iPhone launch may be delayed by trademark dispute

Comwave Telecom has filed a complaint with the Canadian Intellectual Property Office against Apple Inc's application for the trademark rights in the name 'iPhone' for its Canadian version of the iPhone.

Following the hotly anticipated US launch of Apple's iPhone in January 2007, technology giant Cisco Systems sued Apple for trademark infringement based on its prior IPHONE trademark registration dating back to 2000. Initial comments from Apple executives as reported by the British Broadcasting Corporation deemed the lawsuit "silly" and "tenuous at best". Despite such dismissive tones, settlement talks commenced and, in February 2007, Apple announced that an agreement had been struck whereby both companies "are free to use the IPHONE trademark" and "acknowledge the trademark ownership rights that have been granted". Apple - no stranger to trademark litigation - had its iPhone available to the market on time and the product currently enjoys excellent success.

Across the border in Canada, a similar dispute appears to be heading towards a much longer and more costly debate. Comwave Telecom, a Toronto-based company of about 100 employees, claims use of the trademark IPHONE in connection with Voice over Internet Protocol software with claimed sales in Canada since as early as June 2004. Upon the January announcement of Apple's iPhone launch, both companies rushed to file trademark applications in Canada, with Comwave filing its application after Apple. However, the Canadian trademark regime awards priority and common law rights to the first user, and not the first to file. Perhaps best summarized by Federal Court Justice Reed in Kabushiki Kaisha Edwin v SDB Design Group (9 CPR (3d) 465 at 468): "It is trite law that under the Trademarks Act, rights in a trademark flow from use, not from registration".

A quick survey of the Canadian trademark landscape reveals that historically, US and overseas companies are no strangers to legal difficulties when attempting to register and use their domestic trademarks in Canada. The list of Apple's brethren is considerable and includes many well-known companies - such as Cacharel, Gucci, Wal-Mart, Office Depot and Marineland - which have all been subject to trademark disputes in Canada (see Bousquet v Barmish Inc (37 CPR (3d) 516), Guccio Gucci SpA v Meubles Renel Inc (39 CPR (3d) 119), Business Depot Ltd v Canadian Office Depot Inc (49 CPR (3d) 230) and Marineland Inc v Marine Wonderland and Animal Park Ltd (16 CPR (2d) 97)). In such instances, courts will focus on the acquired public reputation and distinctiveness of the impugned marks and on whether the first user would suffer any harm. If, as in the case at hand, the Canadian business can demonstrate first use and public reputation, Apple's chances of success in Canada appear slim. Disputes of this nature typically come to resolution; all it requires is the payment of a sum of money that sometimes can be quite significant.

Companies which may be interested in the Canadian marketplace are best advised to apply for and register their trademarks in Canada as early as possible. On one point Canadian law is clear: long-standing Canadian rights will simply not be swept away by the courts.

Adam Tracey, Macera & Jarzyna - Moffat & Co, Ottawa