I wanted to take this opportunity to share a teachable moment from the world of trademark law. Apple hit a big hitch in its effort to control and protect its brand in Mexico because it was late to the trademark party. A Mexican telecom company registered “iFone”—a trademark that the Mexican court determined is confusing similar (phonetically) to “iPhone” in Mexico—four years before Apple tried to register its mark.
iFone sells communications systems and services, including interfaces for IP-based telephone calls, virtual office services, and software for switching systems. Its clients include Microsoft, Maxcom, Axtel, and Avay. So there’s enough market overlap between iFone and Apple to support the trademark confusion argument relating to these two brands.
In 2009, Apple initially filed suit requesting that iFone cease using the iFone brand in order to head off the possibility of consumer confusion with its iPhone products. Apple essentially attempted to gain control over the brand the year after its iPhone first launched in Mexico by pushing against a local telecom’s brand. But Apple recently lost this injunction request that would have allowed it to continue selling iPhone-branded products despite the potential consumer confusion regarding these two products.
The Mexican court used the earlier iFone trademark registration in Mexico to support its decision to deny Apple’s injunction request. The Mexican firm later countersued for damages, which could amount to 40% of iPhone sales revenue in Mexico. Yikes! iFone’s countersuit also sought to keep Apple from selling the iPhone under its current name in Mexico, given iFone’s prior trademark rights in that country.
Apple’s loss in this trademark tussle may significantly impact the Mexican smartphone market. Several Mexican telecom companies are scheduled to begin selling the iPhone 5 soon, and it’s not clear how quickly the sales ban will go into effect. One thing’s for sure, Apple is likely going to appeal the decision or reach a settlement that clears the way for its iPhone sales.
What should you take away from this story? Well, you should register the trademarks used with products that incorporate your valuable company marks in markets you’ll be entering as soon as possible. The failure to secure trademark rights in the countries in which you operate can be costly, down the road.