Cisco this week sued Apple over its use of the iPhone name for its new mobile telephone. Cisco holds US and European trade marks in the name and negotiations over a licensing deal between the companies had broken down, Cisco said.
Trade mark specialist Lee Curtis of Pinsent Masons, the law firm behind OUT-LAW.COM, has found a legal loophole, though, which could strip Cisco of its European rights. He told technology law podcast OUT-LAW Radio that in Europe a person can lodge a revocation application against a trade mark registration if the trade mark has not been used for the past five years.
Just such a revocation was lodged by a German law firm, CMS, on exactly the same day, 18th December 2006, on which Cisco launched the iPhone.
OUT-LAW can find no use in Europe of the iPhone trade mark in the five years preceding that revocation application, which means Cisco's ownership of the trade mark is under threat in Europe. Though there are references in US media to Linksys products dating from 2005 using the iPhone name, this is unlikely to count as use in Europe unless there were sales into the EU or Linksys, a subsidiary of Cisco, undertook advertising and promotional activity in the EU.
If CMS filed its revocation application before Cisco launched its product, meaning earlier that day, then Cisco will lose the trade mark rights.
Apple has the oldest application for the mark so would almost certainly then own the trade mark in Europe.
But even if it is found that Cisco launched its product earlier on 18th December than CMS launched its revocation application it could still lose the rights. In that case a special rule comes into play which is designed to stop companies launching products simply to protect their trade marks.
"Under the European Trade Mark Directive any use made in the three month period before the application for revocation is disregarded, unless there were actual plans for resumption of use before the trade mark owner became aware that an application for revocation might be filed," said Curtis.
This complicated rule is designed to stop companies rushing out a product quickly once they hear that someone is about to file a revocation application on their trade mark. It creates a three month window preceding the revocation application in which any use of the trade mark is not allowed to justify the continued holding of the mark.
The only way in which Cisco could use its 18th December product to hold on to the trade mark is if it could prove that it had launch plans which predated its learning that a revocation application was being filed. That is a complicated issue which a European court is likely to decide.
"The crucial question is when did Cisco become aware that they might be planning to revoke," said Curtis.
The news could fundamentally change the negotiations between two of the world's biggest technology companies. Curtis said that Apple had paid The Beatles' record label tens of millions of pounds in a settlement over the Apple name. "That was tens of millions of pounds. This could be more," he said.
But the potential weaknesses in Cisco's European situation could change that completely. A mutual licensing agreement between the companies could end up taking the place of a multi-million pound payment.
There are barriers in Apple's way, though. Observers are assuming that CMS is acting on behalf of Apple, and if that revocation is successful then Apple is the next in line to register the trade mark. But three European companies have filed objections to Apple's 2002 registration application. The details of those objections are not available, but they could either derail Apple's application or limit the rights that it wins through its registration.
Cisco's ownership of the iPhone trade mark stems from its purchase of a phone equipment maker seven years ago. "Cisco purchased Infogear in 2000 and Infogear were the proprietors of a US trade mark registration for iPhone dating from 1996 for various computer software relating to telephones," said Curtis. "In the European Union Cisco systems also own a community trademark registration for iPhone as well dating slightly later."
Cisco has said that it was negotiating with Apple over the use of the iPhone name up to as late as Monday night. Apple chief executive Steve Jobs then announced the name of his company's new mobile telephone as iPhone on Tuesday without a deal being in place.
An Apple spokeswoman was quoted in the US press as saying that the company would mount a case based on the fact that its product is different to Cisco's because it was a mobile phone and Cisco's was a voice over internet protocol (VOIP) phone.
Curtis said that that argument was unlikely to convince a court. "The basic scenario is you have to look at the nature of the product, the use they are put to and the trade channels through which they are sold to deem whether they are similar or not," he said. "I think it's not a particularly tenable argument to put forward that the products are not similar, they're [both] telephone products."