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Beatles' Apple Corps Sues Over iTunes

Posted on: Thursday, 30 March 2006, 15:00 CST

By Megan Murphy Bloomberg News

Apple Computer Inc. is profiting from the Beatles' trademark by using the iTunes music store to promote its own brand alongside acts such as U2 and Coldplay, a lawyer representing the 1960s band told a London court.

Apple Corps Ltd., which represents the Beatles' business interests, is suing Apple Computer for allegedly breaching a 1991 agreement barring the manufacturer from using the Apple name or logo to sell music. Apple Computer has sold more than 1 billion songs through iTunes for its best-selling iPod music player.

The launch of iTunes marked a "radical change" for Apple Computer, moving the company from hardware and software to the music business, Geoffrey Vos QC, a lawyer for Apple Corps, told the High Court Wednesday in his opening arguments in the case.

"The sale of the music itself is the rationale and the raison d'etre of the iTunes music store," Vos said.

London-based Apple Corps, which is owned by Sir Paul McCartney, Ringo Starr and the widows of John Lennon and George Harrison, is seeking unspecified damages and a court order permanently blocking Apple Computer from using the Apple trademark in connection with the iTunes store. If Apple Computer loses the case, it may be forced to set up a separate music site, with no reference to its logo, lawyers acting on the case have said.

It's the third time Apple Corps has sued the computer company, based in Cupertino, Calif., over the apple trademark, which the Beatles have used since the late 1960s. Apple Computer was founded by Chief Executive Officer Steve Jobs and Steve Wozniak on April 1, 1976.

Apple Computer denies wrongdoing and claims that iTunes is a software system that isn't barred by the 1991 agreement. The company sells about 3 million songs a day in the U.S. through iTunes, which can only be played on the company's iPod players, Macintosh personal computers and other PCs, it said in January.

Vos Wednesday argued that iTunes customers are paying for music, not software, when they buy songs from the iTunes store. Apple Computer uses the apple logo on almost every screen of the Web site as well as in its "huge" advertising campaign, he claimed.

An iTunes television commercial, featuring music by Coldplay, one of the world's top-selling bands, and the apple logo was played before the court Wednesday as a purported example, as well as Chic's 1978 disco hit "Le Freak."

Jobs even offered the Beatles $1 million for the "Apple Records" trademark just prior to the site's launch, to avoid a dispute, Vos claimed. The company is acting "just like a record company," signing exclusive deals with artists like Sting and U2 and using iTunes to "repackage" and re-brand musical content, Vos told the court.

Apple Computer paid Apple Corps $26.5 million in 1991 to settle litigation over the trademark after it introduced new hardware and software making it easier to reproduce sound. That agreement specifically prohibits Apple Computer from distributing "physical media" with pre-recorded content, such as a compact disc or record.

The issue before the court in the current case is whether Apple is violating that agreement by selling customers digital musical files from an Apple-branded iTunes. Apple Corps claims that it still holds the exclusive right to use the Apple name and logo in connection with music sales.

Apple Computer is expected to begin presenting its defense later in the week, with the case scheduled for 10 days.

Source: Deseret News (Salt Lake City)

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