Apple now faces a major obstacle in the emerging Brazilian smart-phone market. Brazilian patent regulators announced today that Apple does not have the rights to the iPhone trademark. This means that Apple will have to fight to keep the name, a battle that they’ve fought before.
The National Institute of Industrial Property (INPI), Brazil’s patent agency, has denied Apple’s claims to the trademark because, it says, IGB Eletrônica SA already owns the rights. IGB is better known by its brand name, Gradiente.
Gradiente filed for a Brazilian trademark on the iPhone name back in 2000, six years before Apple filed its application. Since Brazil's trademark law states that registrations work on a first-come, first-serve basis, Gradiente was definitely in line before Apple. However, Apple is challenging the decision, according to the Wall Street Journal, on the basis that Gradiente has not sufficiently used its trademark.
Gradiente won the trademark in 2008, which according to Brazilian laws gives it rights to the name until 2018 as long as the company produces a device under that name within five years. Gradiente did not release such a device until December, only a few weeks before the deadline. Gradiente’s “IPHONE Neo One” runs on the Android OS, retailing for $304. That is a fraction of the price of Apple’s iPhone 5, which retails for $1,220 in Brazil. (In the US, the cheapest iPhone costs $199 with a two-year contract. That contract helps phone companies recoup the money lost on the initial sale of the device. Most countries do not have these subsidies, hence higher prices)
Apple has run into naming problems before. Last year, Proview Electronics sued Apple for fraud and unfair competition. Proview had sold the rights to the iPad name in Taiwan back in 2009. Apple thought that the deal included the naming rights in mainland China as well, but Proview's Chinese subsidiary disagreed. As a result, Proview attempted to stop the sale of iPads in China. If Proview had won the case, the iPad trademarks for the European Union, South Korea, Mexico, Singapore, Indonesia, Thailand, and Vietnam would have all been returned to them. Apple opted to settle the dispute, avoiding a trial.
Apple also faces a similar situation in Mexico. A telecommunications-equipment firm filed its name as “iFone.” The name was registered in 2003, well before Apple filed for the iPhone trademark there. Apple originally filed an injunction against iFone, claiming that the phonetically similar words would confuse customers. Mexican courts ruled against Apple, allowing iFone to continue its business. Apple is still allowed to use the iPhone name since the companies work in different businesses.
The Brazilian fight for the iPhone trademark could turn out to be costly for Apple in more ways than one. Brazil is one of the biggest upcoming markets for smart phones. The WSJ reports that the country is expected to become the world’s fourth largest smart-phone market by 2016.