Tuesday, January 30

Fighting On New Fronts: iPhone

When two companies decide to wage a trademark battle, interesting things always happen. People choose sides. Smaller skirmishes ensue. Loose alliances are forged between unlikely players.

USA Today reports Verizon, probably because Cingular got the Apple iPhone deal, tossed in its hat with Jim Gerace, vice president of corporate communications, saying, in one breath, “We have nothing bad to say about the Apple iPhone. We just couldn’t reach a deal that was mutually beneficial.”

In Gerace's next breath, he says the demands were “steep,” including revenue share from service fees, distribution rights and much more. “They would have been stepping in between us and our customers to the point where we would have almost had to take a back seat … on hardware and service support,” he said.

Gee, so much for not having anything bad to say. His message was almost written by Cisco, which also claims the biggest stumbling block between the Cisco/Apple trademark negotiation was about sharing technology. Ho hum, you don't have to be a Fortune 500 executive to know that Apple does not like to be open about its innovations.

Some people don't like that, but whatever. Frankly, if it did share everything, I'm not so sure that there would be an Apple around to shake up the market like it does. So, I don't blame them. (Besides, they tried sharing once, if you recall, and it failed miserably).

Although Cisco has since backtracked on that idea that all this was about wanting Apple technology, it was part of the equation. Moneyweb published an early quote from Mark Chandler, Cisco's general counsel, saying "Fundamentally we wanted an open approach. We hoped our products could interoperate in the future."

Was that the deal breaker? If so, then Cisco knew the deal was going to fail all along because I really don't believe such a media relations savvy company would be so naive that it would think Apple is going to jump to interoperate with Cisco. For the reason I already stated above, it would be "silly."

Even sillier is the misnomer being floated by some analysts (those applying for Cisco fan status, I imagine) is that Apple is doing all this for the publicity. Yeah, right.

Apple has never been a company to think that all publicity is good publicity. Given that the iPhone launch was one of the most anticipated tech announcements of the decade, I hardly think Apple needed a Cisco lawsuit to jazz things up.

But, of course, that didn't stop someone at ThinkEquity Partners LLC from dreaming up this non-reality: "As this trademark infringement case escalates, we are taking the stance that 'any publicity is good publicity.'" Oh well, it's an easy way to get your name in the paper, I suppose. File under not thinking in New York.

You see, Apple and Cisco have always understood that there is a fundamental difference public relations and publicity. Neither have been big on employing the latter because it carries more risk and is generally reserved for companies without name ID or brand value.

In fact, the resulting lawsuit has drawn attention to some subjects neither company wanted to talk about: Cisco's recent violation of an open source license (which it has since thanked everyone for, er, pointing out the oversight) and Apple's iPhone mark up (which prompted some sideline banter that Apple has yet to set a final price). Darn publicity. You cannot control it. I doubt either wants it.

Specifically, the license violation made Cisco look not so good about sharing, which was the case it wants to make about Apple. And the profit margin of an iPhone made Apple look a little less "taken advantage of" by Cisco hoping to cash in on the trademark.

Hmmmm. I think Technewsworld called it right like I did when they said this one has "the potential to turn very ugly." Why any company, Verizon included, would want to comment on this is beyond my comprehension.

The bottom line is that Cisco kind of holds the higher ground, but I'm unconvinced it can keep it, especially as other companies come forward to challenge Cisco's hold on the trademark (which benefits one of Apple's arguments that the the term iPhone should be shared because other companies have been using it for years). Besides, as I said before, the public seems to want Apple to have the name.

So what is this really about? More and more, it looks to me as if this is nothing more than a high stakes game of "you're not playing fair so I'm going to sue you, nana nana boo boo." And in this game, there will be no winners, but a whole lot of losers.

But then again, it might seem obvious to me to because as a journalist student in the 1980's, I learned everything I needed to know about law (as a non-attorney) while writing my very first article for The Sagebrush. To the ire of the University of Nevada, Reno (UNR), I asked what some consider my very first "dangerous" question: "Could UNR find itself caught in a liability suit for injuries related to adminstration-approved events run by private organizations such as fraternities?"

I found my answer by calling every attorney in Reno until one of them gave me the answer. His answer was "yes" (to the chagrin of the UNR). Simply put, however, he also told me, novice that I was in the ways of business at the time, that anybody could sue anybody for anything. He then went on to explain that he could, in that instance, build a strong case against either side.

"Whether or not the plaintiff would win the case would be up to the courts to decide," he said.

This was also my first real lesson in the power of reporting and the importance of public relations. The lesson learned for public relations came from how easy it was to ask questions from the coordinator of campus standards and receive answers that lent well to the story, but did not lend well for her.

My intent was not to harm her (we were friends for heaven's sake). But as I said, I was pretty naive at the time. The fact is, the damage done to her by what was a "good story" became one of the reasons I leaned toward corporate communication and public relations as opposed to reporting. These people needed help, I concluded.

Of course, that's not to say I'm afraid to call a duck a duck either. And the iPhone lawsuit is exactly that. It's a duck. Or, more appropriately, if you are a company thinking of taking sides, you better duck. The publicity is not worth it.


Rich on 2/2/07, 1:51 PM said...

Famous Last Words:

"Apple and Cisco have agreed to extend the time for Apple to respond to the lawsuit to allow for discussions between the companies with the aim of reaching agreement on trademark rights and interoperability." — a joint release from Apple and Cisco.

Rich on 2/23/07, 3:37 PM said...

Yes, Apple and Cisco have reached an agreement to "explore opportunities for interoperability in the areas of security, and consumer and enterprise communications."


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