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Apple Computer's Lawyers Defend Company Against Beatles

A lawyer for Apple Computer Inc. (AAPL) dismissed as ridiculous Thursday a long-running trademark infringement claim by another cultural icon, The Beatles' Apple Corps Ltd. holding company.

"Even a moron in a hurry could not be mistaken about that," the distinction between the computer company's iTunes online music business and a recording company like Apple Corps Ltd., Apple Computer attorney Anthony Grabiner said.

At the core of the Apple vs. Apple dispute are conflicting interpretations of a 1991 settlement that ended more than a decade of legal wrangling between the two companies, each of which agreed not to tread on the other's sphere of business.

In Britain's High Court, Grabiner rejected Apple Corps' claim that the tech company's iTunes Music Store violated the agreement.

He said the computer company had paid the Fab Four's firm $26.5 million as part of the settlement and in return had received "a considerably expanded field of use."

The terms of the deal were kept confidential at the time.

Grabiner said the "distribution of digital entertainment content" was permitted at Apple Computer under the agreement.

"Data transmission is within our field of use," he said. "That's what [the agreement] says and it is inescapable."

Apple Corps' lawyer Geoffrey Vos had argued that Apple Computer's music distribution business "was flatly contradictory to the provisions of the agreement."

Apple Corps was started by The Beatles in 1968 and is still owned by Paul McCartney, Ringo Starr, John Lennon's widow Yoko Ono and the estate of George Harrison.

Its lawsuit seeks to force Apple Computer to drop its apple logo from the iTunes Music Store and pay unspecified damages.

Vos argued Wednesday that although services like iTunes are permissible, Apple Computer should stay out of the music business if it uses the logo, a cartoonish apple with a neat bite out of its side.

Apple Corps' logo is a green Granny Smith apple.

Vos said the 1991 agreement set out the areas under which each company could operate using its respective apple trademarks and that by selling music under the apple mark, the computer company was overstepping its boundaries.

But Grabiner argued that Apple Computer wasn't a recording label simply because it distributed music, so it did not violate the agreement. He said no "reasonable person" would assume that Apple Computer created or owned the 3.5 million songs on its hugely successful iTunes Music Store.

"It's obvious that the content comes from a wide variety of content providers," he said. "It's obvious that Apple Computer is not the source or origin of the content."

Most recording companies have welcomed iTunes, because — unlike pirate music sites — it protects their copyright and collects a fee. But the Apple vs. Apple dispute means that no Beatles music is available on iTunes.

"We haven't unfortunately been able to persuade Apple Corps in relation to their Beatles catalogue," Grabiner said. "But we have persuaded everybody else."

The presiding judge, Edward Mann, is computer-literate and has acknowledged owning an iPod music player.

At one point Thursday, Mann stopped Grabiner during an explanation of Apple Computer's iLife suite of multimedia software.

"ILife is not a complete novelty to me. I've got it and I use it," the judge said.

Grabiner apologized for explaining the obvious, but said that should the case go to a higher court, an older judge might not be so savvy.

"The higher up one goes, the less likely it is that anyone will know what we're talking about," he said.

The trial, which began Wednesday, is expected to last until at least next week.