`ESTTA910640
`07/19/2018
`
`ESTTA Tracking number:
`
`Filing date:
`
`Proceeding
`
`Party
`
`Correspondence
`Address
`
`Submission
`
`Filer's Name
`
`Filer's email
`
`Signature
`
`Date
`
`Attachments
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`91229208
`
`Plaintiff
`Apple Inc.
`
`GLENN A GUNDERSEN
`DECHERT LLP
`CIRA CENTRE, 2929 ARCH STREET
`PHILADELPHIA, PA 19104-2808
`UNITED STATES
`Email: glenn.gundersen@dechert.com, trademarks@dechert.com,
`gayle.denman@dechert.com, jennifer.insley-pruitt@dechert.com
`
`Testimony For Plaintiff
`
`Jennifer Insley-Pruitt
`
`Jennifer.Insley-Pruitt@dechert.com, trademarks@dechert.com
`
`/Jennifer Insley-Pruitt/
`
`07/19/2018
`
`Trial Declaration of Tom La Perle - Declaration.pdf(212146 bytes )
`Trial Declaration of Tom La Perle -Exhibit A -1.pdf(307112 bytes )
`Trial Declaration of Tom La Perle - Exhibit A - 2.pdf(392364 bytes )
`Trial Declaration of Tom La Perle - Exhibit A - 3.pdf(202346 bytes )
`Trial Declaration of Tom La Perle - Exhibit A - 4.pdf(201273 bytes )
`Trial Declaration of Tom La Perle - Exhibit A - 5.pdf(182316 bytes )
`Trial Declaration of Tom La Perle - Exhibit A - 6.pdf(196541 bytes )
`Trial Declaration of Tom La Perle - Exhibit A - 7.pdf(220994 bytes )
`Trial Declaration of Tom La Perle - Exhibit A - 8.pdf(231473 bytes )
`Trial Declaration of Tom La Perle - Exhibit A - 9.pdf(95038 bytes )
`Trial Declaration of Tom La Perle - Exhibits B - D.pdf(973155 bytes )
`Trial Declaration of Tom La Perle - Exhibits E - F.pdf(821590 bytes )
`Trial Declaration of Tom La Perle - Exhibit G -1.pdf(3578864 bytes )
`Trial Declaration of Tom La Perle - Exhibit G - 2.pdf(5762280 bytes )
`Trial Declaration of Tom La Perle - Exhibit G - 3.pdf(3903168 bytes )
`Trial Declaration of Tom La Perle - Exhibit G- 4.pdf(3504633 bytes )
`Trial Declaration of Tom La Perle - Exhibit G - 5.pdf(4422452 bytes )
`Trial Declaration of Tom La Perle - Exhibit G -6.pdf(1922042 bytes )
`Trial Declaration of Tom La Perle - Exhibits H - K.pdf(992941 bytes )
`Trial Declaration of Tom La Perle - Exhibits L - N.pdf(995441 bytes )
`Trial Declaration of Tom La Perle - Exhibit O.pdf(201775 bytes )
`Trial Declaration of Tom La Perle - Exhibit P - 1.pdf(2056228 bytes )
`Trial Declaration of Tom La Perle - Exhibit P -2.pdf(4418716 bytes )
`Trial Declaration of Tom La Perle - Exhibits Q - S.pdf(1810405 bytes )
`Trial Declaration of Tom La Perle - Exhibits T - U.pdf(445531 bytes )
`Trial Declaration of Tom La Perle - Exhibit V .pdf(2237190 bytes )
`Trial Declaration of Tom La Perle - Exhibit W.pdf(282255 bytes )
`Trial Declaration of Tom La Perle - Exhibit X - 1.pdf(91330 bytes )
`Trial Declaration of Tom La Perle - Exhibit X - 2.pdf(108303 bytes )
`Trial Declaration of Tom La Perle - Exhibit X - 3.pdf(11043 bytes )
`Trial Declaration of Tom La Perle - Exhibit Y - 1.pdf(229860 bytes )
`Trial Declaration of Tom La Perle - Exhibit Y - 2.pdf(337061 bytes )
`Trial Declaration of Tom La Perle - Exhbit Y - 3.pdf(154643 bytes )
`Trial Declaration of Tom La Perle - Exhibit Y - 4.pdf(219946 bytes )
`Trial Declaration of Tom La Perle - Exhibit Y - 5.pdf(134692 bytes )
`Trial Declaration of Tom La Perle - Exhibit Y - 6.pdf(172884 bytes )
`
`
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`Trial Declaration of Tom La Perle - Exhibit Y - 7.pdf(185994 bytes )
`Trial Declaration of Tom La Perle - Exhibit Y -8.pdf(172093 bytes )
`Trial Declaration of Tom La Perle - Exhibit Y -9.pdf(304861 bytes )
`
`
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`
`
`
`In re Application Serial No. 86/765,783
`Mark: APPLE PENCIL
`
`
`
`APPLE INC.,
`
` Opposer,
`
` v.
`
`HOMER MARTIN PEAVY,
`
` Applicant.
`
`
`
`
`
`
` Opposition No. 91229208
`
`
`
`
`
`
`
`
`
`
`I, THOMAS R. LA PERLE, declare under penalty of perjury as follows:
`
`
`TRIAL DECLARATION OF THOMAS R. LA PERLE
`
`1.
`
`I am a Director in the Legal Department of Apple Inc., managing the Trademark
`
`and Copyright Group. In this Declaration, I refer to Apple Inc. as “Apple.”
`
`2.
`
`I have been employed by Apple continuously since September 1999. Before
`
`joining Apple, I worked as Apple’s outside intellectual property counsel at a US law firm. Since
`
`joining Apple, my responsibilities have included and still include the global prosecution and
`
`protection of Apple’s well-known trademarks. As a result of my current and previous job
`
`responsibilities, I am familiar with the history and operations of Apple and, among other things,
`
`its products, advertising, sales, and trademarks.
`
`3.
`
`I submit this declaration as my direct testimony in connection with the above-
`
`captioned proceeding between, on the one hand, Opposer Apple Inc. and, on the other, Applicant
`
`
`
`Homer Martin Peavy (“Applicant”). I confirm that the facts and matters set out herein are based
`
`on my own knowledge and understanding or from my review of the records and documents of
`
`Apple, which are prepared and kept in the regular course of business and to which I have access
`
`and that I rely on in my position at Apple. Furthermore, all of the exhibits attached hereto are
`
`records kept in the ordinary course of Apple’s business or compiled from records kept in the
`
`ordinary course of Apple’s business, and Apple regularly relies on documents of this type in
`
`conducting its business.
`
`I.
`
`BUSINESS AND PRODUCTS OF APPLE
`
`4.
`
`Since its founding in 1976, Apple and its wholly-owned subsidiaries designs,
`
`manufactures and markets mobile communication and media devices and personal computers,
`
`and sells a variety of related software, services, accessories, networking solutions and third-party
`
`digital content and applications. Apple’s products and services include iPhone, iPad, Mac,
`
`Apple Watch, AirPods, Apple TV, HomePod, a portfolio of consumer and professional software
`
`applications, iOS, macOS, watchOS and tvOS operating systems, iCloud, Apple Pay and a
`
`variety of other accessory, service and support offerings. Apple sells and delivers digital content
`
`and applications through the iTunes Store, App Store, Mac App Store, TV App Store, iBooks
`
`Store and Apple Music (collectively “Digital Content and Services”). Apple sells its products
`
`worldwide through its retail stores, online stores and direct sales force, as well as through third-
`
`party cellular network carriers, wholesalers, retailers and resellers.
`
`A.
`
`5.
`
`Apple and Its Famous Trademarks
`
`Since at least as early as 1977, Apple has continuously and extensively promoted,
`
`marketed, advertised, distributed, and sold goods and services in connection with a family of
`
`
`
`
`
`- 2 -
`
`
`
`trademarks consisting, in whole or in part, of the word APPLE and/or a graphical equivalent of
`
`the word, i.e., a logo depicting a stylized apple with a “bite” and a detached leaf, as shown
`
`below:
`
`(the “Apple Logo”).
`
`
`
`6.
`
`Today, Apple is one of the biggest and most famous companies in the world. In
`
`Fiscal Year 2017 alone, Apple had $229.23 billion in global net sales, with $84.3 billion of those
`
`sales in the United States. Attached as Exhibit A is Apple’s Form 10-K for the fiscal year that
`
`ended on September 30, 2017.
`
`7.
`
`In February 2018, Apple announced the most profitable quarter in its history, and
`
`reported that at that time, there were 1.3 billion Apple devices in active use worldwide.
`
`Attached as Exhibit B is a February 1, 2018 press release issued by Apple reporting Apple’s
`
`financial results for the first quarter of fiscal year 2018.
`
`8.
`
`As of January 2018, Apple was the largest taxpayer in the United States, and
`
`employed 84,000 people in the United States alone. Attached as Exhibit C is a January 17, 2018
`
`press release issued by Apple discussing Apple’s role in the U.S. economy.
`
`9.
`
`Due to Apple’s enormous sales and the fame of the company and its products, the
`
`mark APPLE and its visual equivalent, the Apple Logo, are among the world’s most iconic
`
`trademarks. I will refer to APPLE and the Apple Logo together as the “Apple Mark.”
`
`10.
`
`All of Apple’s goods and services are marketed and sold under the famous Apple
`
`
`
`
`
`- 3 -
`
`
`
`Mark, and many of its most popular products and services also bear Apple Mark-formative
`
`product marks (collectively, “Apple-Formative Product Marks,” and together with the Apple
`
`Mark, the “Apple Family of Marks”), including APPLE WATCH,
`
`, APPLE TV,
`
`,
`
`APPLE MUSIC, and
`
`. Attached as Exhibit D are printouts from Apple’s apple.com
`
`website (the “Apple Website”) showing Apple’s use of the Apple Mark and a selection of goods
`
`and services marketed by Apple under Apple-Formative Product Marks.
`
`B.
`
`11.
`
`The APPLE PENCIL Precision Writing Instrument and the APPLE
`PENCIL Mark
`
`Among Apple’s well-known Apple-Formative Product Marks is the mark APPLE
`
`PENCIL and its logo form,
`
` (together, the “APPLE PENCIL Mark”).
`
`12.
`
`Apple announced the APPLE PENCIL device on September 9, 2015 as a versatile
`
`precision stylus allowing users to write, draw, and sketch on their iPad Pro tablets. Attached as
`
`Exhibit E is a September 9, 2015 press release issued by Apple announcing the introduction of
`
`the APPLE PENCIL device.
`
`13.
`
`Since then, the APPLE PENCIL device, which operates like a classic writing
`
`instrument, has become a well-regarded tool among many groups of users, including students
`
`and artists. Apple now markets the APPLE PENCIL device not only for use with the iPad Pro,
`
`but also in connection with Apple’s most popular and affordable entry-level iPad. Attached as
`
`Exhibit F is a March 27, 2018 press release issued by Apple announcing the introduction of a
`
`new line of iPads for use with the APPLE PENCIL device.
`
`14.
`
`The APPLE PENCIL device is used in connection with a vast array of tasks
`
`ranging from taking notes to retouching layers in a photo. It works in conjunction with a variety
`
`
`
`
`
`- 4 -
`
`
`
`of apps and programs, including programs such as Microsoft Office, to allow users to add
`
`handwriting and drawings alongside text, make edits to documents, spreadsheets, and
`
`presentations, and write directly on email messages. Artists use the APPLE PENCIL device for
`
`purposes ranging from drawing and painting to calligraphy. Attached as Exhibit G is a printout
`
`from the Apple Website providing information on the APPLE PENCIL device and its uses.
`
`15.
`
`Apple uses its APPLE PENCIL Mark prominently in connection with the sale of
`
`both the APPLE PENCIL writing instrument and certain accessories for the APPLE PENCIL
`
`device, including an APPLE PENCIL case. Attached as Exhibit H are printouts from the Apple
`
`Website showing use of the APPLE PENCIL Mark in connection with the sale of the APPLE
`
`PENCIL device and related accessories.
`
`16.
`
`The APPLE PENCIL Mark is featured on the APPLE PENCIL product and its
`
`packaging in logo form. Attached as Exhibit I are photographs of the APPLE PENCIL device
`
`and its packaging showing the placement of the APPLE PENCIL Mark on the APPLE PENCIL
`
`device and its box.
`
`17.
`
`The APPLE PENCIL Mark is also displayed in Apple’s retail stores. Attached as
`
`Exhibit J are photographs of the display of APPLE PENCIL products in Apple’s retail store at
`
`1981 Broadway in New York City.
`
`C. Marketing and Advertising of the APPLE PENCIL Device
`
`18.
`
`Apple supports its APPLE PENCIL device through strategic and highly visible
`
`advertising, promotions, and public relations programs. Apple advertises and promotes its
`
`APPLE PENCIL product in marketing material focusing on the APPLE PENCIL device, and
`
`also through advertisements of other products such as Apple’s well-known iPad featuring use of
`
`
`
`
`
`- 5 -
`
`
`
`those products in conjunction with the APPLE PENCIL device.
`
`19.
`
`Apple has advertised the APPLE PENCIL device in a variety of media, including
`
`television. Apple’s U.S. television commercials are also posted on Apple’s YouTube page,
`
`where they draw millions of views even after the television run of the advertisement has ended.
`
`Attached as Exhibit K are screenshots from Apple’s YouTube page of the commercial entitled
`
`The Amazing Apple Pencil, which aired on United States television beginning in or about June
`
`2017; attached as Exhibit L are screenshots from Apple’s YouTube page of the commercial
`
`entitled On Any Given Wednesday, which aired on United States television beginning in or about
`
`June 2017; and attached as Exhibit M are screenshots from Apple’s YouTube page of the
`
`commercial entitled Homework, which aired on United States television beginning in or about
`
`March 2018.
`
`20.
`
`Apple also advertises the APPLE PENCIL device through Internet-only
`
`commercials. Attached as Exhibit N are screenshots from Apple’s YouTube page of an Internet
`
`commercial entitled Organized Notes, which was released in or about July 2018; and attached as
`
`Exhibit O are screenshots from Apple’s YouTube page of an Internet commercial entitled
`
`Travel Simply, which was released in or about July 2018.
`
`21.
`
`Apple promotes the APPLE PENCIL device through its website. Attached as
`
`Exhibit P are a selection of pages from the Apple Website promoting the APPLE PENCIL
`
`device, including for use in connection with Apple’s IPAD products and with applications
`
`including KEYNOTE and PAGES.
`
`22.
`
`Apple also promotes the APPLE PENCIL device through its social media
`
`accounts, including Twitter and Facebook. Attached as Exhibit Q are printouts from Apple’s
`
`
`
`
`
`- 6 -
`
`
`
`social media accounts promoting the APPLE PENCIL product.
`
`23.
`
`Apple also promotes the APPLE PENCIL device through “how-to” videos
`
`explaining the utility of the product to different groups of users. Attached as Exhibit R are
`
`screenshots from Apple’s YouTube page of an instructional video entitled How to Mark Stuff Up
`
`With Apple Pencil, which was released in or about August 2017; attached as Exhibit S are
`
`screenshots from Apple’s YouTube page of an instructional video entitled How to Sketch in
`
`Notes With Apple Pencil, which was released in or about April 2018; and attached as Exhibit T
`
`are screenshots from Apple’s YouTube page of an instructional video entitled How to Draw on
`
`Screenshots, which was released in or about April 2018.
`
`24.
`
`In addition, Apple promotes the APPLE PENCIL device through Apple’s
`
`TODAY AT APPLE program, which consists of sessions and special events held at stores
`
`around the United States that focus on teaching individuals how to use Apple products. Attached
`
`as Exhibit U are printouts from the Apple Website advertising a variety of TODAY AT APPLE
`
`classes focusing on the APPLE PENCIL product.
`
`25.
`
`Through its extensive marketing and advertising activity, Apple promotes its
`
`APPLE PENCIL products to students, artists, educators, and other user groups. Attached as
`
`Exhibit V are printouts from the Apple Website and press releases evidencing promotion of the
`
`APPLE PENCIL device to various user groups.
`
`D.
`
`26.
`
`Distribution of APPLE PENCIL Products
`
`APPLE PENCIL products are sold throughout the United States through the
`
`Apple Website and authorized resellers. The APPLE PENCIL device is also sold in Apple’s
`
`more than 270 APPLE STORE retail stores, which are located across the United States, with at
`
`
`
`
`
`- 7 -
`
`
`
`least one store in almost every state. Attached as Exhibit W is a listing of Apple retail stores
`
`across the United States.
`
`II.
`
`APPLE’S TRADEMARK REGISTRATIONS AND ENFORCEMENT EFFORTS
`
`27.
`
`In connection with its efforts in protecting its renowned brands, Apple has
`
`secured a number of federal registrations for the Apple Family of Marks. Attached as Exhibit X
`
`are copies of records from the Trademark Search and Document Retrieval service of the United
`
`States Patent and Trademark Office reflecting some of Apple’s registrations for the Apple
`
`Family of Marks, including U.S. Registration No. 5028493 for the mark APPLE PENCIL and
`
`U.S. Registration No. 5028531 for the mark
`
`.
`
`28.
`
`Apple takes great care to vigorously enforce its exclusive rights in the Apple
`
`Family of Marks. Among other steps, Apple has filed a number of trademark oppositions against
`
`parties who improperly seek to register marks confusingly similar to those owned by Apple.
`
`Attached as Exhibit Y are notices of opposition filed by Apple (with attached exhibits omitted),
`
`and documents sufficient to indicate the resolution of these opposition proceedings.
`
`III.
`
` HARM TO APPLE IF APPLICANT IS PERMITTED TO REGISTER HIS MARK
`
`29.
`
`Given the renown of the Apple Family of Marks and the vast sales under the
`
`Apple Family of Marks, I believe that consumers overwhelmingly associate both the Apple Mark
`
`and Apple-Formative Product Marks with Apple and its wide variety of technology-related
`
`goods and services.
`
`30.
`
`As I understand it, Applicant has applied to register the mark APPLE PENCIL in
`
`connection with various goods in Class 16, including writing and drawing instruments.
`
`Applicant’s mark is identical to Apple’s APPLE PENCIL word mark. Because the Apple
`
`
`
`
`
`- 8 -
`
`
`
`Family of Marks and Apple-Formative Product Marks generally and the APPLE PENCIL Mark
`
`specifically are so well-known among consumers, I am concerned that consumers are likely to
`
`incorrectly believe that Applicant’s goods sold under Applicant’s APPLE PENCIL mark
`
`originate with or are otherwise associated with Apple.
`
`
`
`
`
`
`
`- 9 -
`
`
`
`Declared under penalty of perjury. this lBIh day ofJuly 20l8 at Sunnyvale. California.
`
`A T
`
`homas R. La Perle
`
`~10-
`
`
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that a true and correct copy of the foregoing Trial Declaration of
`Thomas R. La Perle and attached exhibits have been served by email to counsel for Applicant,
`Homer Martin Peavy, at ms@themiamilaw.com and midstewart@gmail.com, this 19th day of
`July, 2018.
`
`
`
`
`Jennifer Insley-Pruitt
`
`
`
`
`
`EXHIBIT A
`EXHIBIT A
`
`
`
`Apple - Annual Report
`
`Page 1 of 184
`
`
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`
`FORM 10-K
`
`(Mark One)
`☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`For the fiscal year ended September 30, 2017
`or
`☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`For the transition period from to
`Commission File Number: 001-36743
`
`Apple Inc.
`(Exact name of Registrant as specified in its charter)
`
`California
`(State or other jurisdiction
`of incorporation or organization)
`1 Infinite Loop
`Cupertino, California
`(Address of principal executive offices)
`
`94-2404110
`(I.R.S. Employer Identification No.)
`
`95014
`(Zip Code)
`
`(408) 996-1010
`(Registrant’s telephone number, including area code)
`
`Securities registered pursuant to Section 12(b) of the Act:
`
`The Nasdaq Stock Market LLC
`Common Stock, $0.00001 par value per share
`New York Stock Exchange LLC
`1.000% Notes due 2022
`New York Stock Exchange LLC
`1.375% Notes due 2024
`New York Stock Exchange LLC
`0.875% Notes due 2025
`New York Stock Exchange LLC
`1.625% Notes due 2026
`New York Stock Exchange LLC
`2.000% Notes due 2027
`New York Stock Exchange LLC
`1.375% Notes due 2029
`New York Stock Exchange LLC
`3.050% Notes due 2029
`New York Stock Exchange LLC
`3.600% Notes due 2042
`(Name of each exchange on which registered)
`(Title of each class)
`Securities registered pursuant to Section 12(g) of the Act: None
`
`http://investor.apple.com/secfiling.cfm?filingID=320193-17-70&CIK=320193
`
`7/13/2018
`
`
`
`Apple - Annual Report
`
`Page 2 of 184
`
`Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
`Yes ☒ No ☐
`Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
`Yes ☐ No ☒
`Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
`1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to
`such filing requirements for the past 90 days.
`
`Yes ☒ No ☐
`
`Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
`required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
`shorter period that the Registrant was required to submit and post such files).
`Yes ☒ No ☐
`
`Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and
`will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of
`this Form 10-K or any amendment to this Form 10-K. ☐
`
`Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or
`an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
`company” in Rule 12b-2 of the Exchange Act.
`
`Large accelerated filer
`Non-accelerated filer
`
`☒
`☐ (Do not check if a smaller reporting company)
`
`Accelerated filer
`Smaller reporting company
`Emerging growth company
`
`☐
`☐
`☐
`
`If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any
`new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
`
`Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).
`Yes ☐ No ☒
`
`The aggregate market value of the voting and non-voting stock held by non-affiliates of the Registrant, as of March 31, 2017 , the last business day
`of the Registrant’s most recently completed second fiscal quarter, was approximately $747,509,000,000 . Solely for purposes of this disclosure,
`shares of common stock held by executive officers and directors of the Registrant as of such date have been excluded because such persons may
`be deemed to be affiliates. This determination of executive officers and directors as affiliates is not necessarily a conclusive determination for any
`other purposes.
`
`5,134,312,000 shares of common stock were issued and outstanding as of October 20, 2017 .
`
`DOCUMENTS INCORPORATED BY REFERENCE
`Portions of the Registrant’s definitive proxy statement relating to its 2018 annual meeting of shareholders (the “ 2018 Proxy Statement”) are
`incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2018 Proxy Statement will be filed with the U.S.
`Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.
`
`http://investor.apple.com/secfiling.cfm?filingID=320193-17-70&CIK=320193
`
`7/13/2018
`
`
`
`Apple - Annual Report
`
`Page 3 of 184
`
`Apple Inc.
`
`Form 10-K
`
`For the Fiscal Year Ended September 30, 2017
`
`TABLE OF CONTENTS
`
`Part I
`
`Business
`Item 1.
`Item 1A. Risk Factors
`Item 1B. Unresolved Staff Comments
`Item 2.
`Properties
`Item 3.
`Legal Proceedings
`Item 4.
`Mine Safety Disclosures
`
`Part II
`Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
`Item 5.
`Selected Financial Data
`Item 6.
`Management’s Discussion and Analysis of Financial Condition and Results of Operations
`Item 7.
`Item 7A. Quantitative and Qualitative Disclosures About Market Risk
`Item 8.
`Financial Statements and Supplementary Data
`Item 9.
`Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
`Item 9A. Controls and Procedures
`Item 9B. Other Information
`
`Part III
`Item 10. Directors, Executive Officers and Corporate Governance
`Item 11.
`Executive Compensation
`Item 12 . Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
`Item 13 . Certain Relationships and Related Transactions, and Director Independence
`Item 14.
`Principal Accounting Fees and Services
`
`Item 15.
`Item 16.
`
`Exhibits, Financial Statement Schedules
`Form 10-K Summary
`
`Part IV
`
`Page
`
`1
`8
`16
`17
`17
`17
`
`18
`21
`22
`36
`38
`72
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`This Annual Report on Form 10-K (“Form 10-K”) contains forward-looking statements, within the meaning of the Private Securities
`Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are located in Part II,
`Item 7 of this Form 10-K under the heading “Management’s Discussion and Analysis of Financial Condition and Results of
`Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions and include
`any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by
`words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,”
`“may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results
`may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences
`include, but are not limited to, those discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors,” which are
`incorporated herein by reference. All information presented herein is based on the Company’s fiscal calendar. Unless otherwise
`stated, references to particular years, quarters, months or periods refer to the Company’s fiscal years ended in September and the
`associated quarters, months and periods of those fiscal years. Each of the terms the “Company” and “Apple” as used herein refers
`collectively to Apple Inc. and its wholly-owned subsidiaries, unless otherwise stated. The Company assumes no obligation to revise
`or update any forward-looking statements for any reason, except as required by law.
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`PART I
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`Item 1.
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`Business
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`Company Background
`
`The Company designs, manufactures and markets mobile communication and media devices and personal computers, and sells a
`variety of related software, services, accessories, networking solutions and third-party digital content and applications. The
`Company’s products and services include iPhone ® , iPad ® , Mac ® , Apple Watch ® , Apple TV ® , a portfolio of consumer and
`professional software applications, iOS, macOS ® , watchOS ® and tvOS™ operating systems, iCloud ® , Apple Pay ® and a variety
`of accessory, service and support offerings. The Company sells and delivers digital content and applications through the iTunes
`Store ® , App Store ® , Mac App Store, TV App Store, iBooks Store ® and Apple Music ® (collectively “Digital Content and Services”).
`The Company sells its products worldwide through its retail stores, online stores and direct sales force, as well as through third-party
`cellular network carriers, wholesalers, retailers and value-added resellers. In addition, the Company sells a variety of third-party
`Apple-compatible products, including application software and various accessories through its retail and online stores. The Company
`sells to consumers, small and mid-sized businesses and education, enterprise and government customers. The Company’s fiscal
`year is the 52 or 53-week period that ends on the last Saturday of September. The Company is a California corporation established
`in 1977.
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`Business Strategy
`
`The Company is committed to bringing the best user experience to its customers through its innovative hardware, software and
`services. The Company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware,
`application software and services to provide its customers products and solutions with innovative design, superior ease-of-use and
`seamless integration. As part of its strategy, the Company continues to expand its platform for the discovery and delivery of digital
`content and applications through its Digital Content and Services, which allows customers to discover and download digital content,
`iOS, Mac, Apple Watch and Apple TV applications, and books through either a Mac or Windows personal computer or through
`iPhone, iPad and iPod touch ® devices (“iOS devices”), Apple TV and Apple Watch. The Company also supports a community for
`the development of third-party software and hardware products and digital content that complement the Company’s offerings. The
`Company believes a high-quality buying experience with knowledgeable salespersons who can convey the value of the Company’s
`products and services greatly enhances its ability to attract and retain customers. Therefore, the Company’s strategy also includes
`building and expanding its own retail and online stores and its third-party distribution network to effectively reach more customers
`and provide them with a high-quality sales and post-sales support experience. The Company believes ongoing investment in
`research and development (“R&D”), marketing and advertising is critical to the development and sale of innovative products,
`services and technologies.
`
`Business Organization
`The Company manages its business primarily on a geographic basis. The Company’s reportable segments consist of the Americas,
`Europe, Greater China, Japan and Rest of Asia Pacific. Americas includes both North and South America. Europe includes
`European countries, as well as India, the Middle East and Africa. Greater China includes China, Hong Kong and Taiwan. Rest of
`Asia Pacific includes Australia and those Asian countries not included in the Company’s other reportable segments. Although the
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`reportable segments provide similar hardware and software products and similar services, each one is managed separately to better
`align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic
`region. Further information regarding the Company’s reportable segments may be found in Part II, Item 7 of this Form 10-K under
`the subheading “Segment Operating Performance,” and in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial
`Statements in Note 11, “Segment Information and Geographic Data.”
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`Apple Inc. | 2017 Form 10-K | 1
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`Products
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`iPhone
`iPhone is the Company’s line of smartphones based on its iOS operating system. iPhone includes Siri ® , a voice-activated intelligent
`assistant, and Apple Pay and Touch ID ® on qualifying devices. In September 2017, the Company introduced iPhone 8 and 8 Plus,
`featuring a new glass and aluminum design, enhanced cameras and speakers, wireless charging and augmented reality
`optimization. Additionally, in September 2017, the Company announced iPhone X, featuring an all-glass design with a Super
`Retina™ OLED display and facial recognition. iPhone 8 and 8 Plus were available starting in September 2017, and iPhone X is
`expected to be available in November 2017. The Company’s line of smartphones also includes iPhone 7, 7 Plus, 6s, 6s Plus and SE
`models. iPhone works with the iTunes Store, App Store, iBooks Store and Apple Music for purchasing, organizing and playing digital
`content and apps.
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`iPad
`iPad is the Company’s line of multi-purpose tablets based on its iOS operating system, which includes iPad Pro ® , iPad and iPad
`mini™. iPad includes Siri, Apple Pay and Touch ID. In June 2017, the Company released a new 10.5-inch iPad Pro and an updated
`12.9-inch iPad Pro with more advanced displays and enhanced performance. iPad works with the iTunes Store, App Store, iBooks
`Store and Apple Music for purchasing, organizing and playing digital content and apps.
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`Mac
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`Mac is the Company’s line of desktop and portable personal computers based on its macOS operating system. Mac includes Siri
`and Apple Pay an