Call Failed – Trademark Dispute Further Delays launch of iPhone in China by Seth Chadab

25 06 2009

While a distribution agreement for the iPhone is still pending for the world’s most explosive market, Apple is facing another setback that will further delay the introduction of the iPhone in China.  It appears that Apple inexplicitly failed to register “iPhone” with the Trademark Office of the State Administration for Industry and Commerce of China in the category for mobile and video phones.  Having only applied for computer hardware and software in its otherwise timely 2002 application, Apple neglected to include the mobile and video phone product category.  Hanwang Technology, perhaps the first company to realize this mistake, applied two years later and secured a registration for “i-phone” with the Trademark Office, under the proper classification.  Despite objections by Apple during the opposition period (similar to U.S. Trademark law), the trademark committee granted Hanwang Technology the exclusive right over the mark, thereby forcing Apple to either rebrand the iPhone in China or negotiate an agreement with Hanwang for permission to use the mark.  This trademark dispute, in addition to other setbacks to the iPhone introduction in China, have many speculating that an exclusive deal with a Chinese cell carrier is not likely to be anytime soon. 

 The Chinese market, however, has proven that the demand for an iPhone is very strong among mobile users.  As a result, a “clone” market has emerged that has hardware manufacturers competing to see who can make the most authentic iPhone knock-off.  The most recent addition, the “iPhome 3G,” joins the already popular “HiPhone” and “SciPhone,” as a cheap substitute that duplicates the iPhone’s stylish exterior and boasts a near-flawless OS X-based operating system.  Apple will have to clear the market of these counterfeits in order to gain the market share that many had expected from the popularity of the iPhone in the western countries. 

 Apple’s folly in China thus far is in stark contrast to its reputation in the United States for vigorously enforcing its trademarks and other IP rights.  To meet expectations in China, Apple will have to negotiate permissions with Hanwang for the iPhone trademark (lets face it – Apple would be crazy to rename the iPhone for the Chinese market) and then accomplish the more difficult task of taking on the cheap counterfeiters that have dominated the Chinese market without impunity.


The issue with Netbook by Seth Chadab

21 06 2009

Psion’s latest battle against Intel and Dell to maintain exclusive rights in ‘netbook’ will be their final salvo in the war to prevent the genericide of their registrations. The Canadian-based hardware manufacturer announced last week they reached an agreement with Intel and Dell and will withdraw their latest ‘netbook’ applications with the Patent and Trademark office. Intel and Psion have battled publically since December 2008 over the use of the term ‘netbook,’ the industry-adopted term for a popular new technology in the consumer gadget industry which has spurred some tough competition.

Psion originally filed an application to register ‘netbook’ trademark in 1996 and introduced their line of mini-PCs shortly thereafter, but only finding minimal success in the market. Psion, however, sold only one line of computers under the ‘Netbook’ name (which was incidentally discontinued in 2003). In 2008, the demand for small laptops predominantly used for web-based applications exploded, prompting larger hardware manufacturers to flood the market. Netbook was widely used by Psion’s competitors to describe the genus of this new tech. Psion responded aggressively to the competition and chose to send out numerous cease and desist letters to these manufacturers and anyone else who had used netbook generically.

Psion’s threats backfired, prompting Dell and Intel to petition the PTO for cancellation of Psion’s registrations. Incidentally, Intel joined the suit in February 2009, despite neither manufacturing netbook computers nor selling any hardware under the ‘netbook’ name. Psion countered with a claim of more than $1 billion in damages. In the end, Dell and Intel successfully hammered Psion for failing to police the mark effectively and even cited to many generic uses of netbook by Psion in their own releases. It is uncertain what will happen to Psion’s current registrations, but it is clear that Psion will no longer protest the use of netbook.

While many predicted that Psion would ultimately lose this fight, the lesson learned by Psion and other hardware manufacturers is to be less descriptive in choosing the name for new products. The more functional and familiar the word is in the larger industry, the more likely that it become generic. Add netbook to the ever-expanding list of words returned to public, which includes PC, notebook, laptop, zip drive, and many more.