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'Apple v. Apple' Trial Opens in London

Britain's Royal Courts of Justice came alive to the beat of the 1978 disco classic "Le Freak" Wednesday as two giants of the music business clashed in a battle over Internet downloads and a piece of forbidden fruit.

Apple Corps, the music company set up by the Beatles in 1968, is suing Apple Computer (AAPL) over its iTunes Music Store, which it says infringes a 1991 trademark agreement that the computer-maker would steer clear of the record business.

Apple Computer denies infringement and says that its iTunes service is an electronic data-processing device — an argument dismissed by Geoffrey Vos, Queen's Counsel, representing Apple Corps, as a "perversion" of the 1991 deal.

As the case opened in the High Court, Vos argued that Apple Computer was clearly in the music business, having sold a billion tracks already through its iTunes service.

He quoted Steve Jobs, founder and current chairman of the computer firm, as saying that downloading music from the Internet now was exactly the same as buying an LP in the era of vinyl.

To prove his point that Apple Computer was using the trademark to sell music even though its download service is branded otherwise, he demonstrated to Justice Edward Mann how to download a track from the iTunes Web site onto an Apple iPod music player.

Choosing "Le Freak" — which spent six weeks at No. 1 on the British charts for the group Chic before the Internet had even been popularized — Vos took the judge through the procedure, pointing out how many times the Apple logo appeared as he did so.

["If you click on the disco section — which I'm sure would be your lordship's immediate choice — you'll see a list of tracks," Vos told the judge as court attendees laughed, the Associated Press reported.]

The song and its chorus — "Aahhh Freak Out! Le Freak, c'est Chic!" — boomed around court No 73.

Justice Mann proved no beginner: The judge is an iPod owner and had earlier offered to disqualify himself from the case on that basis.

[Vos also played a commercial promoting the release of British band Coldplay's "X&Y" album. As their hit song "Speed of Sound" filled the courtroom, Vos pointed out that the commercial is not for any of Apple's computer products. The commercial ends with a shot of Apple Computer's logo.]

Vos told the court that both sides had respected the 1991 agreement and all had gone well between the two companies until the advent of the iPod, the portable music player that can store thousands of tracks downloaded from the Internet or ripped from a user's CD collection.

He said that Apple Computer violated the agreement when it launched iTunes in 2003 and described as "plainly wrong" its argument that it uses the apple mark only in connection with a delivery system.

["They were the people who were supplying computer systems, computer software, computer hardware. That's what they did," Vos said. "We were the people supplying the music. And they crossed the dividing line."]

Customers of the service now have access to 3.7 million songs, and when Jobs launched the American version of the iTunes Music Store in 2003, part of the presentation included exclusive tracks from artists including U2, Eminem and Bob Dylan — "tracks for the Store that you cannot get anywhere else."

"[Apple] Computer was promoting a store at which to buy music, and more particularly, Computer's musical recordings — permanent downloads — with special characteristics," argued Vos. "No objective onlooker could think otherwise."

"What Apple Computer are not doing using the Apple mark is selling software, delivery systems, or anything of the like. They are selling music," he added, "and that is in violation of the agreement."

The computer company's logo is a cartoonish apple with a neat bite out of the side; the record company is represented by a perfect, shiny green Granny Smith apple.

He added that Jobs wanted to use the mark "apple" for the Music Store but realized that the agreement prevented this.

Before the launch of iTunes it had even approached Apple Corps and offered $1 million for the trademark Apple Records, said Vos.

That offer was rejected by Neil Aspinall, the Beatles' former road manager, who is now managing director of Apple Corps.

Although Apple Computer recognized that the use of "apple" marks would be impermissible, it "succumbed to its earlier desire" and used the logos with "great prominence" and the name "apple" and had continued to do so up to the present date, Vos added.

Apple Corps is seeking court orders to stop Apple Computer using the "apple" marks in connection with the iTunes Music Store and is also asking for damages after an investigation into Apple Computer's profits from the world's dominant music download service.

[There has been much litigation between the two Apples. The Beatles sued Apple Computer over the name in 1981, four years after Steve Jobs co-founded Apple Computer. He is said to have chosen the name in part as a tribute to The Beatles.

The 1981 case ended after the tech company paid The Beatles' company an undisclosed amount and agreed to use the name only for computer products.

A decade later, The Beatles sued again, alleging Apple Computer was violating the initial agreement by using its Apple logo on music-synthesizing products. The case was settled out of court with Apple Computer paying an undisclosed amount to The Beatles' company and signing the agreement around which the latest lawsuit revolves.]

Apple Corps' current owners — Sir Paul McCartney, Ringo Starr, George Harrison's widow Olivia Harrison and Yoko Ono — did not attend the hearing.