You might think this is something Terry Gilliam worked up for a remake of Brazil, but it's real: IGB Eletrônica SA released a smartphone this week in Brazil called IPHONE Neo One under the brand name of Gradiente. But wait, it gets better because the device is powered by Google's Android.
Irony Wars with Tragedy – The IPHONE Neo One
We hear your question deep in the hallowed halls of TMO Towers. “How can this be?” some of you ask. Others are laughing at the imagery of thousands of lawyers marching forth to crush this naive wannabe smartphone firm, but the reality is that IGB Eletrônica SA may well have the law on its side.
That's because the company registered the trademark for IPHONE in Brazil in 2000, 6 years before Apple announced the iPhone at Macworld Conference & Expo in January of 2007. The mark was granted to IGB Eletrônica SA in 2008. Apple filed for its own trademark in Brazil in 2006, and The Wall Street Journal reported that it is likely to be officially rejected sometime in 2013.
Gradiente said in a statement it would take “all the measures used by companies around the world” to preserve its intellectual property rights because “the two brands can't coexist in the market.”
Eugenio Staub, president of Gradiente, added, “It's up to Apple to make a move.”
IPHONE Neo One is being sold for R$599 (Brazilian Reals), which is US$289 as of Wednesday's exchange rate. Apple still sells the iPhone 4S in Brazil for R$1,999, or US$965. The price is so high because Apple's iPhones and other products are hit with steep protectionist tariffs in Brazil.
According to Ubergizmo, For those R$599, users get a 3.7-inch 320×480 display, a 700MHz processor, 2GB of internal storage, a 5MP rear-facing camera, a 0.3MP front-facing camera, dual-SIM support, all powered by Android 2.3.4 Gingerbread.
Apple faced a similar issue in China, where the trademark for IPAD was registered in 2000 by a company called Proview. Proview, however, was a bankrupt company who sold the trademark to Apple and then claimed not have sold the rights to mainland China. Though it no longer made a product with that name, the company eventually won an additional $60 million from Apple in a settlement.
Gradiente was similarly bankrupt, but emerged from bankruptcy proceedings a couple of years ago. Unlike Proview, Gradiente makes and sells products, including tablets, smartphones, cameras, TVs, Blu-ray players, Internet-connected settop boxes, and more.
Company president Eugenio Staub told The Journal that his company doesn't need Apple's money to survive, but also made it clear that he is “open to dialogue” with Apple.
Spin: Apple is going to end up having to pay these folks. Brazil's trademark system is based on a first-come, first-served basis, and it's using its trademark. Oh, sure, this device is a hackneyed Android device worth less than the price of the parts that went into making it, but it's for sale.
Worse for Apple, the name “IPHONE” will move some of these things, damaging the value of the iPhone brand in the process because they're all but junk. The sooner Apple pays, the better, and that's something the folks at Gradiente clearly understand.
To that end, it seems clear that this device wasn't intended to be a serious entry into the smartphone markets. Instead, it's a ticking time bomb intended to add serious pressure to Apple to part with some of those billions of dollars it holds.