Apple, Cisco Over Trademark and Deadweight Loss

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It was widely reported a long time ago that Cisco had acquired the trademark of iPhone. Then when it was reported that Apple placed a manufacturing order to a Taiwanese company, some people might have thought that the order wasn’t for iPhone. Now Cisco Systems has sued Apple Inc. for infringing Cisco’s iPhone trademark.

No matter how important the name of iPhone is for Apple, it will be a silly joke of the decade if Apple doesn’t have Plan B for legally using it. And whether or not Apple and Cisco reach an agreement in trademark use, a simple economics principle applies to this silly conflict. It’s a deadweight loss to the whole nation.

A deadweight loss results from an inefficient allocation of resources. Going to court and exchanging arguments and papers don’t involve real production. Cisco and Apple could both use their resources otherwise to produce goods and services. America as a nation doesn’t benefit from this trademark conflict. But other nations will because they can produce goods and services while Americans are fighting over use of a trademark.

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