Cisco Systems last night sued Apple over its use of the iPhone trademark.
The move comes a day after Apple unveiled its sleek mobile phone using the name claimed by Cisco.
Shares of Apple, which are volatile, initially fell 1.3 per cent in after-hours trade following the announcement and then pared the loss to less than half a per cent.
Apple chief executive Steve Jobs debuted the long-rumoured iPhone at the start of Apple's annual Macworld conference in San Francisco on Tuesday, and both companies had said a deal on the "iPhone" name was near.
"We think this is silly," said an Apple spokesman. "There are already several companies using the name iPhone for voice over IP (internet protocol) products."
Cisco said it wanted to keep Apple from "infringing upon and deliberately copying and using" the trademark, which the network equipment maker obtained in 2000 after acquiring Infogear.
Infogear had previously owned the trademark and had sold devices called iPhones for several years, it said.