According to the Institute of Industrial Property (INPI), a local company, Gradiente Eletronica, registered the trademark iPhone in the country in 2000, seven years before the U.S. firm attempted to do so. The INPI added, however, that it understood that Apple intends to lodge an appeal.
Apple had argued that it should have been given full rights to the name iPhone as Gradiente Eletronica had not released a product using the term iPhone until December of last year.
The INPI said that its decision only applied to handsets. Apple can continue to use the iPhone name elsewhere, including in software, in publications, on clothing, and any other items.
The ruling doesn't mean that Apple has to halt sale of iPhones in Brazil, either. However, Gradiente Eletronica has the option of suing for exclusivity, which could result in problems for Apple in what is Latin America's biggest market.
Indeed, Gradiente Eletronica sells its own smartphones. The Manaus-headquartered company sells its Android-powered iPhone Neo One for 599 reals (or $304; £196).
That being said, the chairman of the board of Gradiente Eletronica has previously been quoted as saying:
We're open to a dialogue for anything, anytime... we're not radicals.
Apple has plenty of money to use if it wants to buy out Gradiente Eletronica's trademark. Apple's most recent financial results revealed its cash reserves had grown to $137 billion. That horde of cash, though, has prompted hedge fund Greenlight Capital to file a lawsuit against the Cupertino, Calif.-based company.