Apple and Cisco agree to share iPhone brand

location based services

Cisco Systems Inc. and Apple Inc. agreed to share the iPhone brand, dismissing Cisco's lawsuit for trademark infringement.

The agreement allows both companies to use the iPhone name and calls for their products to work together in the future, the companies said last night in a joint statement.

The settlement ends a six-week dispute between the Silicon Valley firms and puts Apple, of Cupertino, Calif., on schedule to start selling its combination iPod music player and mobile phone under the iPhone brand in June.

"IPhone is worth a hell of a lot more to Apple than to Cisco," John Daniel, a partner at Kramer Levin Naftalis & Frankel L.L.P., of New York, said before the announcement. He is not involved in this case. "The 'I' prefix is what Apple has been developing, and if it didn't have that, it would be unhappy. I don't think anybody associates iPhone with Cisco these days."

Cisco, of San Jose, Calif., the world's largest maker of computer-networking equipment, claimed last month that Apple's iPhone violated a trademark Cisco has owned since 2000. Apple, which unveiled the device Jan. 9 in San Francisco, called the suit "silly" because its iPhone differs from Cisco's Internet-based home phone.

Shares of Apple finished $3.30 higher at $89.20 yesterday in Nasdaq Stock Market composite trading, and have jumped 29 percent in the last year. Cisco shares fell 28 cents, to $27.38, and are up 40 percent in the last 12 months.

Apple approached Cisco about using the name several times during the last year and announced the product before an agreement was reached, according to a Jan. 10 blog posting by Cisco general counsel Mark Chandler.

Apple still faces possible delays in Canada, where closely held Comwave Telecom Inc. has used the iPhone brand since 2004 to sell Web-based phone service. Comwave said in January that it filed documents opposing Apple's motion to take the name.

Cisco "wants to ride Apple's brand recognition and get a little coattail effect," James M. McCarthy, a partner at McDonnell Boehnen Hulbert & Berghoff L.L.P., of Chicago, said before the announcement. He is not involved in the case. "Interoperability was important to Cisco."

Apple chief executive officer Steve Jobs said last month that he expected to sell 10 million iPhones, which cost as much as $599 apiece, in 2008. The move puts Apple in competition with Research in Motion Ltd.'s BlackBerry and Palm Inc.'s Treo.

Cisco's iPhone is part of its Linksys home routing unit, which the company purchased in 2003 to tap the consumer market. The phones, which sell for less than $100, enable Web-based calls through eBay Inc.'s Skype service and Yahoo! Inc.'s Messenger.