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1/12/2007
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Analyst: Apple Will Use iPhone Trademark Lawsuit For Publicity

Hours before Apple announced the iPhone, Cisco -- which later sued Apple, claiming to own the trademark -- issued a statement saying they expected to reach an agreement over the product name.

Only hours before Cisco slapped Apple with a lawsuit for trademark infringement, Cisco spokesperson John Noh sounded optimistic that Apple planned to agree to the Cisco's terms for using its "iPhone" trademark.

His faith in Apple reflected Cisco's public statement about Apple's decision to use the contested name. "Given Apple's numerous requests for permission to use Cisco's iPhone trademark over the past several years and our extensive discussions with them recently, it is our belief that with their announcement today, Apple intends to agree to the final document and public statement that were distributed to them last night and that addressed a few remaining items," the company said in a statement before announcing its lawsuit. "We expect to receive a signed agreement today."

But Apple did not comply. The reason, Apple said, is because it doesn't believe Cisco's claim on the "iPhone" trademark is legally sound. Apple spokesperson Steve Dowling called Cisco's lawsuit "silly."

Financial analyst Jonathan Hoopes, who covers Apple for investment research firm ThinkEquity Partners LLC in New York, offers an additional explanation: The lawsuit will pay for itself in publicity. "We trust that Apple's swarm of in-house lawyers, marketing professionals and paid outside advisors had thought through the ramifications of not settling the iPhone naming conflict with Cisco prior to announcing the iPhone earlier this week," said Hoopes in a research note published Friday. "As this trademark infringement case escalates, we are taking the stance that 'any publicity is good publicity.'"

Apple, Hoopes noted, has shown considerable comfort with name changes recently. It dropped "Computer" from its corporate name to become simply "Apple Inc." and it re-christened its iTV media hub "Apple TV." And then there's the company's MacBook, which not so long ago was called the iBook.

"We would not be surprised if, after exhausting all legal (and publicity) avenues, the company ultimately capitulated and conceded the iPhone name to Cisco for use with its IP telephone handset that is part of the Linksys unit," said Hoopes. "If Apple does drop the iPhone moniker, we think the name Apple Phone would be alright."

An Apple spokesperson was not immediately available to comment.

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