Apple (NASDAQ: AAPL) may be facing a snag in launching its smartwatch in the birthplace of luxury watches due to a patent issue.
According to reports by Swiss broadcaster RTS and business publication Business Montres, local watch company Leonard Timepieces owns a trademark that gives it the exclusive right to use the word “Apple” and any imagery of an Apple in the watch and timepiece market.
The patent was filed in 1985 and expires on December 5, 2015. Switzerland isn’t a targeted market in the first tier of country launches, but no doubt Apple will want to launch its smartwatch there soon as it’s a high-income economy with a taste for luxury goods.
Neither Apple nor Leonard Timepieces is talking to the press about the issue. It’s unclear whether Apple will wait until the patent has lapsed, or will choose to launch the watch anyways and either move to reach a settlement with Leonard or just fight the company in court.
This isn’t the first time Apple has encountered a naming snafu when trying to launch a product. Shortly before Apple launched the first iPhone in 2007, it discovered that Cisco (NASDAQ: CSCO) already had rights to the name as it had used it for a line of VOIP desktop phones in the 1990s. While Cisco had the legal rights to the name Apple wanted it — badly — and used some fairly aggressive tactics to make it its own.
According to an excerpt of the book Inside Apple reprinted by the blog Cult of Mac Steve Jobs fought Cisco hard to get the rights to use the name. In the end Jobs reached a deal with Cisco’s Charles Giancarlo, an executive, which amazingly didn’t involve and monetary compensation for Cisco. Only a promise to cooperate in areas of “mutual interest”.
Giancarlo fielded a call directly from Steve Jobs. “Steve called in and said that he wanted it,” Giancarlo recalled. “He didn’t offer us anything for it. It was just like a promise he’d be our best friend. And we said, ‘No, we’re planning on using it.’ ” Shortly after that, Apple’s legal department called to say they thought Cisco had “abandoned the brand,” meaning that in Apple’s legal opinion Cisco hadn’t adequately defended its intellectual property rights by promoting the name. To Apple’s way of thinking this meant the name iPhone was available for Apple’s use. Giancarlo, who subsequently joined the prominent Silicon Valley private-equity firm Silver Lake Partners, said Cisco threatened litigation before the launch. Then, the day after Apple announced its iPhone, Cisco filed suit.
The negotiation displayed some classic Steve Jobs negotiating tactics. Giancarlo said Jobs called him at home at dinnertime on Valentine’s Day, as the two sides were haggling. Jobs talked for a while, Giancarlo related. “And then he said to me, ‘Can you get email at home?’ ” Giancarlo was taken aback. This was 2007, after all, when broadband Internet was ubiquitous in homes in the US, let alone that of a Silicon Valley executive who had worked for years on advanced Internet technology. “And he’s asking me if I’m able to get email at home. You know he’s just trying to press my buttons—in the nicest possible way.” Cisco gave up the fight shortly after that. The two sides reached a vague agreement to cooperate on areas of mutual interest.
It’s not known if Apple will use the same negotiating tactics with Leonard Timepieces. It may be that Apple has a better case of the company abandoning the trademark than it did with Cisco, but this same tactic could backfire in a foreign court.
The Apple Watch goes on sale in nine countries around the world on April 24. Pricing starts at $349 and climbs to $17,000 for the luxury edition made of 18-karat gold.
