Precis: whereas Apple holds several "i" trademarks such as "iPod" and has built a family of "i"-branded products, CISCO holds the US trademark specifically for "iPhone". Having attempted to obtain the "iPhone" trademark for themselves, Apple launched their own "iPhone" at a US trade show. CISCO responded by filing suit in a Californian court claiming trademark infringement, unfair competition, false description and injury to business reputation.
Analysis: IANAL but, prima facie, CISCO appears to have the stronger legal case being the current holder of the US trademark at issue (having purchased its original corporate owner - it is conceivable that the trademark was the only genuine asset in the deal). Apple may have believed they were sufficiently close to agreement with CISCO to just take a chance on launching the product. Alternatively, Steve Jobs may indeed have "brass balls" as stated in the News.com story. He may well be working on the basis that "there ain't no such thing as bad publicity", in other words win or lose, people will at least be aware that Apple has a new product. Maybe he thinks going poublic will force the negotiations to a close in order for both parties to avoid expensive legal action? CISCO does not have an entirely clear run though due to Apple already having a family of other "i" products. Other companies have also released iPhones, apparently without CISCO's approval.
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