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Cisco Systems’ efforts to negotiate an agreement with Apple over the use of the iPhone name fell apart because the networking group insisted that Apple’s new mobile handset be made to interoperate with its own networking devices, according to a statement by Cisco’s top lawyer.

Mark Chandler, Cisco’s general counsel, wrote on a company weblog late on Wednesday that Apple unexpectedly broke off contact in the hours before Steve Jobs, Apple’s chief executive, unveiled the company’s iPhone mobile handset at its annual MacWorld trade show in San Francisco on Tuesday.

“What were the issues at the table that kept us from an agreement? Was it money? No. Was it a royalty on every Apple phone? No. Was it an exchange for Cisco products or services? No. Fundamentally we wanted an open approach. We hoped our products could interoperate in the future,” Mr Chandler said.

News that Cisco was seeking to collaborate with Apple by sharing the iPhone mark and making the iPhone compatible with other networking devices comes as the technology heavyweights are assessing the strengths of their conflicting claims to the iPhone name.

Apple has long preferred to develop products built on closed, proprietary technologies rather than open standards. Its proprietary iTunes music software, which will not work with devices other than Apple’s iPod, is one example of such a system.

Cisco, which is seeking an injunction that would prevent Apple from using the name iPhone in connection with its new handset, has claimed that it owned the exclusive right to the term iPhone since 2000, when it bought a company that had registered the trademark in relation to telecoms equipment. Last month, Cisco began shipping a series of VoIP-enabled cordless telephones bearing the iPhone mark.

Grace Han Stanton, a partner at the law firm Perkins Coie and an expert in trademark law, said that in spite of this history, Apple could make an argument that it still has the right to use the iPhone name.

According to one theory, Apple could argue that is has the right to use the name because the iPhone is part of a “natural progression” of products belonging to a single product family.

Just as McDonald’s, the fast food chain, might challenge another company’s use of ‘McPizza’, Apple could make the case that the iPhone is simply the latest in a long line of i-products, Ms Han Stanton said.

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