The battle for the Canadian iPhone trademark is over.
Apple Inc. has secured the legal right to use the trademarked name “iPhone” in Canada after reaching a settlement Wednesday night with Comwave Telecom Inc., the independent Toronto-based telecom provider that has used the term since 2004.
Apple's 3G iPhone goes on sale in 70 countries, including Canada, Friday.
Under the terms of the agreement, Apple will receive sole rights to the iPhone name in Canada, while Comwave has agreed to phase out its use of the moniker – which it currently uses to promote its Voice over Internet Protocol (VoIP) phone service – by Nov. 9. Terms of the agreement were not disclosed.
The eleventh hour deal brings about a happy ending to a two-year legal odyssey for Comwave president and founder Yuval Barzakay, who signed the final settlement with Apple officials at his attorney's office on Wednesday evening.
“I'm happy to report that we have settled our dispute,” Mr. Barzakay said in an interview with The Globe and Mail. “Both parties worked hard and diligently to make sure the deal was closed prior to the launch.”
A spokesman for Apple in Canada did not return a request for comment.
For more than a year Mr. Barzakay and his attorneys negotiated with Apple over the right to the iPhone trademark. Although the dispute could have devolved into a lopsided shoving match between a computer giant and a small Canadian business, the two sides never let things get that far.
“Initially we had that thought that perhaps it could have been that way,” Mr. Barzakay said. “But I think that Canadian industry needs to stand up when their rights are being violated. It can be costly, but I think it's important and I think that ultimately if you have something to stand for and you stand up for it you're going to prevail. In this case I think both parties were satisfied.”
This isn't the first time Apple has run into opposition to its use of the iPhone name. In February 2007, a little more than a month after the iPhone was announced, Apple settled a dispute with Cisco Systems Inc., which was using the iPhone name to promote its own Web-based home phone service in the U.S.
Even though Comwave was the first out of the blocks with the iPhone in Canada, customers were increasingly identifying the term with Apple's product, which led to confusion for the 120-employee firm.
“One of the things that we have always said about the trademark is that whenever you have a very large enterprise like Apple and they put in $20-million to $30-million a quarter into advertising, it doesn't matter whose name it is, eventually they will own it,” he said.
“It's all about perception. There are hundreds of thousands of Canadians who have been exposed to our iPhone over the course of a few years, but within a very short time, the hysteria on the Apple iPhone has almost caused what I call reverse confusion, in that the perception is that the iPhone name was Apple's and not Comwave's. That is something that we wanted to make clear,” he said.
Comwave's iPhone brand was created in a boardroom at the company's Toronto offices in June 2004 as Mr. Barzakay and his call centre managers searched for a name to go with its plans to market an Internet-based home phone service. Prior to the launch of the iPhone, Comwave was primarily a long distance reseller, but the VoIP service now accounts for 30 per cent of its revenue.
Comwave is the second largest VoIP provider in Canada, Mr. Barzakay said.
“There wasn't anyone in the market selling an Internet phone yet when we came up with the brand, but it really took off,” Mr. Barzakay recalls.
In 2006, the company started hearing rumblings that Apple was working on a new multimedia cellphone, tentatively named the iPhone to keep step with the company's other i-branded product lines such as iMac and the iPod.
At the time Mr. Barzakay found it hard to believe Apple would launch a product dubbed the iPhone, but a few months later in January 2007, Mr. Barzakay was at the annual Consumer Electronics Show when he heard the news; Apple chief executive officer Steve Jobs had unveiled the revolutionary touch screen device at the competing Macworld Conference & Expo.
He was shocked.
“We heard rumours about it, but we didn't believe [Apple] would launch it when there were so many trademark holders of the name,” he said. “Internally we looked at it and thought they can't really do that, it would be foolish, and we were quite surprised when they did launch it.”
Although the first generation iPhone was only available in the U.S., Mr. Barzakay could see the writing on the wall and knew it was only a matter of time before Apple would bring the device to Canada.
It wasn't long before Comwave filed documents opposing Apple's motion to take the name and the two companies entered into negotiations.
“They were aware of us and I guess it was just a matter of whether or not they took us seriously,” he said. “I think in due time they did, and realized that they weren't able to trample over Canadian industry and that an amicable solution would have to come out of it.”
Dozens of letters between attorneys were exchanged. Meetings and conference calls followed. Throughout the ordeal Apple's attorneys were both professional and understanding, Mr. Barzakay said.
Now that its dispute with Apple has concluded, Comwave can focus on the future, which will begin with shooting new television commercials and preparing for the rebranding of the company's VoIP service.
Mr. Barzakay said he might even buy himself an iPhone.
© The Globe and Mail
