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Thursday, January 11, 2007, 03:00 pm PT (06:00 pm ET)

Apple, Cisco trade shots over iPhone lawsuit

In the wake of a lawsuit filed by Cisco over Apple's alleged misuse of the iPhone trademark, the two companies on Thursday escalated the level of rhetoric in their claims to the hotly-contested product name.

Apple has broken the silence it maintained regarding its rights to use the iPhone name for its recently unveiled cellphone. An official statement issued by the company to its spokespeople flatly denied the legitimacy of the suit filed in federal court on Wednesday, characterizing Cisco's filing as both "silly" and "tenuous at best."

"We're the first company to ever use the iPhone name for a cellphone," the statement said. "If Cisco wants to challenge us on it, we're very confident we'll prevail."

In contrast, Cisco representatives have followed their own official statement with relatively candid responses, adopting an at once conciliatory and defensive tone. The network supplier maintained that it had no hostile intent against Apple and was merely protecting what it believed it rightly owned.

Speaking with the Wall Street Journal, spokesman John Earnhardt expressed hopes that the lawsuit would not need to continue. "We still hope we can reach an agreement," he said, "but when your neighbor steals your property, you have no recourse other than to call the cops and file a complaint."

Cisco senior VP Mark Chandler was equally quick to defend his employer's approach in his corporate blog. He reiterated the company's formal claim that it has owned the iPhone trademark since 2000, following the buyout of an Internet phone developer named Infogear Technology, and that it had no financial or idealist grudges against its purported competitor. Infogear first registered the trademark in 1996.

"This is not a suit against Apple’s innovation, their modern design, or their cool phone. It is not a suit about money or royalties. This is a suit about trademark infringement," Chandler wrote. "This is a suit about trademark infringement."

The lawsuit — coupled with some profit taking — also triggered a small-scale retreat in the value of Apple's stock, which dipped by $1.20 to $95.80 by the close of the market Thursday evening. Financial agencies Bear Stearns and UBS had previously raised their estimates for Apple, triggering a dramatic surge to $97 in advance of today's news.