Apple and Cisco Systems have settled their legal dispute over the iPhone name. The two technology groups will share the moniker after agreeing to explore "opportunities for interoperability” between their products.

In a short statement, the companies said they would drop any pending legal actions regarding the trademark, which Apple is using for a new mobile phone device. Cisco, Silicon Valley’s largest company, is already using the name for a family of internet telephones sold by Linksys, its consumer division.

Further details of the agreement were not released.

Cisco, which has owned the Cisco brand since 2000, sued Apple last month in federal court in San Francisco, the day after Apple unveiled its iPhone. Cisco alleged Apple's use of the name was a "wilful and malicious" violation of the trademark.

Eleventh-hour negotiations over the contended name broke down on the eve of Apple's iPhone launch on January 9. It is understood that Apple had insisted on a deal where it would eventually own the trademark outright. Cisco had been unwilling to relinquish control and had sought to use the talks to gain access to Apple’s closed systems.

Apple has now apparently agreed to explore the possibility of making its hardware and software compatible with Cisco's. If followed though, the move would constitute an about-turn by Steve Jobs, the Apple chief executive, who has fiercely resisted calls from lawmakers in Europe to open-up the closed system that links Apple's online music store, iTunes, and its iPod music players.

Cisco, which makes most of its revenues from sales of hardware such as routers, which form the backbone of the internet, has long been committed to open industry standards. The group is making a big push to establish itself as a consumer brand, focusing especially on online video.

Currently, music and video content downloaded from iTunes only work with iPods. The lack of compatibility has been seen as a key weapon for Apple, which effectively means it locks customers who use iTunes into using an iPod.

Recently, however, Mr Jobs has sought to display a willingness to embrace more open systems. This month he insisted he would drop the digital rights management (DRM) technology, which protects digital music from piracy but limits where a certain file can be played, "in a heart beat" if the music companies would allow him to.

Apple’s iPhone is due to go on sale in the US in June with a retail price starting at $499 (£256).

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