Apple's iCloud Sued by iCloud Communications: The Business of Corporate Names

June 14, 2011 — -- When you name your company after something as common as an apple, and many of your products after common words preceded by the letter "i" -- iPhone, iPad, iPod, etc. -- you're eventually bound to run into someone who's had a similar idea. Even if it's something as wispy as an iCloud.

So it is that Apple, Inc., perhaps one of history's most successful marketers of consumer technology, has been sued by iCloud Communications, a Phoenix company that provides telephone services over the Internet. ICloud Communications says Apple's newly-announced iCloud storage service for music, pictures and other content infringes on its trademark, and already has had confused customers calling to see if it had been bought by Apple.

It's not the first time Apple has been in this position. In 2007 when it announced the iPhone, it turned out the name was already owned by Cisco Systems, Inc. Even the name Apple has been contentious; it was most famously used as a record label by a little rock group called the Beatles.

"Apple's announcement and launch of its 'iCloud' cloud computing service appears to be just one more example of Apple's 'act first and worry about the consequences later' approach to trademark use," said iCloud Communications in its legal filing. "Even the most cursory Internet search -- which could have easily been conducted by any of the legion of Apple's in-house marketing or legal staff -- would have revealed the prior, long term usage of the iCloud Marks by iCloud Communications."

Is this really part of Apple's standard operating procedure? Tim Bajarin, a veteran Apple watcher at Creative Stratagies, Inc., came to the company's defense.

"Apple has been working on the back end of iCloud for five years," he said. "They already bought the name [for the iCloud website] from an online storage service in Sweden.

"Until the 'i' era, the only issue they ever had was the one with Apple Records," Bajarin said.

ICloud Communications and Apple did not immediately return several messages. In the meantime, ABC News did a search and could not find a record showing iCloud Communications had trademarked the word "iCloud."

The Web address iCloud.com will take you to Apple's site. To find iCloud Communications online, one goes to Geticloud.com.

Apple has had other headaches in the meantime. There has been a recall of iPads -- its size not disclosed by the company -- that had trouble making wireless connections. Bajarin said Apple is rich enough, and values its reputation enough, that it took the defective units back.

"This would be a much bigger deal is it was a smaller company," Bajarin said.

Coors vs. Corr's

The business of trademarks can often get messy. Apple has tangled with Amazon over the term "App Store." In the 1980s Coors beer objected when a man named Robert Corr started a soft-drink company; he finally had to change his soda from "Corr's" to "Robert Corr's." And in 2008 MapQuest, a site for motorists owned by AOL, filed suit against a site for boaters called NavQuest.

How the iCloud case plays out will be a matter for the lawyers. When Apple and Cisco collided over "iPhone," they came to a confidential settlement that allowed Apple to use the name. When Apple Computer and Apple Records tangled, they agreed that the computer company would not start a music business.

But sometimes these things work out in surprising ways. Apple has since started iTunes -- very much a music business -- and instead of getting a fight from the Beatles, it negotiated with them to include their albums in the iTunes library.

Apple CEO Steve Jobs made the announcement: "It has been a long and winding road to get here," he said.