What is Steve Jobs thinking?

We all knew Cisco had the trademark on the name. According to their press release:

"Cisco entered into negotiations with Apple in good faith after Apple repeatedly asked permission to use Cisco's iPhone name," said Mark Chandler, senior vice president and general counsel, Cisco. "There is no doubt that Apple's new phone is very exciting, but they should not be using our trademark without our permission."

They negotiated, Cisco said no. So they release it anyway. And Apple's response is:

Apple responded by saying the lawsuit was "silly" and that Cisco's trademark registration was "tenuous at best".

"We think Cisco's trademark lawsuit is silly," Apple spokesman Alan Hely said. "There are already several companies using the name iPhone for Voice Over Internet Protocol (VOIP) products."

It's "silly"? Come on, that sounds like they're daring Cisco to take it to court. And claiming that the trademark has already been diluted by other products is a dangerous game. If that argument prevails, then Apple will have no standing to prevent anyone else from releasing their own iPhone.

What the hell are they thinking?


[Update]

See the Joel on Software forums for some discussion of this.