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.

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One response

26 06 2009
schiffrinlaw

This issue would be less of a problem for Apple in the United States. In most countries, including China, trademark rights exist as a result of registration. In the U.S., use controls, so Apple’s common law use of IPHONE in connection with mobile and video phones (its use of the mark in commerce) would likely be sufficient to establish priority of use.

Priority applies in the United States based on use in a particular geographic area. Given Apple’s wide promotion of the IPHONE, the geographic region in which it would have priority, would likely be nationwide in the United States.

In the U.S., Apple would likely win an opposition against third parties who would attempt to register IPHONE without use. In China, the registration matters, not prior use. Interestingly, in the U.S., Apple’s IPHONE mark is not yet registered. It has had to deal with a merely descriptive refusal for the mark, and a likelihood of confusion with Cisco’s IPHONE mark for computer hardware and software for telecommunications use.

Ultimately, Apple has dealt with the descriptiveness issue by showing secondary meaning and amending the mark to seek registration through acquired distinctiveness. As for the likelihood of confusion issue, Apple has stated that it and Cisco have agreed to use the mark on their respective products, and will likely submit a consent agreement as proof.

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