Since 2003, Mexican residents have been serviced by telecommunications company iFone. Apple started selling the iPhone in the country in 2007 and registered its own trademark. The Cupertino-based company then brought legal action against iFone in 2009, and iFone sued right back. In this case, Apple should have settled right out of the gate.

A court in Mexico City handed down a judgment last week that sees Apple lose an injunction that would have allowed the company to keep selling iPhone-branded products in the country. The court said that iPhone was too phonetically similar to iFone. The ruling means that Apple will no longer be allowed to sell iPhones with the iPhone name in Mexico.

It was pretty much a given that Apple was going to lose this one. iFone has been around since 2003, a full four years before Apple ever showed off its iPhone. It seems like a strange oversight by Apple, however, as the company claims to have paid for the iPad name in Asia during its legal dispute with Proview. Why didn’t Apple just work out a deal with iFone before threatening legal action against a brand that preceded its own?

It’s already pretty bad that Apple lost the right to use the iPhone name in Mexico, but it could get much worse. iFone sued Apple for damages which could result in 40 percent of all iPhone sales revenue in Mexico going to the telecom.

Electronista reports that the top two Mexican carriers were scheduled to start selling the iPhone 5 today. It’s unknown if the court order will delay the launch, or outright ban the iPhone 5 from sale in Mexico until Apple can either change the name or come to an agreement with iFone. My bets are on the latter as Apple probably wouldn’t change the name of its flagship device for just one country.

[h/t: El Universal]