Mar 10

The joy of having a backbone

Last week Apple acquired the iPad trademark from Fujitsu, about two months after they launched iPad. Three years ago they acquired the iPhone trademark from Cisco, about a month after they launched iPhone.

Yikes. Any armchair lawyer could tell you this isn’t the ideal way to go about securing a product name. Once you’ve launched, your negotiating position pretty much evaporates.

So which is it? Does Apple have an incredible knack for getting itself into dicey situations? Or does it simply have a backbone?

The truth is, Apple often succeeds because it is willing to stand up for what it wants. Sometimes that requires going up against other companies. Other times, it likely involves going up against its own lawyers — who surely wouldn’t advise launching a product without first securing the name.

Steve Jobs has a refreshing attitude about lawyers. He listens to them carefully, and then he makes a decision based on many factors, including his long-term vision and short-term marketing goals. He wants to understand the risk, but he will decide if the risk is worth it. And oftentimes it is.

This just doesn’t happen in most places. Certainly not on such a visible level. When a company’s legal department issues a ruling, it’s all over. And since it’s the lawyers’ job to keep the company out of the courts, their opinions are invariably conservative. Some of the feistiest clients I’ve known would never dream of pushing back against the lawyers — even if it’s to discuss the wording of a legal disclaimer.

I can’t imagine IBM, Dell, Intel or any technology company exposing themselves to lawsuits over a product name. It’s unthinkable. But that’s exactly the kind of thing Apple does think about. Over and over, they prove that a little backbone can go a long way.

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  • Peter

    I was just thinking that recently! When I read the news about Apple securing the rights to the name “ipad” I wondered how much they had to pay for it, and thought it to be counter intuitive to launch a product with a name that you didn’t even own. I’m sure it was important to keep the continuity of the imac, ipod, iphone, i- etc. so really whether Apple knew they’d have to pay up the *** to get the rights to the name, the name was going to happen regardless. So I suppose they didn’t have much of a choice…thanks to whoever it was that came up with the who i-product naming scheme. :)

  • Jimi

    Honestly, I think this has very little to do with backbone and a lot to do with cash reserves… Apple know they have the money to get themselves out of trouble.

    Also, I assume you can’t sue someone until they are actually shipping the product, and as we know, any press is good press when it comes to a product release (we had a classic case of that recently in Australia with iSnack2.0… look it up, seriously… 100x more press than it would have got otherwise).

    Worse case scenario: Fujitsu would have looked like the bad guy for not giving Apple the name, and Apple would have gone with another name which would probably be better anyway…

  • Taxi

    Once Apple makes an announcement of the name of a product, then the value of the name to the “other” product becomes seriously diluted.

    So my reading is not that Apple necessarily has backbone, but rather that they understand exactly how much press they’re getting, and that by releasing the product without the rights to any given name, they are not giving up a negotiating position but actually reducing their opponent’s. There’s probably an element of surprise in there as well.

    I don’t think Apple really works from the gut on this sort of thing, I actually tend to think they are very clinical in how they go about their business. Although it must be said that this harks back to the original Macintosh, whose name has a similar history.

  • ken segall

    I will respectfully disagree that Apple does not harm its negotiating position once they’ve announced a product. The whole reason we trademark names is to prevent other companies from simply waltzing in and taking them. Simply muscling your way in with great PR and advertising doesn’t make your legal position any stronger. In fact, it probably gives the other side a better case to collect damages because you are illegally and publicly taking something that belongs to them and (in theory) causing confusion in the public’s mind. Once If they are in talks prior to a product announcement, it’s all theory. Apple can always say they will only pay up if the terms are favorable. Once Apple commits publicly to a name, the trademark holder is aware that Apple is putting a whole lot of eggs in that one basket. That’s bargaining power. Of course, Apple wouldn’t just blindly go into such things. They’d first do their homework and figure out if they can make a good case for taking the trademark, or a reasonable chance of buying it from the current trademark holder. The other side would have to assess their chances of prevailing too. In the case of Cisco and iPhone, Apple was in negotiations with Cisco prior to the launch day — which, in court, would serve as Apple’s admission that they understood that the trademark was owned by Cisco. That have to have been one big reason Apple didn’t want the dispute to ever reach a courtroom.

  • Taxi

    Hi Ken, I actually agree with you, in that it certainly reduces their negotiating position legally. But that wasn’t what I was thinking about. I was thinking about the negotiating position when sitting at a boardroom table, before the lawyers get too involved.

    The whole world already called Apple’s phone the iPhone before it was released. How would Cisco look if it fought for and won the trademark? How do they benefit from a protracted legal argument about a name that most people already associate with Apple? By making a formal announcement about the name, Apple is simply reinforcing this.

    Cisco would spend a lot of money to get a trademark that is forever associated with another company.

    So, once Apple has announced the name, it’s a bit of a doomsday scenario if Cisco retaliates. Apple removes Cisco’s leverage by going public with the name; Cisco can either agree to terms or not, but they can’t sit on their hands or make outrageous demands because the public now associates the name with Apple.

    I’m really just trying to explain Apple’s actions, in hindsight; I think they’re an extremely smart company, I’m sure SPJ was involved in the trademark negotiations (or at least the positioning), and I can’t imagine that they left it up to chance.