TELECOM Digest OnLine - Sorted: Cisco, Apple Settle 'iPhone' Dispute

Cisco, Apple Settle 'iPhone' Dispute

Jordan Robertson, AP Tech (
Thu, 22 Feb 2007 00:36:47 -0600

By JORDAN ROBERTSON, AP Technology Writer

Cisco Systems Inc. and Apple Inc. have agreed to share the "iPhone"
name, but both companies are staying tightlipped about what future
products might come from the resulting deal to collaborate on
"interoperability" between the companies' products.

Analysts said the settlement announced late Wednesday in Cisco's
trademark-infringement lawsuit could help both companies strengthen
their positions in the increasingly fierce battle to deliver video and
other applications directly to consumers' homes.

Zeus Kerravala, a network infrastructure analyst with Yankee Group,
said there are ample opportunities for the companies to dream up
collaborative projects to win over consumers.

One possibility, he said, could be a device from Cisco's Linksys
division that users call into to record podcasts that are then
automatically uploaded to iTunes. Such a product would make it easier
to create and disseminate such programs.

However, he cautioned that both companies need to be willing to share
in order to make the partnership work.

"If the two actually can work together, then the combination of the
two is obviously more powerful than the two butting heads," he said.
"There's no company out there that understands network service like
Cisco. And you could argue no other company understands user
experience like Apple."

The Silicon Valley tech giants said they have agreed to dismiss any
pending legal actions regarding the iPhone trademark.

Cisco's lawsuit, which was filed last month in San Francisco federal
court, threatened to derail Apple's use of the iPhone name for its
much-hyped new iPod-cellular phone gadget. The sleek multimedia device
is set to go on sale in June with a retail price starting at $499.

The companies said Apple will be allowed to use the name in exchange
for exploring wide-ranging interoperability between the companies'
products in the areas of security, consumer and business

No other details of the agreement were released, and representatives
from both companies declined to comment beyond their short joint

The showdown between the companies erupted when Cisco sued Apple
claiming that Apple's use of the iPhone name constituted a "willful
and malicious" violation of a trademark that Cisco has owned since

Cisco has been using the trademark since last spring on a line of
Linksys phones that make free long-distance calls over the Internet
using a technology called Voice over Internet Protocol, or VoIP.

The lawsuit was filed Jan. 10, a day after Apple Chief Executive Steve
Jobs unveiled his own company's iPhone, which operates over the
cellular network instead of the Internet.

Apple initially called the lawsuit "silly" and argued that it was
entitled to use the name because the phones operate over different
networks and would not compete with each other.

Cisco maintained that in an era of "convergence" -- where increasingly
intelligent networks and devices can handle a variety of different types
of voice, video, data and other transmissions -- the two companies'
phones could eventually take on different features and wind up competing

The result would be "confusion, mistake and deception among
consumers," according to the lawsuit.

Negotiations between the companies broke down just hours before Jobs'
dramatic unveiling of the product in San Francisco.

The sticking point apparently was Cisco's demand that in order to use
the iPhone name, Apple would have to open up its famously closed
products to communicate with some of Cisco's offerings.

The dispute highlights the shifting business strategies for both

Cisco, which is Silicon Valley's most richly valued company with a
market capitalization of $166 billion, makes most of its money by
selling the routers and switches that direct data traffic over
computer networks.

However, the San Jose-based company is also making an aggressive push
into the consumer market and toward products that help deliver
content, such as cable set-top boxes, wireless broadband routers for
the home, and equipment for playing digital music.

Cupertino-based Apple is also expanding its business range from beyond
primarily a Macintosh computer and software maker as it capitalizes on
the demand for digital music and the soaring popularity of its iTunes
and iPod products.

Legal experts said Cisco's argument that the phones could eventually
compete seemed like an unlikely scenario. They added that the products
and markets they serve are currently so dissimilar there's little
likelihood of future trademark tangles.

"Although Cisco is making the point that we don't know what the future
brings, it just strikes me that their markets are plenty distinct, and
there's probably room for them to find peaceful cooperation," said
James Pooley, an intellectual property litigator and adjunct law
professor at the University of California at Berkeley. "They're not
naturally going to be stepping on each other's toes very much, so
cooperation makes a whole lot of sense."

On the Net:

Apple's iPhone:
Cisco's iPhone:

Copyright 2007 The Associated Press.

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