Cisco Systems is suing Apple to prevent it from using the name iPhone for the new smart phone Apple introduced Tuesday at the Macworld Conference & Expo in San Francisco.
Cisco has filed a lawsuit in US federal court seeking an injunction against Apple using the name, which is a registered trademark of Linksys, a division of Cisco. Linksys picked up the iPhone name when it bought a company called Infogear Technology in 2000. Cisco's iPhones are telephone handsets designed for use on a voice over internet protocol (VoIP) network.
The iPhone has proved to be the most talked-about product at this year's Macworld, and its positive reception has sent Apple's stock surging over the past two days. The company's stock closed at $97 (£50) Wednesday, up nearly 5% for the day.
Apple and Cisco have been in negotiations for about two years over Apple's desire to license the iPhone trademark, said Cisco spokesman John Noh. When Apple chief Steve Jobs introduced the iPhone Tuesday at Macworld, Cisco had not yet received a signed trademark licensing agreement from Apple, even though the two companies had been negotiating terms as recently as Monday night.
"Because they have been negotiating with us on licensing the trademark all this time, Apple is acknowledging that we own the name," said Noh.
"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 for Cisco.
"Today's iPhone is not tomorrow's iPhone. The potential for convergence of the home phone, mobile, work phone and PC is limitless, which is why it is so important for us to protect our brand," Chandler said.
An Apple executive told PC World magazine that because the Cisco iPhone is a VoIP phone and the Apple iPhone is a mobile device, Apple is not in violation of Cisco's trademark. "They're different products," said Greg Joswiak, Apple's vice president of worldwide iPod marketing. The iPhone also includes an iPod music player.
But if Apple was in talks with Cisco to licence the iPhone trademark, it would be "a dangerous move" for Apple to start using the iPhone name anyway, said trademark lawyer Allonn Levy of US law firm Hopkins & Carley (who do not represent Cisco or Apple). "It could be seen as intentional infringement."
Levy says it's possible that Apple could argue that Cisco had not introduced any iPhone products until last summer and that Apple would consider the name available. But he also said Cisco may have filed the lawsuit in order to pressure Apple into signing the trademark licensing agreement the two companies had been negotiating.
This latest legal hot potato follows the ongoing US federal investigation into its stock option backdating practices, which resulted in a $84 million restatement of its financial results last week.