The move sets up a trademark battle a day after Steve Jobs, Apple’s chief executive, introduced the new mobile and sent the company’s shares up by almost 8.5 per cent.

The announcement of the court action came after US markets closed last night and Apple stock dipped 1.3 per cent in after-hours trading. It is expected to fall further when markets open this morning.

Cisco decided to sue Apple after several years of negotiations in which the two parties failed to reach an agreement. It has owned the name iPhone since 2000 when it acquired InfoGear Technology, which originally registered the name.

Cisco put the trademark to use three weeks ago when it released an internet-enabled phone — called iPhone — that uses the increasingly popular Voice over Internet Protocol.

Mark Chandler, the senior vice-president and general counsel at Cisco, said: “Cisco entered into negotiations with Apple in good faith after Apple repeatedly asked permission to use Cisco’s iPhone name. There is no doubt that Apple’s new phone is very exciting, but they should not be using our trademark without our permission.” Cisco filed its suit in the US District Court for the Northern District of California.

After years of speculation, 200 patent applications and a development programme shrouded in secrecy, Apple’s iPhone was unveiled at a conference on Tuesday to a standing ovation.

Apple hopes that the iPhone will do for mobile phones what its iPod did for MP3 music players. The iPod has redefined the industry, selling more than 70 million since it was introduced in 2001, and has led to more than 2 billion songs being downloaded via Apple’s iTunes store.

The company aims to sell 10 million iPhones by the end of next year, or about 1 per cent of all mobile phones sold.

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