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Does Apple have a case against Cisco?

The problem with this argument is that the letter 'i' is not a strong letter for trademark purposes, said Grace Han Stanton, a trademark lawyer with Perkins Coie. "There are a number of parties that use 'i' for Internet services," she said.

For example, Sony uses a technology it calls iLink to describe its implementation of the FireWire, or IEEE1394, connection. And there's also a company that operates the iBoat Store, selling boats and boating supplies over the Internet. And several iPod accessory makers use lower-case 'i's in their product names, such as the Soundcast iCast or the Klipsch iGroove, Mende said.

And Apple has established an association between itself and the specific iPhone term because it went ahead and launched a product with a name that it didn't have clear rights to use. This is called 'reverse confusion', when one company starts using a trademark used by another company, and the later entrant into the market creates a significant buzz around its products. Given the sheer volume of iPhone coverage and that Apple is better known among average consumers than Cisco, people might assume that Cisco is ripping off Apple's iPhone with its family of VoIP phones, Radack said.

If either of those tactics fails to impress a judge or jury, Apple could also claim that Cisco has failed to defend its iPhone trademark, Stanton said. Cisco acquired the iPhone trademark when it bought Infogear in 2000. Since then, other companies, such as Teledex and Orate Telecommunications Services, have shipped products -- products that directly compete with the Cisco/Infogear line of phones -- bearing the iPhone moniker.

Even Cisco doesn't appear to have actively used the iPhone name until weeks before Apple's announcement. Cisco says that it sold products under the iPhone trademark after it acquired Infogear in 2000 -- until it started selling Linksys VoIP phones using the iPhone name starting in early 2006. But references to either a Cisco or Linksys iPhone were not readily available on the Web sites of either division until December 2006, when Linksys launched the iPhone family of VoIP phones.

If Apple can argue that Cisco failed to defend the trademark until it launched the new iPhones in 2006, it could possibly convince a judge that Cisco abandoned the trademark, Stanton said. Cisco has said that it used the iPhone trademark on VoIP phones sold in early 2006, and maintains that it has actively defended its trademark. "We have taken all actions necessary to satisfy all elements to prove the validity of our trademark under trademark law," a Cisco spokesman said.

Settlement is the most likely outcome of this dispute, though, given the burden of proof on Apple needed to overcome Cisco's trademark registration, the lawyers said. "Even big companies get legal fatigue," Radack said.

But Cisco has said that negotiations broke down over Cisco's desire for interoperability between its iPhone and Apple's. Apple is not known for its desire to make its products interoperable with anyone else's, so if there's no amount of money that could make Cisco happy, we could be in for a battle.

CNET News.com's Marguerite Reardon contributed to this report.