Apple must know what they're doing. If even casual observers knew about Cisco's trademark, then Apple definitely knew. So let's see. Here's my theory... somehow Cisco was being uncooperative and leaning toward saying no, so Apple went public, took ownership of the name in the minds of the general public and maybe force Cisco to reconsider. Who knows?
Apple: We'd like to use iPhone as the name for our new product.
Cisco: Sorry, we own it.
Apple: Can we work out a deal? Maybe we can pay you 20 million bucks to use it. That would cover your marketing and you could re-brand your phone. We *really* wanna use that name and we'd pay that much for it.
Cisco: Maybe, how about 30 million?
Apple: Um... okay. 30 million.
Cisco: No, let's make it 40 million.
Apple: No, 30 million sounds good.
Cisco: No, screw off. We've changed our minds now.
(Apple goes public with the iPhone name.)
Cisco: Damn, you've grabbed major headlines with that. We may own the iPhone trademark, but everyone on the planet now thinks it's yours. We're suing you.
Apple: Hey, I have an idea. Let's talk about us buying it from you again. How does $30 million sound? That would more than cover re-branding and could avoid a lot of messy legal entanglements.
EDIT: Avicdar, I seriously did not see your post before posting mine. Weird. Same idea, same sort of post. Oh well... great minds and all that. 😉