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One day after Apple (Nasdaq: AAPL) 
dazzled the tech world by unveiling its first-ever mobile phone device, the so-called "iPhone," the company was hit with a lawsuit from Cisco Systems (Nasdaq: CSCO) , which said it has held a trademark on the iPhone name since 2000.
Cisco's home networking unit, Linksys, began shipping a VoIP-enabled handset dubbed the "iPhone" early last year and formally announced the product line with new models in December, nearly a month before Apple's mobile handheld debuted this week at the annual Macworld Expo.
Late Wednesday, Cisco said it had filed suit in U.S. District Court for the Northern District of California to prevent Apple from "infringing upon and deliberately copying and using Cisco's registered iPhone trademark."
iPhone Trademark Dispute
Cisco acquired the iPhone trademark when it bought Infogear in 2000. That firm had first sought to protect the iPhone trademark in March 1996; it had been selling VoIP phone gear under that name. Other firms have applied for trademark protection of the same name.
Cisco said it had tried to reach a friendly agreement with Apple before filing the lawsuit.
"Cisco entered into negotiations with Apple in good faith after Apple repeatedly asked permission to use Cisco's iPhone name," said Mark Chandler, senior vice president and general counsel at Cisco. "There is no doubt that Apple's new phone is very exciting, but they should not be using our trademark without our permission."
The news of the suit dampened investor enthusiasm somewhat for Apple shares, which had enjoyed a strong two-day run following the debut of the iPhone and the Apple iTV set-top box device at Macworld.
In morning trading Thursday, Apple shares were off as much as 1 percent to US$95.10, but later gained back some of those losses. Cisco stock was up 1 percent to $28.97.
Different Products
The lawsuit is without merit, Apple responded in a statement, and noted that its iPhone is a mobile device whereas the Cisco iPhone is meant to be used in homes and offices to access IP networks.
"Apple's the first company to use the iPhone name for a cell phone. And if Cisco wants to challenge us on it, we're very confident we will prevail," the company stated.
Cisco, however, said the future may bring other uses for its own iPhone.
"Today's iPhone is not tomorrow's iPhone," Chandler said. "The potential for convergence of the home phone, cell phone, work phone and PC is limitless, which is why it is so important for us to protect our brand."
Cisco had continued to negotiate with Apple right through Steve Jobs' Macworld keynote address -- when he unveiled the new phone -- which has been almost universally praised for its sleek design and unique functionality that eliminates keypads in favor of touch-screen technology.
Cisco is asking a judge to issue an injunction stopping Apple from selling the phone under the iPhone brand.
Tricky Business
The case may not be an easy one to call, especially because Cisco and Apple may not be the only companies to use the iPhone name.
The pressure may be on Apple, however, to ensure that its iPhone can launch successfully on schedule in June. The company has reportedly placed a manufacturing order for 12 million Apple iPhone units to be made over the next year.
Apple could be motivated to settle with Cisco in order to avoid storing millions of unsold products in warehouses should the injunction be granted.
"In light of Apple's usual sophistication in the [intellectual property] area, it would be shocking to learn it went ahead with the use of iPhone trademark without some clear indication or opinion that the mark was either clear or available," Michael R. Graham, an intellectual property attorney and partner with Marshall Gerstein & Borun LLP, told MacNewsWorld.
Another possibility, he added, is that Apple may have acquired "what it believes to be superior rights" through one of the other applicants for the iPhone trademark.
Many companies have acted recklessly when it comes to trademark issues, but Graham said Apple has demonstrated expertise in this area, leading him to believe the company is not acting rashly.
The tech world has seen a spate of trademark suits in recent months. For instance, BlackBerry maker Research in Motion recently sued Samsung , claiming that calling its new smartphone device "BlackJack" was an attempt to ride the BlackBerry's successful coattails.
Late last year, YouTube owner Google (Nasdaq: GOOG) was sued by Universal Tube & Rollform Equipment, a metal tube and pipe vendor that claimed its Web address and YouTube's were so similar that millions of people visited Universal Tube's Web site by mistake, allegedly causing financial loss.
Apple has been on the front lines of trademark issues as well, as when it found itself sued by the The Beatles over the use of the Apple logo in conjunction with the iTunes Music Store. It has also filed cease-and-desist orders in an effort to protect the term "pod" while it awaits U.S. Patent and Trademark Office action on its application to trademark that term.
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