Apple Inc. Chief Executive Officer Steve Jobs can start selling the iPhone in June as planned after agreeing to share the name with Cisco Systems Inc. and averting a possible court case.
The Silicon Valley giants ended a six-week dispute by agreeing to share the iPhone brand and explore ways their products can work together, according to a joint statement late yesterday. Cisco sued Apple last month for violating a trademark owned since 2000.
The settlement paves the way for Cupertino, California-based Apple to start marketing the combination music player, mobile phone and messaging device, which was introduced to fanfare last month in San Francisco. Jobs expects to sell 10 million iPhones next year for as much as $599 a piece, taking on Research in Motion Ltd.’s BlackBerry and Palm Inc.’s Treo.
‘IPhone is worth a hell of a lot more to Apple than to Cisco,’ John Daniel, a partner at Kramer Levin Naftalis & Frankel LLP in New York, said before the announcement. He isn’t involved in this case. ‘The Rs.I’ prefix is what Apple has been developing, and if it didn’t have that, it would be unhappy. I don’t think anybody associates iPhone with Cisco these days.’
Cisco, the world’s largest maker of computer-networking equipment, claimed Apple’s iPhone violated a trademark that Cisco acquired in 2000 with the purchase of Infogear Technology Corp. Apple, which unveiled the device on 9 Janurary, called the suit ‘silly’ because its iPhone differs from Cisco’s Internet-based home phone.
The agreement comes two weeks after Apple ended decades of litigation with the Beatles over rights to use the Apple name and logo.
Shares of Apple rose $3.30 to $89.20 yesterday in Nasdaq Stock Market composite trading and have jumped 29 % in the past year. Shares of San Jose, California-based Cisco fell 28 cents to $27.38 and are up 40 % the past 12 months.
Apple approached Cisco about using the name several times during the past year and announced the product before an agreement was reached, according to a 10 January blog posting by Cisco general counsel Mark Chandler.
Apple still faces possible delays in Canada, where closely held Comwave Telecom Inc. has used the iPhone brand since 2004 to sell Web-based phone service. Comwave said in January it filed documents opposing Apple’s motion to take the name.
Cisco Rs.wants to ride Apple’s brand recognition and get a little coat-tail effect,’ James M. McCarthy, a partner at McDonnell Boehnen Hulbert & Berghoff in Chicago, said before the announcement. He isn’t involved in the case. ‘Interoperability was important to Cisco.’
Cisco’s iPhone is part of its Linksys home routing unit, which the company purchased in 2003 to tap the consumer market. The phones, which sell for less than $100, enable Web-based calls through EBay Inc.’s Skype service and Yahoo! Inc.’s Messenger.
The companies said yesterday that they will explore ways their products can work together in security products as well as consumer and business communications.
For Apple, the decision follows an agreement with the Beatles to end all trademark disputes related to the Rs.Apple’ name and logo and may enable the company to add songs by the Beatles to the iTunes online store. Apple Inc. will license some rights back to Apple Corps Ltd.