The Little App Factory, founded by Matthew Peterson, is one of the most popular developers of applications for Mac computers with a customer base of millions.
But Apple has taken issue with its signature product, "iPodRip", which allows users to transfer files from an iPod or iPhone device to a computer if a hard drive has been wiped, deleting music and media files. Usually when a user attempts to reconnect their iPod, music files are also deleted.
The product has been available for the past six years, but Peterson received an email within the last fortnight asking the company to change the product's name. Speaking through law firm Baker & McKenzie, Apple requested Peterson remove the name "iPod" from the product name and give up control of domain name ipodrip.com.
The development company was so concerned that Peterson's business partner in the US, John Devor, wrote an email to Apple chief Steve Jobs asking him to intervene in the situation.
Peterson and Devor expected some help from Apple, after it had learned many of the company's tech support staff had recommended its iPodRip program to customers. But the reply from Jobs was not expected.
"Change your apps name. Not that big of a deal," he wrote.
The company then decided to give up the fight. But in a blog post, Peterson wrote the company's future has now been thrown into chaos as he considers whether the business can remain financially viable.
"They have stated we can't use the name iPodRip, can't use an iPod icon (who knew?) and can't even retain ownership over our domain names."
"In fact, our entire business has been thrown into turmoil as we wonder about our future revenue and whether we need to lay off staff all the while dealing with lawyers; lawyers with very deep pockets."
Under a new legal agreement with Apple, the company is forbidden from even stating the application was previously called iPodRip, and he cannot inform customers of the change through emails.
Peterson maintains he is in the right, referencing the Trademark Act of 1995 that states if a person uses a trademark in good faith to indicate the intended purpose of certain goods, then no infringement has been made.
"So why aren't we fighting it then? Other than the aforementioned deep pockets, which would effectively bankrupt us before we started, we are loyal to Apple. We are all Apple customers, most of us are Apple shareholders and of course, we develop for the Mac OS X platform."
But Peterson offered a warning to Apple in his post, noting the company could see its reputation decline if it "stops caring".
"When we look back in history at the big companies and how their slow declines started there were usually two signs: they stopped caring about the little things and their internal departments stopped talking to each other."
"Apple, this was a little thing but something that your support team needed and your legal department decided against. As the mismanaged App Store also proves, the beast that Apple has become is ultimately becoming unwieldy and dare I say unfriendly. Hopefully this can be changed."
The legal battle comes after Apple challenged a trademark application by Woolworths last month, saying the supermarket chain's new logo was similar to its own.
If anything, Apple's IP team should be able to review the name change announcement before it is sent, to help ensure that their position is properly represented, but crippling the developer's ability to comply through properly announcing a name change and transitioning gently is just cruel.