iPhone (TM) Update

Apple and Cisco (as earlier posted) have apparently agreed to settle their trademark dispute over the use of the "iPhone" name to describe (i) Cisco's phone and (ii) Apple's forthcoming cell phone. According to the WSJ,

Under their agreement, Cisco, of San Jose, Calif., and Apple, of Cupertino, Calif., are free to use the iPhone trademark on their respective products throughout the world.

It also has come to light that Cisco apparently failed to make use of the name "iPhone" during the six years following registration, and therefore the validity of any claim that they had against Apple was under suspiscion. A good reason to settle.

Apple and IP Rights

Two bits of news related to Apple this week.

First, on Monday, Apple announced the resolution of its ongoing battle with Apple Corps (the Beatles' record label) with regard to teh use of "Apple" in connection with music. Originally a trademark dispute, the two sides reached an agreement in 1991; however, with the expansion of Apple's business into music and music delivery (via iPod/iTunes), Apple Corps brought suit on an apparent breach of the 1991 settlement. The new settlement gives Apple rights to use "Apple" in connection with music, and licenses the name back to Apple Corps in certain areas. The guess here is that in addition the license rights, Apple Corps received a hefty check. Next step: getting the Beatles' music on iTunes. And then turning to resolution of the Cisco dispute over 'iPhone.'

Second, yesterday Steve Jobs released an open letter calling for a music industry-wide move away from Digitial Rights Management (DRM) software. Jobs states that when Apple went to license music from the major labels, it was required to create, update, and monitor use of the music and protect it via DRM; as the result, music sold through the iTunes store will only work on Apple products (iPods). (Apple argues that providing the 'keys' to permit DRM on third-party products will result, inevitably, in the disclosure of the keys to the public and therefore the 'unlocking' of the DRMs.) Moreover, as Jobs also points out, the labels' sell millions of CDs to the public without any DRM at all. (Apple, by the way, calculates that only 3% of the music currently loaded onto the world's iPods was purchase through the iTunes store; but that 3% still equals 2 billion songs.)

As the leader in portable music (and looking to extend that lead with the iPhone), Apple has the most to benefit from elimination of a DRM regime that seems flawed to begin with; and what is good for Apple, in this case, looks like it would be good for consumers as well.

Apple v. Cisco

Lost in the tumult over Apple's (very successful, apparently) launch of its new cellphone was the fact that Apple was sued the next day by Cisco for trademark infringement. Cisco, it seems, has been selling a VoIP phone of that name since the spring of last year. (Cisco, in turn, acquired the mark when it made an acquisition in 2000.)

A few thoughts: first, Apple and Cisco apparently had been negotiating through the weekend (with the announcement looming over the talks) over licensing rights to the name. Wonder what the difference in prices were at the end?

Second, the USPTO does recognize the same "mark" in different categories, so Apple may be betting on the ability to differentiate the two phones (so as not to confuse the public, which is essentially the test the USPTO applies). But at first blush, it seems that Apple has an uphill battle to prove that the cellphone and VoIP phone markets are so distinct that consumers won't be confused.

Third, it's interesting to note that Apple was also involved in a high-profile litigation with Apple Corps (the Beatles' label) over the use of the "Apple" in connection with music (iTunes, iPod, etc.)

Finally, it's rare to see two corporate giants litigate head-to-head. Enjoy the show.