Apple Inc (
has lost its right to use the "iphone" trademark in Brazil.
According to a recent ruling from Brazilian copyright regulator
Inpi, the "iphone" trademark in Brazil belongs to Gradiente
Eletronica SA. Apple has requested the regulator to review its
Brazilian consumer electronics maker, Gradiente had filed its
claim to use the "iphone" trademark way back in 2000. However,
after a long delay, Gradiente finally received the approval in
2008, one year after Apple introduced its iconic smartphone.
As per the ruling, Gradiente needs to prove that it has used
the trademark between Jan 2008 and Jan 2013, within the next 60
days. As per Brazilian law, a trademark granted for a certain
brand must be developed within five years of gaining approval.
IGB Electronica SA, an enterprise formed post restructuring of
Gradiente launched its "iphone" branded smartphones in Dec
Apple is not new to trademark controversies. In February last
year, Apple was sued by Proview Technologies for the "iPad"
trademark, which prevented it from launching iPad in China. Apple
eventually settled the lawsuit for $60.0 million in July 2012.
However, the delay in launching the iPad in China, one of its
biggest markets, negatively affected its top-line growth.
In November last year, a Chinese court ordered Apple to pay
520,000 Yuan to the Encyclopedia of China Publishing House for
copyright infringement. In December, Apple lost another copyright
infringement lawsuit filed by a group of eight Chinese writers
and two publishers, and was ordered to pay a fine of 1.03 million
Although Apple can challenge the ruling in a Brazilian court,
lawsuits of this type tend to linger for a long time, which will
create an overhang on the stock. Moreover, any adverse outcome
may result in a hefty penalty, which can hurt Apple's
profitability and dent its cash pile going forward.
Apple is focusing on improving its penetration in the emerging
markets of Brazil and China as the North American and European
smartphone markets get saturated. However,
Android-based smartphones manufactured by handset makers Samsung,
Motorola, LG, ZTE and Huawei hold the major market share in
Brazil followed by
In such a scenario, we believe that an out-of-court settlement
is possible as any restriction on selling the iPhone in Brazil
will hurt Apple's top-line growth and market share going
Apple is facing a number of headwinds in the near term. Its
shares have plunged 26.0% over the last six months, primarily due
to not-so-impressive first quarter results as well as due to
increasing competition from Google's Android based smartphones,
Nokia's resurgence through the Lumia series and
Research In Motion's (
recently released BlackBerry 10.
Currently, Apple has a Zacks Rank #3 (Hold).
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