Apple is going to lose the ability to call the iPhone an iPhone in Brazil. Citing unnamed sources familiar with a Brazilian regulator's decision, Reuters reported that Apple would be stripped of its right to use the name and awarded the trademark for "IPHONE" to a local company who registered it first.

That company is called IGB Eletrônica SA, and it registered the trademark in 2000, roughly seven years before Apple announced the iPhone in January 2007. The mark was finally granted in 2008.

In December of 2012, IGB Eletrônica released a cheap Android smartphone called IPHONE Neo One for R$599 (Brazilian Reais) or US$302. The company is marketing the device under the Gradiente Eletrônica SA brand.

Gradiente IPHONE Neo One

Apple sells the iPhone 4S in Brazil for R$1,999, or US$1,007. The price is so high because Apple's iPhones and other products are hit with steep protectionist tariffs in Brazil.

Gradiente's IPHONE Neo One was a low-end device when it was released, and its primary intent was most likely to protect the IGB trademark rather than to serve as a serious contender in the smartphone market.

The company said in a statement in December that it would use, "all the measures used by companies around the world" to preserve its intellectual property rights because "the two brands can't coexist in the market."

Later in December, a local trademark consultant opined that Apple would likely end up buying the trademark from IGB. As we noted at the time, the presence of the low-end Gradiente device damages the iPhone brand from Apple's perspective, and the impending ruling from the Brazilian Institute of Intellectual Property tremendously increases the strength of IGB's negotiating hand.

Reuters reported that Apple could challenge the ruling in court, but every day that goes by could be a day where Apple can't sell the iPhone without renaming it while IGB peddles its $302 Android device. That will put great pressure on Apple to pony up and buy the mark from IGB.

Apple eventually paid Proview Technology some $60 million for the "IPAD" trademark in China—not counting legal fees. Just like the Chinese market, Brazil has a growing middle class and it could become a very important market for Apple. That could eventually be reflected in the purchase price of this trademark should Apple buy it.