Apple Corps v Apple Computer 1

Apple Corps v Apple ComputerBetween 1978 and 2006 there were a number of legal disputes between Apple Corps (owned by The Beatles) andthe computer manufacturer Apple Computer (now Apple Inc.) over competing trademark rights. The High Court ofJustice handed down a judgment on 8 May 2006 in favour of Apple Computer, but the companies did not announce afinal settlement until 5 February 2007.

History of trademark disputes

1978–1981In 1978, Apple Corps, the Beatles-founded holding company and owner of their record label, Apple Records, filed alawsuit against Apple Computer for trademark infringement. The suit was settled in 1981 with an undisclosedamount being paid to Apple Corps. This amount had been estimated to be US$50–250 million, but was later revealedto be $80,000. As a condition of the settlement, Apple Computer agreed not to enter the music business, and AppleCorps agreed not to enter the computer business.

1986–1989In 1986, Apple Computer added MIDI and audio-recording capabilities to its computers, which included putting theadvanced Ensoniq 5503 DOC sound chip from famous synthesizer maker Ensoniq into the Apple IIGS computer. In1989, this led Apple Corps to sue again, claiming violation of the 1981 settlement agreement. The outcome of thislitigation effectively spelled the end of any further development of the highly profitable Apple II line, all forays atthe time by Apple Computer into the multimedia field in parallel with the Amiga, and any future advanced built-inmusical hardware in the Macintosh line.[citation needed]

1991In 1991, another settlement involving payment of around $26.5 million to Apple Corps was reached.[1] This time, anApple employee named Jim Reekes had included a sampled system sound called Chimes to the Macintosh operatingsystem (the sound was later renamed to sosumi, to be read phonetically as "so sue me"). Outlined in the settlementwas each company's respective trademark rights to the term "Apple". Apple Corps held the right to use Apple on any"creative works whose principal content is music", while Apple Computer held the right to use Apple on "goods orservices ... used to reproduce, run, play or otherwise deliver such content", but not on content distributed on physicalmedia. In other words, Apple Computer agreed that it would not package, sell or distribute physical music materials.

2003–2006In September 2003, Apple Corps sued Apple Computer again, this time for breach of contract, in using the Applelogo in the creation and operation of Apple Computer's iTunes Music Store, which Apple Corps contended was aviolation of the previous agreement. Some observers believed the wording of the previous settlement favoured AppleComputer in this case. Other observers speculated that if Apple Corps was successful, Apple Computer would beforced to offer a much larger settlement, perhaps resulting in Apple Corps becoming a major shareholder in AppleComputer, or perhaps in Apple Computer splitting the iPod and related business into a separate entity.The trial opened on 29 March 2006 in England, before a single judge of the High Court. In opening arguments, alawyer for Apple Corps stated that in 2003, shortly before the launch of Apple Computer's on-line music store,Apple Corps rejected a $1 million offer from Apple Computer to use the Apple name on the iTunes store.On 8 May 2006 the court ruled in favour of Apple Computer, with Justice Edward Mann holding that "no breach ofthe trademark agreement [had] been demonstrated".[2]

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The Judge focused on section 4.3 of that agreement:4.3 The parties acknowledge that certain goods and services within the Apple Computer Field of Use arecapable of delivering content within the Apple Corps Field of Use. In such case, even though Apple Corpsshall have the exclusive right to use or authorize others to use the Apple Corps Marks on or in connection withcontent within subsection 1.3(i) or (ii) [the Apple Corps catalogue and any future music], Apple Computers[sic] shall have the exclusive right to use or authorize others to use the Apple Computer Marks on or inconnection with goods or services within subsection 1.2 [Apple Computer Field of Use] (such as software,hardware or broadcasting services) used to reproduce, run, play or otherwise deliver such content provided itshall not use or authorize others to use the Apple Computer Marks on or in connection with physical mediadelivering pre-recorded content within subsection 1.3(i) or (ii) (such as a compact disc of the Rolling Stonesmusic).

The Judge held Apple Computer's use was covered under this clause.In response, Neil Aspinall, manager of Apple Corps, indicated that the company did not accept the decision: "Withgreat respect to the trial judge, we consider he has reached the wrong conclusion," and announced that it would "befiling an appeal and putting the case again to the Court of Appeal." The judgment orders Apple Corps to pay AppleComputer's legal costs at an estimated UK£2 million, but pending the appeal the judge declined Apple Computer'srequest for an interim payment of £1.5 million.The verdict spawned the Wrong Guy incident on BBC News 24, in which a job applicant mistakenly appeared on airafter he was confused with computing expert Guy Kewney.

2007There was a hint that relations between the companies were improving at the January 2007 Macworld conference,when Apple CEO Steve Jobs featured Beatles content heavily in his keynote presentation and demonstration of theiPhone. During that year's All Things Digital conference, Jobs quoted the Beatles song "Two of Us" in reference tohis relationship with co-panelist Microsoft chairman Bill Gates. Speculation abounded regarding the muchanticipated arrival of the Beatles' music to the iTunes Store.On 5 February 2007, Apple Inc. and Apple Corps announced a settlement of their trademark dispute under whichApple Inc. will own all of the trademarks related to "Apple" and will license certain of those trademarks back toApple Corps for their continued use. The settlement ends the ongoing trademark lawsuit between the companies,with each party bearing its own legal costs, and Apple Inc. will continue using its name and logos on iTunes. Thesettlement includes terms that are confidential, although newspaper accounts at the time stated that Apple Computerwas buying out Apple Corps' trademark rights for a total of $500 million.Commenting on the settlement, Steve Jobs, Apple's CEO said, "We love the Beatles, and it has been painful being atodds with them over these trademarks. It feels great to resolve this in a positive manner, and in a way that shouldremove the potential of further disagreements in the future."Commenting on the settlement on behalf of the shareholders of Apple Corps, Neil Aspinall, manager of Apple Corpssaid, "It is great to put this dispute behind us and move on. The years ahead are going to be very exciting times forus. We wish Apple Inc. every success and look forward to many years of peaceful co-operation with them."An announcement in April 2007 that Apple Corps had settled another long-running dispute with EMI (and that NeilAspinall had retired and been replaced by Jeff Jones) further fueled media speculation that The Beatles' cataloguewould appear on iTunes.In early September 2007, an Apple press release for the new iPod touch, related iPod updates, and iPhone price cut was entitled "The Beat Goes On", the title of the Beatles' last press release before splitting up. Although Beatles content was still unavailable from the iTunes store, each Beatle's solo work could be accessed and downloaded on this service. Paul McCartney was quoted in Rolling Stone as saying that their catalogue would be released through

Apple Corps v Apple Computer 3

digital music stores such as iTunes in the first quarter of 2008, but this did not happen until 2010.

References[1] Miles 1998. pp 581–582.[2] ( archived (http:/ / web. archive. org/ web/ 20090402120847/ http:/ / www. hmcourts-service. gov. uk/ judgmentsfiles/ j4226/

apple_v_apple_hc03c02428_0506. htm) on 2 April 2009)

Bibliography• Doggett, Peter (2011). You Never Give Me Your Money. Harper. ISBN 0-06-177418-9.• Miles, Barry (1998). Many Years From Now. Vintage-Random House. ISBN 0-7493-8658-4.• Soocher, Stan (1999). They Fought the Law: Rock Music Goes to Court. Schirmer Trade Books.

ISBN 0-8256-7241-4.• Southall, Brian (2009). Pop Goes to Court: Rock 'n' Pop's Greatest Court Battles. Omnibus Press.

ISBN 1-84772-113-3.

The History of Apple v. Apple

In the early 1980s, the primary ways to purchase a copy of music were to buy an LP, 8-track tape

or cassette tape. It would be years before the computer and the media center would merge

technologies. So, when The Beatles' company Apple Corps sued the up-and-coming Apple

Computer in 1981, it seemed reasonable that the computer company would agree to never be in

the music business. The two companies instead agreed to share the disputed trademark in

completely separate markets: Apple Corps in the music business, and Apple Computer in the

computer business.

When Apple started developing computers that made sounds, the company decided its 1981

agreement needed revisiting. Attempts at renegotiating in 1987-88 led nowhere, and Apple went

on to release its first computers with Musical Digital Interface (MIDI) in 1989. Apple Corps

snapped to attention, claiming a violation of the 1981 settlement. After another round in court,

Apple Corps and Apple Computer reached a new settlement in 1991 with undisclosed terms.

In 2003, Apple Computer’s launch of iTunes created a stir throughout the music business. With

iTunes, Apple was selling music track-by-track, allowing you to download your purchases and

copy them onto your iPod. Apple was taking the downloadable media market by storm, even in a

time where Internet music sharing was creating growing legal controversies. Suddenly, each

recording company and artist was in a position to either embrace or reject this new way of selling

music.

Apple Corps came forward again in 2003 stating that the launch of iTunes was another breach in

their trademark agreement. In the meantime, though, Apple Corps had other issues, fighting EMI

in another of a long history of lawsuits for unpaid royalties they claimed were owed to The

Beatles for releases in the ‘90s. In 2007, Apple Corps finally settled both cases, including

completely replacing their trademark agreement with Apple, Inc.

Apple Corps manager Neil Aspinall, who would soon retire, stated about the 2007 settlement that

it was “great to put this dispute behind us and move on” (source: Apple Inc.). Apple fans and

iTunes customers were relieved to hear the news, hoping it would mean that The Beatles' catalog

would soon be available at the iTunes store. But it took more time to work out a deal.