Cisco sues Apple over iPhone trademark

Cisco Systems has filed a lawsuit against Apple accusing the company of infringing its iPhone trademark.

The suit also accuses the iPod maker of using a front company to try to acquire rights to the name.

The networking company accused Apple in a suit filed in US District Court for the Northern District of California of willingly infringing its trademark when it announced the new iPhone at the Macworld Expo in San Francisco on Tuesday.

Cisco said in the complaint that Apple had attempted to get rights to the iPhone name several times but after Cisco refused, the company created a front company to try to acquire the rights another way, according to the lawsuit.

That spat…

Read our leader on the Cisco-Apple iPhone trademark scuffle.

Mark Chandler, senior vice president and general counsel at Cisco, said in an interview that the companies were close to finalising a deal on Monday night that would have allowed both Apple and Cisco to use the iPhone name. One aspect of the agreement called for some sort of technical interoperability between Cisco's Linksys internet telephony products and Apple's mobile phone. Chandler said the hope was that by making the products interoperable, it would help alleviate confusion among customers, who would be likely to be target consumers for both products.

The companies left the negotiating table on Monday evening with only a few points left to negotiate, Chandler said. Then on Tuesday, Apple CEO Steve Jobs took the stage at the Macworld Expo and, amid much fanfare, unveiled the new "iPhone".

Chandler said: "We indicated that it was important that the negotiations be completed before the launch of their product. Our expectation was that our name wouldn't be used without permission. And it is a surprise when any large company announces a product using a name they don't have a right to use."

Chandler said Cisco made it clear after Apple's launch that negotiations needed to be completed immediately but he said Cisco has still not heard from Apple.

Cisco is seeking an injunction that will prevent Apple from using the name as well as damages from the company, the lawsuit said.

Fresh off one of the biggest launches in its history, a product Jobs called one of the most exciting products he's ever worked on, the company dug in its heels. An Apple spokeswoman said: "We think Cisco's trademark suit is silly... We believe [their] trademark registration is tenuous at best.

"There are already several companies using the iPhone name for VoIP products. We're the first company ever to use iPhone for a cell phone. If Cisco wants to challenge us on it, we're confident we'll prevail."

Cisco obtained the iPhone trademark in 2000 when it acquired Infogear, a small US start-up which developed consumer devices that allowed people to easily access the internet without a PC. Infogear had actually registered the iPhone trademark in March 1996. Cisco's home-networking division, Linksys, has been using the iPhone trademark on a new family of voice over IP phones since early last year, Cisco said. And last month, Linksys expanded the iPhone family with additional products.

A UK company called Orate Telecommunications Services also offers a VoIP phone called an iPhone, and UK company Teledex offers an iPhone for hotel rooms.

Chandler said Cisco is aware that other companies have used the iPhone name and in the past Cisco has been involved in "enforcement actions involving the use of this name".

Cisco said in its complaint that Apple had first approached the company about acquiring the rights to the iPhone trademark in 2001. Over the years, Apple continued to make requests for the rights, including several attempts in 2006, Cisco said. These requests were refused.

Apple apparently was not willing to accept Cisco's decision, so it created a front company called Ocean Telecom Services that applied to use the trademark in the US on 26 September, 2006, according to Cisco's complaint. That company, Cisco says in the filing, is "owned or otherwise controlled by Apple and is the alter ego of Apple".

Long-time Apple watcher Roger Kay, an analyst with Endpoint Technologies Associates, was blunt in his assessment of the situation. "This was just brass balls on the part of Steve [Jobs], to go in there and just grab that trademark and not pay a licence for it or negotiate. It's the height of arrogance," Kay said. "He basically thinks he can get away with it."

However, it's likely that the two companies will settle their differences, as prolonged litigation doesn't really serve either company, Kay added. "Apple is playing chicken with Cisco, and there's other companies I'd rather play chicken with," he said, referring to Cisco's deep pockets.

Cisco holds a clear advantage in the legal dispute as the trademark holder of record and having already released products using the iPhone name, said Bruce Sunstein, co-founder of the Boston law firm Bromberg & Sunstein."

Apple's only choice is to argue that its "iFamily" of trademarks such as iPod, iTunes and iMac create confusion in a customer's mind as to who makes the iPhone, Sunstein said. It's not out of the question but in general the company in Cisco's position with clear rights to the trademark has a stronger argument than a company making the family argument, he said.

Apple's spokewoman had no comment on the status of negotiations between the two companies, including whether Apple had received documents from Cisco the night prior to the iPhone launch, as Cisco had stated on Tuesday.

CNET News.com's Declan McCullagh contributed to this report

Marguerite Reardon writes for CNET News.com