A Timely Decision

Lisa Shuchman

Corporate Counsel

01-01-2013

In our November issue we reported that Apple Inc. had been accused of appropriating the design of an iconic clock, copyrighted and trademarked by the Swiss Federal Railway, to use in the iPad's new operating system. Apple was mum at the time, and still hasn't publicly commented on the matter. But if money talks, Apple has spoken.

Swiss newspaper Tages-Anzeiger reported that the Cupertino-based technology giant paid 20 million Swiss francs ($21 million) to compensate the railway. That amount included a license that will allow Apple to continue to use the design in the clock app that comes with the latest version of the iPad tablet.

The deal was actually struck in October, but neither Apple nor the railway released financial details at the time. The amount is inconsequential for cash-rich Apple, but the fact that it paid several million dollars to license the design goes a long way to counter the perception that the company is a high-tech hypocrite.

The case of the unlicensed clock occurred in September—shortly after Apple won $1 billion in a lawsuit against Samsung Electronics Co. in which it claimed the Korean company stole its intellectual property. After that verdict, Apple CEO Tim Cook wrote in a memo sent to corporate employees that he hoped the verdict sends a message that "stealing isn't right."

The Swiss clock imbroglio began a short time later, after Apple released its new iOS 6 operating system. The software included a clock for the iPad that looked almost identical to the one created for the Swiss Railway in 1944. The timepiece, which over the years has become a symbol of Swiss precision and punctuality, was designed by Swiss engineer Hans Hilfiker and is still used in station clocks throughout Europe.

When news broke that Apple had failed to pay for a license to include the clock design in the iPad, the Swiss Federal Railway politely made it known that it was not happy. "We were proud to see our iconic clock used by Apple, but we were surprised they did not contact us for permission," Swiss Railway spokesperson Daniele Pallechi told CorpCounsel.com at the time. The railway said it had contacted Apple about the company's failure to obtain a license and was hoping to quickly resolve the issue.

It is perhaps not surprising that Apple, a company known for its high appreciation of clean, minimalist design, would pay big money to license the iconic clock, which has such a distinctive appearance that it was included in an exhibit at The Museum of Modern Art in New York. But it's also possible that it acted out of fear. Despite the Swiss Federal Railway's extreme politeness about the matter, and despite the fact that it never overtly threatened to sue Apple for infringing its intellectual property rights, the specter of litigation was there. The trademark is valid, and the railway could have demanded that Apple cease selling its iPads in Switzerland or remove the clock from iPads sold there. Either option would have proved costly to Apple—in loss of both revenue and reputation.