January 10, 2007 5:14 PM PST

Cisco sues Apple over use of iPhone trademark

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January 10, 2007

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Longtime Apple watcher Roger Kay, an analyst with Endpoint Technologies Associates, was blunt in his assessment of the situation.

"This was just brass balls on the part of Steve (Jobs), to go in there and just grab that trademark and not pay a license for it or negotiate. It's the height of arrogance," Kay said. "He basically thinks he can get away with it."

However, it's likely that the two companies will settle their differences, as prolonged litigation doesn't really serve either company, Kay said. "Apple is playing chicken with Cisco, and there's other companies I'd rather play chicken with," he said, referring to Cisco's deep pockets.

Cisco holds a clear advantage in the legal dispute as the trademark holder of record and having already released products using the iPhone name, said Bruce Sunstein, co-founder of the Boston law firm Bromberg & Sunstein. "The one who has a registration is in a better position than the one who does not."

Apple's only choice is to argue that its "iFamily" of trademarks such as iPod, iTunes and iMac create confusion in a customer's mind as to who makes the iPhone, Sunstein said. It's not out of the question, but in general the company in Cisco's position with clear rights to the trademark has a stronger argument than a company making the family argument, he said.

Also, the applications for trademarks in other countries have no bearing on Cisco's iPhone trademark, Sunstein said. "The fact that Apple may have superior rights in Australia doesn't (give) them any rights in the U.S.," he said.

Apple's Kerris had no comment on the status of negotiations between the two companies, including whether Apple had received documents from Cisco the night prior to the iPhone launch, as Cisco had stated Tuesday.

In the U.S., courts evaluate trademark disputes based on a list of 13 factors, including how similar the trademarks are, how well-recognized they are--and, crucially, whether there will be "any actual confusion" on the part of consumers.

Identical product names in similar areas have prompted courts to side with the original trademark holder in the past.

In one 2003 decision by a federal appeals court, a company selling "Red Bull" tequila sought a trademark. But the court ruled a malt beverage made by Schlitz and also called Red Bull was already trademarked, and granting a second one would result in a "likelihood of confusion" between the two alcoholic drinks.

Under federal law, the loser in a trademark dispute can be forced to hand over any profits it received as the result of selling the device in question, and signs, labels, and packaging can be required to be destroyed.

CNET News.com's Declan McCullagh contributed to this report.

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