Opinion and debate on the legal issues affecting IT, by international law firm Pinsent Masons Opinion and debate on the legal issues affecting IT, by international law firm Pinsent Masons Opinion and debate on the legal issues affecting IT, by international law firm Pinsent Masons

Thursday, 11 January 2007

Has Apple bitten off more than it can chew?

Yesterday marked the launch of one of the most eagerly anticipated products of recent years: Apple's iPhone. But amidst all the hype and hysteria about the technology, the iPhone's debut has been marred by a backdrop of confusion and squabbling over its name. Steve Jobs described iPhone as a revolution, but from a branding point of view at least Apple will find that Cisco has already been there and done that.

Cisco Systems registered a trade mark for "iPhone" back in 1998, and in December last year its subsidiary Linksys launched its own voice over IP (VoIP) handset under the iPhone brand.

A search of the UK Trade Marks register and the Community Trade Marks (CTM) register throws up some interesting history around the mark.  Cisco Systems' CTM application was received in 1998.  Apple only applied for the same name in 2002. With Cisco's registration approved long before Apple's application was received, Apple's only hope would be to challenge Cisco's entitlement to the mark. And a challenge has indeed been raised, but to complicate matters further it was made by third party, not by Apple. Cisco's entitlement to the mark is under review, and it looks like this might not be the end of the story.

In the meantime, however, Apple, who zealously protect all their brands and products with trademarks, may have laid themselves open to copycat products and rip-offs.

Possibly worse, if Cisco do retain the trade mark, Apple will need to seek a licence to use the brand, and press speculation suggests that Cisco might not be falling over themselves to grant one. If Apple fail to obtain a licence, and continue to use the iPhone brand, they could lay themself open to trade mark infringement or passing-off proceedings.

Monday, 11 December 2006

02 vs 3 – the Ad Wars

More on mobile phones and 3G as O2 were also in the Court of Appeal recently having got very grumpy about some of Hutchison 3G's advertising.

The Court had to decide how far EU law permits comparative advertising to go and, in particular, whether the advertiser can use its rival's trademarks, name and trade imagery.

What on earth does this mean? Well, Hutchison 3G decided that a good way of breaking into the mobile phone market would be to advertise against the big brands by comparing prices. The idea was to show how you can get a better deal with Hutchison 3G than with the 'big four'. The comparison with O2 involved using the bubbles that O2 had used in their advertising campaigns.

When the case first came before the courts, Hutchison 3G were found to have a defence under the Trade Marks Act. O2 were not best pleased and appealed the decision.

Hutchison 3G argued that the advert did not fall within the protection afforded to trade mark owners under the Act and that even if it did, they had a defence. Their main argument was that there was no requirement for necessity of use in the law and that even if there was, that requirement was met here.

O2 argued that there was such a requirement and that here it would only have been necessary to use the O2 name, not the bubbles.

Lord Justice Jacobs felt obliged to make a reference to the European Court for a ruling on three questions. The first was whether using a sign in a context purely for the purpose of comparing the merits of the two sets of goods in a way which could not undermine the essential function of the mark was caught by the Directive. The second asked whether there was a requirement of indispensability and if so, how was it measured. Finally, if the answer to the second question was yes, then did that requirement preclude any use of a sign so similar to the registered mark as to be confusingly similar to it?

He did however offer his own views and sided with 3 on all counts. He thought it was a matter for comparative advertising rules rather than trade mark law, there was no rationale for the indispensability requirement and it would lead to absurd results.

Whilst doing all of this, he noted that law was in danger of becoming unintelligible and that the drafters may not have really understood what they were drafting. Who says judges are out of touch?

The signals for O2 look weak here. However, watch this space for the European ruling. Don't hold your breath though. Given the time it takes for a reference to come back, the bubbles may have gone!

Friday, 08 December 2006

Mobile phones in the Courts

Mobile phone issues have been in the courts recently. In a recent case, InterDigital Technology appealed against a decision in favour of Nokia. The facts were quite complicated but revolved around 3G mobile phones.

Nokia had sought declarations that about 30 of InterDigital's patents were not essential to comply with the internationally agreed 3G standard for mobile phones. Nokia's licence to use them had expired so if the patents were truly essential for 3G standard then Nokia would need to get one. They would also have been 'technically infringing' in the meantime.

How it works is that one of the standard setting organisations for mobile phone technology will go about trying to develop a standard for a particular piece of technology. During the development phase, the members notify it of all of their patents that they consider 'essential' for use in the proposed standard.

Once the standard is agreed, there will be a variety of complex negotiations for licences under the notified patents. Those with the most notified patents are in the enviable position of being able to extract more out of the others. If everyone needs lots of licences from you, the more you can get in return. InterDigital had even more reason to be cheerful as they, a non-manufacturer, would not need to obtain cross-licences from anyone else.

InterDigital tried to persuade the court that the appropriate remedy for Nokia was a declaration of non-infringement under the Patents Act 1977 s.71 and not via the general jurisdiction to grant a declaration. Lord Justice Jacob was not persuaded and therefore dismissed the appeal.

It was thought important that if a standard was set, no one manufacturer should have a patent monopoly preventing its use by others. At the same time however, if one party does have a patent monopoly whose use is essential, he should have a fair reward for the use of his invention by others. It seems InterDigital were a bit over-zealous in their notifications and the courts sided with Nokia.

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