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Apple has lost their legal claim to the iPhone name in Mexico (phonearena.com)
125 points by mun2mun on Nov 2, 2012 | hide | past | web | favorite | 67 comments



Here's the brief - There's a telecom company by the name "iFone" in Mexico. And Apple sued them unnecessarily...and lost the case.

"The iFone trademark was filed in Mexico in 2003, a full four years before Apple filed to trademark the iPhone. Despite the rather obvious priority issue, Apple decided to sue iFone in 2009 in an attempt to invalidate the company’s name for being too similar to the iPhone. The predictable response was a countersuit by iFone, and the court battles have been swinging in iFone’s favor ever since."

I think Apple deserves this and perhaps, even more.


Great quote from the lobby of the San Jose superior court lobby, "Lawsuits are like handguns, when you pull the trigger someone is going to get hurt but its not clear who." I don't know if the lawyer was trying to dissuade a client or just kibitzing with another lawyer but it was a great comment.


What am I missing about that quote? If you're wielding a handgun, it's pretty clear who will get hurt when you pull the trigger, barring rare events like a misfire or a ricochet.


What I took away from the quote wash that in personal disputes between individuals, when one individual pulls out a handgun it escalates the dispute to the level of potentially mortal harm. Prior to that level of escalation there could be a knock down drag out fight but it would be perhaps less likely to result in someone dying. Further, when the stakes become 'life or death' because someone has a gun, the responses take on a level of urgency and desperation that they would not have at lower threat levels.

So from the perspective of an analogy, corporations don't have 'blood' they have money, which is an analog for blood. And up to the point where they are arguing about this and that the total amount of money that is at stake is constrained by the companies involved deciding not to do business with each other. But a lawsuit can drain a disproportionate amount of money out of the 'target' (and the instigator). This 'escalates' the problem because what is at risk is higher. And, like an individual, when you threaten a company with more serious damage, their willingness to respond with more harm goes up significantly, if they feel like they are fighting for their life they will do things that normally would be considered 'too risky.'

So as an analog, the handgun and a lawsuit are escalation to the conflict which can result in much greater harm.


You pull the trigger, maybe you miss (Apple not winning the lawsuit), then they pull their gun...


Maybe a better quote or platitude in this case is "don't take out a weapon unless you plan on using it". I always took that to mean, wrt guns, if you take it out, be prepared to shoot to kill.

Apple certainly seems to have done that here. I don't know why though. Ianal, but anyone should be able to look at the date of filing for ifone and compare that to Apple's product launch. Apple lost right there.

Why they went in guns blazing thinking they are going to scare a telco is crazy. And a Mexican telco, which I would bet may behave a little different than US telcos.

I think Apple should have simply kept their mouths shut. I understand you have to protect your trademark, but ones a product, the other a service.

Apple seems to have jumped into a small pool of sharks with the iPhone name. Didn't Cisco have an IP phone called iPhone long before Apple? And as far as I know, Apple made no negotiations with them prior to launch.

I guess when you have enough money in the bank in cash to buy pretty much any competitor, it changes they term competitor in ones mind a bit. I certainly wish they would buy up AT&T and run the company right. 120.00 or more a month for a phone is pushing your luck.


People sometimes shoot back.


You'd be surprised how many people with handguns shoot themselves in the process of trying to intimidate someone else.


So you pull the trigger and kill someone. You get put away for murder for life.

It's more about the unintended consequences of a lawsuit than outright direct effects.


The lawyers for Apple were holding the gun, pointing it in the general direction of both iFone and Apple.


Couldn't agree more. Apple tried to throw its weight around when it clearly had no business suing. Apple's working on the principle it is too big to fail.


However, this is a win-win situation for lawyers, at both Apple and iFone.


Err, what? They are salaried. It's a "win" for iFone's outside counsel, and a blow for Apple's. It's barely a win at all, most likely. Yes, they get paid, but companies move legal business around all the time depending on wins/losses and quality of advice (and how that advice fared in court).

I'm always a bit boggled at why folks think stuff like this is a "win" for lawyers, just because some lawyer makes money. Dealing with these kinds of cases with clients like Apple is like running 2 startups at once. You are working 14+ hour days for a year, dealing with tons of emergencies, researching 100 page briefs as fast as you can, etc.

This is not the win. The real "win" is apple paying you 1k/hr hour to do relatively simple stuff because you won this case. If you lose, well, it's "what have you done for me lately". Hell, if you lose, Apple would probably demand an hourly rate reduction if you want to keep their business.


Yes, lawyers are salaried, but having this ridiculous court battles just increases the number of lawyers needed, thus increasing their average salary.

Look, I would like the judge ordered them to do some custom phone application development instead of citing legal documents. That way, they will need to hire more developers to do that, or allocate some developers from other departments, thus creating more developer jobs. Instead, the lawyers got to fight that battle and get paid for that, thus, they won.


I think this is a great insight.

A lawyer's action can benefit or harm himself; it is fairly trivial to determine which in any particular case. However a lawyers actions can also benefit or harm lawyers as a group.

A single lawyer initiating and losing lots of lawsuits is not really going to benefit himself, but he is doing his part to drive demand for lawyers even higher. If lawyers were microbes, we could expect to see this sort of behavior become more prevalent so long as it provided a benefit to lawyers with similar traits greater than the damage done to the individual lawyer.


> Yes, lawyers are salaried, but having this ridiculous court battles just increases the number of lawyers needed, thus increasing their average salary.

How is this an example of a "ridiculous court battle?"

We have trade-marks so businesses can build a brand and keep people from free-riding on their good-will. Trademarks are fairly arbitrary and not intrinsically valuable, so the only real consideration at play is that people use different ones, to minimize confusion.

"iFone" and "iPhone" are confusingly similar. Somehow, you have to decide who gets to use the mark in Mexico.


IMHO, this _is_ an example of ridiculous court battle. AFAIU Apple is trying for years to destroy iFone trademark in Mexico, although any non-salaried lawyer would just say it's a lost battle.

And battling lost battles over and over with 0.1% of a chance to win for years just out of hope that, by same miracle or mistake, they could win the case is ridiculous. I'd rather them spend their money on innovation, but that's just my opinion, and the money they spend on lawyers is just their money :)


Do you feel they are confusingly similar when used in context?

"I have my cellular service with ifone" "I love my new iPhone" "ifones service sucks" "The iPhone sucks"

Even in the last two comparisons, conversationally, I don't see anyone being confused. Apples product is large enough it is a household name now. That helps disrupt that confusion. Conversely, were Apples product not well known, this would just go under the radar and no one would be confused either.

I understand legally you must protect you trademark, though in this case I'm seeing it as falling into the clause of "if those marks offer identical or similar offerings".

IANAL but doesn't one being a product and one being a service pretty much nullify the need to protect or defend the trademark on either side? That's how I'm seeing this one.

Now, were Apple to purchase a telco, that would change everything for me, even if they kept their new shiny telcos name as it previously existed.

I did read Apple started a new wireless research division. Perhaps one day we won't all be tethered to mandatory text messaging fees and bandwidth rates that are truly extortion in my opinion.


It's a win in the sense that you will always take home big bucks. Yes, it's a lot of work, but there isn't a risk of no payout in the case your side loses. Startup success or failure means big bucks or no bucks. Lawsuit success or failure means big bucks or even bigger bucks.


No offense, but I think you are greatly confused about the economics of lawyering. Without getting into a full blown 30 page explanation, you do not always take home big bucks. This is a common misconception.

There is in fact, a large risk of "no payout", or worse, a loss, if apple decides to argue about your billing (which they will). As a firm, you may end up having to pay your associates more than apple pays you, depending on how things go, generating a net loss for the firm. Your associates get paid well (particularly in the IP field), but usually this just about makes up for the large amount of law school debt they have (which can easily be $3000+ a month). Again not that they are poor starving people, but the salary differences you see often are eaten by debt payments and the fact that they work ridiculous hours.

On the direct "payout side", you are right that trademark work is not usually contingency work, but a lot of other work is, in which case the risk is immense. Firms are often fronting many millions of dollars in large cases, and all you have is the hope you will get paid on time. Your recourse if you don't is to sue the client, and then spend even more money, and either settle for 50% to not drag it out (the average time to resolve these cases is 7 years), or hope a judge doesn't think your billing is atrocious.

This risk is certainly less in the corporate world (in my wife's area, family law, individual clients can have something like a 35% non-payment rate, particularly in hard economies), but still there.

Again, i'm not saying lawyers don't make money, and aren't well off in a lot of cases, but to pretend that lawyers are somehow guaranteed "big bucks" in cases like this is just a fantasy. It's a business. Sometimes you do well, sometimes you don't. There are no guarantees, and there is always risk. Given the state of the legal job market and the legal world , if you want to make big bucks, running a law firm and taking cases like this is not the way to do it anymore.


I completely agree. However note that your examples are straw men. I wasn't talking about the general economics of lawyering, and at no point did I make that claim. My comment was in response to this specific case of corporate IP law. I agree with you that family law and consumer protection (e.g. class actions lawsuits) for example certainly are like startups at times. In this trademark case it most likely a case of big bucks or bigger bucks. It's not contingency work and there isn't really a risk of non-payment with a client like Apple.

And yes, there are no guarantees and there is always risk, but in this trademark case the amount of risk versus upside is very very favorable to the lawyers involved.

What I don't understand is why "taking cases like this is not the way to do it anymore." I simply don't see why the lawyers aren't almost guaranteed to make good money in this particular case, especially with a deep-pocketed client like Apple involved. I would like to know why though.


"It's not contingency work and there isn't really a risk of non-payment with a client like Apple." This isn't quite true, non-payment is often a bill-reducing tactic. :)

I'll answer your last question, and one someone else posted. I simply don't have time at the moment to get into a protracted discussion right now, humorously due to dealing with lawsuits, so this will have to be my last real response. I actually don't have a dog in this fight, even though i'm a corporate IP lawyer. I actually also manage a team of software engineers, and spend most of my time on the legal front either dealing with open source licensing, or trying to put myself out of business by getting rid of software patents.

On the corporate side:

Money from these cases doesn't go to hiring more lawyers. Ignoring NPEs and other weird cases, in most companies, the number of lawyers is fixed relative to the size of other things, like any support staff. For example, i can name a huge tech company where lawyer headcount is limited to 1% of engineer headcount.

Until engineer headcount increases, winning or losing lawsuits has no impact on the number of lawyers being hired or paid. It does not make the lawyers more or less money.

Again, the above is common even in companies that derive large amounts of money from licensing (though i'm still excluding NPE's). They are simply "understaffed" and deal with it.

Please also note that corporate lawyers nowadays often make less than equivalent engineers, unless you are talking about the very top folks. People do corporate law because of better hours, not better money.

On the law firm side:

There are too many lawyers already. The vast majority of lawyers coming out of law school right now cannot find jobs. Vast majority being 70+%. It's no longer economically worth being a lawyer, in the sense that the debt you incur is more than your expected increase in earnings.

For the first time in a long time, law schools and the ABA are actually starting to tell students it's not worth it, too.

A large number of firms are downsizing heavily, including IP firms.

This in turn, has caused two things to happen:

1. Good lawyers are looking for work, and willing to work cheap. very cheap.

2. Cheap fresh-out graduated law students are willing to work for basically nothing, because they have debt but no jobs. "Basically nothing" = there are large numbers of fresh-outs from top schools willing to work for 20 bucks an hour. No joke.

This, combined with outsourcing (which most find a hilarious thought), is seriously pushing down the hourly/etc price of lawyers. The amount of profit you will now make in a trademark suit, even with a client like apple, is not that large, but the expenses haven't changed, because law firm structures haven't changed. You would think #2 would just cause law firms to hire people cheaper. Instead, they've just limited themselves to the number of associates they can afford to pay 150k a year to. It turns out most law firms are astonishingly bad at the business part.

Simultaneously, clients have become less willing to pay for associates. When times were very good, they didn't care. Now, they care. They aren't willing to pay 450/hr for an associate to learn how to do a trademark case, they want a partner. They are basically willing to pay "nothing" for the associate until they've been doing this stuff for 4-5 years. Thus, the law firms are starting/continuing to have to eat that cost, since the still have to pay the associates, cutting into profits.

Cases like the Apple one are large cases. They often involve a large number of associates for a number of years, which, again, apple isn't going to be very willing to pay much for. The firm would actually be better off with simpler cases that associates can do multiples of at a time. For example, they'd be better having associates draft simple trademark licensing agreements for multiple clients all day, than taking on complex litigation like this.

"deep pocketed" clients don't really exist in the tech world anymore. It's true that there used to basically be a money faucet from deep pocketed clients, and you could bill whatever you want. This hasn't been true for a while in general. They now all have very tightly controlled budgets for IP law in order to keep costs down. They are also pushing for and getting fixed cost structures from law firms. For example, they will only be willing to pay $4000 to a law firm to draft a patent, regardless of the size of the patent, complexity, etc. On the other side, however, firms are still paying per-hour billed. This can't last without driving per-hour salaries down, and it certainly doesn't turn into good money.

This is why "taking cases like this is not the way to do it anymore". It's no longer cost effective like it used to be, because the economics have changed. It may work if you are a 1-2 person practice who specializes in this, and have very low expenses. This is also one of the reasons that NPE's have arisen. They have very fixed expense structures and take on a very specific set of work. It is, sadly, a very efficient way to work and make good money.

But of course, this doesn't mean the lawyers in this exact case won't make good money. They may, they may not, depending on how the firm is structured and it's particular financial situation. But it's definitely not guaranteed. It's also not a good business bet anymore compared to simpler work that you can get paid just as much for, or you can have predictable expenses for.

Note that none of this is not a very structured argument. I haven't sat down and tried to present a very cogent argument (that would take a lot of time), mainly just answered a bunch of questions and tell you are wrong. I wouldn't expect much else from a lawyer :)

That said:

TL;DR Lawyering as a profession is not going to be a high earning profession in the future until lawyers become scarce again. Lawyer earnings will only get worse. Law firms that think otherwise are kidding themselves. If you want to make good money, go into plumbing. Most master plumbers are over 55 now, and nobody is willing to send their beautiful unique snowflake to trade school anymore. I expect within 10-15 years plumbers will make 400/hr, and lawyers will make less than the average website design guy.


This is awesome, Danny. Now get on that 30-page version. :)


Thank you for taking the time to write such a detailed, perfectly valid explanation to clear out the misconceptions that many might have had.

Good day.


I want to save this response for future instances where people ignorantly claim that these lawsuits are "good for lawyers, bad for everyone else."


In other news, it's hard to argue with people whose job is to argue with other people.

Still, lawyers create little besides more work for other lawyers, and that's the ultimate point being made. It's not fair to call the entire profession a confederacy of leeches, as some like to say, but comparing them with arms merchants who sell to both sides in a war is not too unreasonable, I think.


I actually think this is an fair comparison, but not for every lawyer. There are plenty of lawyers I know who spend most of their time trying to end the war entirely.

I'd say 99.9% of lawyers give the other 0.1% of us a bad name.


I didn't see anyone say that lawyers had a 100% profit margin so discussing all their business difficulties is fallacious. Regardless, these lawyers have still made money most of us wish they hadn't, and in doing so they've taken it from people who earned it.

That the barbarians lost some of their plunder in fires they had needlessly started was probably little comfort to the villagers...

Your point regarding law students having crippling debt is an emotional red herring. Most people here have or have had huge student loans or are otherwise personally taking a large financial gamble for their careers/businesses.

You also mention the difficulties of paying employees when on contract yourself when missing that everyone else is in the same boat too, trying to make payroll in an uncertain world.

And it's amusing that you mention legal difficulties as you're talking about exactly the people who, collectively, cause those difficulties for everyone. If not for the sort of lawyers who needlessly sued iFone, there wouldn't be the sort of lawyers who'd defend a company skipping out on a legal bill like that, and so forth.

There's risk in everything from fry-cook to indie iOS app developer. Not only is it callous of the people who suffer the least from economic downturn (the upper class, most educated) to complain about problems facing everyone, but it's also another attempt to muddy the issue.

The lawyers alone chose to be there and they alone profited. The money iFone wasted defending itself from this attack could have gone to providing services to customers, wages to employees, and profits to investors.


So you're an employee of a company, and the company goes bankrupt in part because you're not doing your job properly (and the lawyers were probably doing their job properly - they just incorrectly predicted the outcome of the case, or an executive pushed it through anyways), but you still got paid your salary. That's a huge win right?

Lawyers (good ones) want to provide value for their clients/employers as much as a (good) developer does.


Its more of just a fallacy for those who dislike the law game. People shout out "only the lawyers win" type line when its pointless lawsuits going back and forth and is only ever true in cases where the lawyers are hired on a per-case basis, like divorce struggles.

In corporate legal warfare, such as this, the lawyers are just doing their assigned duties. To win or lose probably doesn't mean a bonus usually.


True, but things like this going on at least allows the lawyers to justify their salary. The more important this stuff is, the higher that salary if likely to be.


"This stuff" = people fighting with each other.

At the end of the day, that's what it comes down to. E.g. Apple didn't sue Samsung because of some arcane patents. They sued Samsung because Samsung released very similar designs to theirs, and they felt ripped off. If the patents weren't there, they would have sued on some other basis.

What ultimately allows lawyers to justify their salary is conflict, and in a big complex economy lawyers don't really need to game the law to manufacture that conflict. Indeed, people come to the US from all over the world to hash out their conflicts in American courtrooms.



This article says a lot about Apple's current disposition:

"It’s not actually clear what Apple was thinking this time around – the iFone trademark was filed in Mexico in 2003, a full four years before Apple filed to trademark the iPhone. Despite the rather obvious priority issue, Apple decided to sue iFone in 2009 in an attempt to invalidate the company’s name for being too similar to the iPhone. The predictable response was a countersuit by iFone, and the court battles have been swinging in iFone’s favor ever since."

I'm glad to see them get knocked down a few pegs on stuff like this. Apple could use a modicum of humility.


They most likely sued iFone on the basis of the "i" prefix branding. iMac was released in 1998, iPod and iTunes in 2001.

They sued in 2009, but it was only in 2010 that an Australian tribunal ruled that the "i" prefix could not be an Apple trademark. And that only applies in Australia.

Now, did iFone choose their name based on the positive connotations associated with Apple? I doubt it. And looking at their website, it's about as far removed from Apple as possible.


"Now, did iFone choose their name based on the positive connotations associated with Apple? I doubt it."

I see no reason to doubt it. There are exceptions but "i" prefix anything generally is trying to cash in on the association. Whether Apple deserves to be the only company that can use "i" prefix is another matter (I would say no).

This is simply another case where Apple will end up writing a big check. They did it for iPad in China, iPhone from Cisco, the swiss clock thing a couple months ago, etc. Again the difference is Apple users aren't crying about how broken the world is because they have to write a check for walking all over some other companies IP.


Apple's iStuff wasn't so trendy in 2003, so it's unlikely that the Mexican telco chose iFone because of Apple.

Today, it would be another matter. Today, a new product named iSomething is most likely trying to piggy back on Apple's coolness factor.


iPod came out in 2001


...in the US. Mexico didn't get iPods that year. Mexico didn't even get the first version of the iPhone when it came out. You had to buy it in the US and unlock it. I think the first iPhone legally available in Mexico was the 3G.


Let's not pretend Mexico technology magazines didn't cover the iPod craze, even the iMac was on the cover of Time magazine twice.

8000 BC - 1998: no "i" branding.

1999: Apple release the first in a string of hit products under the "i" branding.

early 2000's to present: many other technology companies and products use "i" branding.

2004: in a completely unrelated development, a Mexican company names itself iFone.


The Linksys iPhone came out in 1998 too (https://en.wikipedia.org/wiki/Cisco_iphone). I doubt they were copying the iMac naming, which was just released around the same time. Putting 'i' in front of your product names, when the Internet starts to become a commodity and you want to connect your product to it, isn't exactly far-fetched.


Thanks, that is a silver bullet counterexample I was unaware of. I guess there's a decent amount of doubt we can merit whether it was connected.

I guess the "i" branding is a natural extension of "e" branding that followed from email. Anyway like I said I dont think Apple should have exclusive rights to "i" branding for various reasons, the biggest of which is that it doesn't seem like they've attempted to defend it against hundreds of other products using it.


So they hadn't heard of it, and chose iFone based on what?


That's crazy. Of course they did. Products haven't been named iAnything forever, it started with the iMac and iPod. Legal or not, it's piggybacking.


This is a non-news. The Verge has an article mentioning that the loss has no impact on Apple's ability to use the name.

http://www.theverge.com/2012/11/2/3591380/iphone-ifone-and-a...


Seems to be much better description about the case than the original article.

Excerpts from the article:

- Apple already owns two iPhone trademarks in Mexico in Class 9 and Class 28

- in 2009, Apple's lawyers decided iFone's Mexican Class 38 mark wasn't being actively used, and they filed a lawsuit to try and get it canceled so they could register their own pending Class 38 mark on "iPhone."

- iFone obviously disagreed and convinced the Mexican courts that they were still using the mark in commerce

  Class 9 = computers, software, cameras, and mobile phone
  class 28 = electronic game devices
  Class 38 = communication services


I'm wondering if they could work the phonetic angle since the "ph" orthography doesn't exist in spanish. Instead they should conduct the entire case calling it the "eep-hoan-ey". In ads and campaigns they could go out of their way to never pronounce iPhone (then again, I'm not sure trademarks extend to the phonetic pronunciation, so maybe the pronunciation used in deciding the case matters. I think trademarks only cover orthography).


I guess this is the other side of the coin as far as their brashly-use-trademarks-and-sort-it-out-later methods go. Not a bad track record though.


Something tells me, that even with a loss in court, it was worth having a few years of iPhone sales as the "iPhone".

It'll probably eventually be called the "Apple Phone"; but people will still call it iPhone.


But why sue and expose themselves to an injunction?


Maybe being on offense allowed them to set the pace of the trial more and possibly be in a better position for a settlement in the case. I'd be great to hear from a lawyer if this speculation is correct.


Not sure why Apple sued iFone in 2009 "for being too similar to iPhone" when iFone has been around much longer. That was a dumb move.


I would a though iPod made more sense but waiting until 2009 is odd.


This appears to be the iFone trademark holders in Mexico:

http://www.ifone.com.mx/frameset_productos_oficina.htm


Exposing tensions between execs through Frostall's departure, slap by UK court, less enthusiasm surrounding iPad mini lunch and now this. It has been a bad week for Apple.


Seems like the legal department of Apple is busy lately.


For the last 2 years yes.


They could always call it the iGalaxy :-S


Aren't "iPhone" and "iOS" technically trademarks of Cisco, not Apple?



In Mexico?


How did they think they could win this? Does any lawyer have a theory on what they were going for?


Is it me or have all apple related article in the past 2 weeks been negative.


I wonder why Apple took this route. When they introduced the iPod they made an agreement with Line 6 who owns the mark Pod for the guitar effects processor.


Somehow I'm not worried about their brand getting usurped.


So how's that nuclear war going for you, Steve-O? Had time to rent a copy of WarGames yet?


aPhone.




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