Mexico City, Mexico - Apple has lost the right to continue selling "iPhone"-branded products in Mexico after its trademark lawsuit against the country's telecommunications company "iFone" backfired.

Judges sitting in Mexico City's 18th District Appellate Court handed down a ruling last Thursday denying Apple's injunction bid that would have allowed it to continue selling their product under the iPhone name in Mexico. The ruling determined that the iPhone brand is too phonetically similar to iFone, and could cause confusion among consumers.

iFone is a telecommunications company selling communications systems and services, including interfaces for IP-based telephone calls, virtual office services, and software for switching systems. It counts Microsoft, Maxcom, Axtel, and Avay among its clients.

The decision marks the end of a three-year trademark battle launched by Apple in 2009, requesting that the Mexican company cease using the iFone brand. It was an unwise move. iFone registered its trademark in 2003, some four years before Apple did so.

Unable to argue that iFone was too similar to iPhone, Apple lost its lawsuit. iFone then countersued and won. Apple appealed last week and was rebuffed by the court.

As a result Apple lost the right to trade using the iPhone brand, and the if the ruling is applied retroactively, the Mexican firm could be entitled to up to 40 percent of the profits Apple has made using the iPhone name in Mexico since it launched five years ago.

iFone's countersuit also sought to block Apple from selling the iPhone under its current name in Mexico.

The decision could have a considerable impact on the Mexican smartphone market. Telcel and Movistar, numbers one and two among Mexican carriers, were scheduled to begin selling the iPhone 5 on Friday, November 2nd. It is not certain how quickly the sales ban will go into effect or if the two companies will come to some sort of financial settlement.

Presumably Apple is going to have to reach deep into its record-breaking profits to smooth this one over. And after this ruling, it will have few cards to play when brokering a deal with iFone to licence the trademark in the future.

Coming within a week of Apple's humiliating public apology in UK over a patent lawsuit that it lost, Apple's habit of launching aggressive lawsuits is coming back to haunt them.