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Thursday, May 27, 2010, 10:25 am PT (01:25 pm ET)

Apple accused of trademark infringement over use of iAd name

A new lawsuit filed in California takes aim at Apple's forthcoming iAd mobile ad network, alleging that the name is in violation of a registered trademark and will deceive consumers.

Innovate Media Group LLC sued Apple last week, accusing the iPhone maker of two counts of trademark infringement, two counts of unfair competition, and one count of common law injury to business reputation. Innovate Media has alleged that it coined the term "iAds" in 2006, a name it uses for its video delivery technology.

Founded by John Cecil, a Yahoo alumni, in 2002, Costa Mesa, Calif., company produces online video advertisements for delivery over the Web. Innovate Ads, or "iAds," became the delivery mechanism for the company since 2006. The suit claims the company's product used by "Fortune 500" clients including Canon and Experian, though neither company appears on this year's list from Fortune.

The U.S. Patent and Trademark Office shows that the company filed for the "iAds" trademark on Oct. 25, 2007, and it was registered less than a year later, on Oct. 14, 2008.

The lawsuit makes mention of the fact that Apple vigorously defends its own trademarks, and engaged in "aggressive pursuit" of the Gizmodo journalist who published photos of a lost prototype iPhone.

Innovate Media said it contacted Apple co-founder Steve Jobs after he introduced the iAd platform in April. Innovate also reached out to Quattro Wireless, the mobile advertising company Apple purchased to kickstart its iAds product.

"Neither Apple nor Quattro Wireless has responded to Innovate Media," the complaint reads. "Instead, Apple has continued to use the infringing mark in commerce, including on its website www.apple.com; on iadtoday.com, a new website dedicated to providing news and information updates on Apple's iAd service, and in connection with its promotional materials for the upcoming Worldwide Developers Conference."

Innovate Media's suit contends that Apple's use of the iAd name has done "irreparable harm" to the company, as Innovate owns the trademark for iAds but Apple did not seek to license it before it revealed the name of its product.

"Given the obvious disparity in resources and market power between Apple and Innovate MEdia, the launch of Apple's 'iAd' application will effectively, and immediately, undo Innovate Media's substantial investment of time, energy and resources since 2002 to build its internet marketing and advertising business, and will completely overtake Innovate Media's use of its 'iAds' marks, and the substantial goodwill and reputation those marks have generated due to Innovate Media's efforts."

Innovate Media seeks to protect its 'iAds' trademark and has asked the court for damages from Apple, on the grounds that Apple's product is confusingly similar to its own. The suit, filed in the Central District of California, Los Angeles, asserts that Innovate Media is entitled to a jury trial.

Innovate's claims wouldn't represent the first time Apple introduced a product before it owned the name. In January, electronics maker Fujitsu revealed they owned the name iPad. In March, just weeks before the iPad was released in the U.S., Apple acquired the iPad trademark from Fujitsu.

Similarly, in 2007, Apple was sued by Cisco over the use of the name iPhone, just days after Apple introduced its handset. Just over a month later, the two companies settled their dispute, with both retaining the rights to use the iPhone trademark on products throughout the world. Terms of the deal were confidential.