Apple Computer Beats Beatles in Trademark Lawsuit

Apple Computer Inc. (AAPL) is entitled to use the apple logo on its iTunes Music Store, a judge ruled Monday, rejecting a suit filed by Apple Corps Ltd., the guardian of The Beatles' commercial interests.

Apple Corps, which contended that the U.S. company had broken a 1991 agreement in which each side agreed not to enter into the other's field of business, said it would appeal.

Judge Edward Mann ruled that Apple Computer used the fruit logo in association with the store, not the music, and thus did not breach the agreement.

"I conclude that the use of the apple logo ... does not suggest a relevant connection with the creative work," Mann said in his written judgment. "I think that the use of the apple logo is a fair and reasonable use of the mark in connection with the service, which does not go further and unfairly or unreasonably suggest an additional association with the creative works themselves."

Though Apple Computer CEO Steve Jobs said he was "glad to put this disagreement behind us," the case appears far from over.

Neil Aspinall, the manager of Apple Corps, said his company would immediately take the case to Britain's Court of Appeal.

"We felt that during the course of the trial we clearly demonstrated just how extensively Apple Computer has broken the agreement," Aspinall said in a statement.

Apple Corps was founded by the Fab Four in 1968 and still owned by Paul McCartney, Ringo Starr, John Lennon's widow Yoko Ono and the estate of George Harrison.

Apple Computer has sold more than 1 billion songs through the iTunes Music Store, which is available throughout Europe as well as in the United States, Canada, Australia and Japan.

Though there are more than 3 million tracks available for purchase in the U.S. — and 2 million in Britain — there are no Beatles songs listed. The band's catalog is not available on iTunes.

In his brief statement, Jobs said he hoped the ruling would help rectify that situation: "We have always loved the Beatles, and hopefully we can now work together to get them on the iTunes Music Store."

That could be the case's main consequence, said Arthur Levy, an entertainment lawyer in New York.

"It's my belief that even if Apple Computer had lost, they'd find a way to do what they were doing, either with a different name or logo," Levy said. "The impact it could have is that if the two Apples patch up their differences, then maybe you'd see Beatles songs on iTunes. That would be good for the Beatles ... and for fans."

But Keith Badman, a Beatles expert and author of several books on the band, said he can't see Apple Corps backing down.

"We've lost John and George, and this is their music, their legacy, their heritage," Badman said. "They just want to make sure they're protected."

Apple Corps' case included a virtual tour of the iTunes Music Store, which culminated in lawyer Geoffrey Vos downloading the 1978 disco hit "Le Freak" by Chic, and playing it for the court.

The music of Eminem, U2, and Coldplay also featured in the case, with Apple Corps showing commercials featuring the artists to demonstrate how often Apple Computer's logo was featured in relation to music.

The judge confessed early on that he owned an iPod.

Lawyers for Cupertino, Calif.-based Apple Computer had argued the company was conducting its business legally and that consumers are smart enough to tell the difference between the logos.

Apple Corps uses a shiny green apple as its logo, while Apple Computer has a cartoon-like apple with a neat bite taken out.

Apple Computer shares rose 45 cents to $72.34 in midday trading on the Nasdaq Stock Market.

The 1991 agreement ended previous lengthy litigation over the logo. Apple Computer told the court that it paid the Fab Four's company $26.5 million as part of the 1991 out-of-court settlement, and in return had received "a considerably expanded field of use." The terms of the deal were kept confidential at the time.

Mann refused Apple Computer's application for an immediate interim payment of 1.5 million pounds ($2.8 million) from Apple Corps toward its legal costs, pending further hearings. Apple Corps faces a similar bill for its own legal expenses.

While the case may have seemed glamorous because of the litigants, it really came down to the interpretation of a contract — the 1991 agreement — said Jonathan Riley, an intellectual property lawyer with London firm Lawrence Graham.

"It was watched with interest, but also some distance, because I don't think it's hugely significant for either the computer industry or the music industry," he said.

Apple Computer was formed in 1976, when college dropouts Steve Jobs and Steve Wozniak filed partnership papers on April Fools' Day.

Their ubiquitous iPods first came out in October 2001 and the iTunes music store opened for business in the United States in April 2003; it is now available across Europe, in Australia, Japan, and Canada.