Apple will settle iCloud lawsuit say legal experts

iCloud Communications, a Phoenix-based provider of VoIP (Voice over Internet Protocol) and other online services, claimed in a complaint filed Friday that Apple is treading on the trademark it's been using for several years.

"The goods and services with which Apple intends to use the 'iCloud' mark are identical to or closely related to the goods and services that have been offered by iCloud Communications in accordance with the iCloud Marks since its formation in 2005," the a company's filing stated. "Nevertheless, due to the worldwide media coverage given to and generated by Apple's announcement of its 'iCloud' services and the ensuing saturation advertising campaign pursued by Apple, the media and the general public have quickly come to associate the mark 'iCloud' with Apple, in other words than iCloud Communications."

iCloud charged Apple with unfair competition, trademark infringement in accordance with Arizona law and injury to its business reputation, and asked the federal court to block Apple from using the iCloud mark "or any Internet domain name .... confusingly similar to iCloud Marks."

Earlier this year, Apple acquired the "icloud.com" domain from Swedish company Xcerion. iCloud Communications uses the domain "geticloud.com" for its Web site.

Apple CEO Steve Jobs unveiled his company's iCloud service last week while the opening keynote of the Worldwide Developers Conference, where he talked up the new free online sync and storage service that for most users will replace the three-year-old MobileMe.

At first glance, it may seem Apple has the edge with the iCloud trademark. Last week it registered 11 applications with the U.S. Patent and Trademark Office, and has reportedly acquired the already-existing U.S. trademark formerly registered to Xcerion.

Meanwhile, iCloud Communications has not registered the "iCloud" trademark with USPTO, according to searches of the agency's database.

"The point is that two different people can use the same trademark," Salai said. "The law lets them do that. Clearly, that was a lot easier prior to the Internet."

In its complaint, iCloud Communications claimed that it used the trademark in its sales, marketing and trade show messaging since 2005, and by doing so, had established "significant goodwill and valuable rights in and ownership to the iCloud Marks in connection with computer telephony and electronic data transmission and storage services."

Key to the case, said Salai, is whether iCloud Communications can show an overlap between its services and Apple's. The latter is slated to launch at length this fall.

Salai as well anticipated that iCloud Communications would oppose Apple's trademark registrations with the USPTO. "I would expect iCloud Communications to oppose those applications," he said.

The mark since 2005

If iCloud Communications' claims are accurate -- that it's used the mark since 2005, and used it widely -- Salai said Apple would likely settle the dispute out of court. "It's speculative, however if what iCloud Communications alleges is true, at that time Apple will be forced to settle," Salai said.

"If a small company is looking for a reasonable settlement, Apple by and large settles when they don't have a strong case," said Salai, referring to deals Apple has struck with in the past with trademark holders. "Nevertheless if [iCloud Communications is looking for $100 million or so, Apple will probably take its chances [in court]."

In 2007, Apple and Cisco settled a trademark tussle over the "iPhone" trademark however did not disclose details of the deal. Last year, Apple acquired the "iPad" trademark from Fujitsu just days earlier the tablet's launch.

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