That box with the homebrew "iPhone" sticker looks pretty sketchy... sounds like Cisco's been angling for a shakedown all along.

Apple still doesn't have a leg to stand on. Just about everyone involved in the VoIP industry knew about this trademark, mainly because we all wanted it.

In the end, Apple will pony up some money and that will be that.

Brand management seems to be the difference between a business vending (specs-oriented) company like Cisco and a consumer (marketing-driven) company like Apple. An iPod is an iPod and not the "Personal Digital Music Player X345" or other name because Apple cares for its brands. Cisco didn't seem to value much the iPhone name as a means to sell their equipment so now they'll have to fight in court to not lose it. Just my $0.02.

I could be wrong (or clueless, or both), but isn't trademark law at least theoretically designed to prevent trolls from sitting on names they aren't using?

If there are legal provisions meant to ensure active use of a trademark--rather than just hoarding it--then it seems clear Cisco was in violation.

And would they really have given a crap about the name if Apple hadn't created the brand value ex nihilo? This is like an abstracted domain squatting case...

Well if you look at this link - http://www.wired.com/wired/archive/3.10/iphone_pr.html
you can see that Vocaltec was using the iPhone moniker in 1995!
I actually remember meeting with them at the time!

IANAL... If the thing actually goes to court the number of unused trademarks that Cisco is sitting on would be a point that would be argued and will be a negotiating point in a settlement out of court.

But Cisco is a huge company in a business where it might someday reasonably want to use "iPhone" so a squatting charge wouldn't fly unless it's a pattern with them.