Uses of Apple Trademark in Dispute: Just Another Day in Court for the Forbidden Fruit

A judge in London this week will hear out the quarrel between Apple Computer, Inc. and Apple Corps, which is owned by Ringo Starr, Paul McCartney, John Lennon’s widow, Yoko Ono, and the estate of George Harrison. The interpretation of the Apple trademark/logo is the surface topic of contestation by Apple Corps, but there is a lot more at stake than another “here we go again” case.

Apple Computer is no stranger to the courts or to settling with Apple Corps. According to Arik Hesseldahl’s BusinessWeek Online report, “the current flap stems from an agreement reached in 1991…, the second time Apple Computer tangled with the legacy of the Fab Four. That agreement gave the Cupertino (Calif.)-based outfit rights to the Apple trademark in connection with ‘electronic goods, computers, telecommunications equipment, data processing equipment.’ It also allows for trademark use related to ‘data transmission services’ and ‘broadcasting services,’ as well as related promotional merchandising. For those rights, Jobs & Co. paid the record company $26.5 million.”

Apple has the decision to settle or continue with litigation, but settling would be the best option, according to BusinessWeek Online source Lee Bromberg, a trademark lawyer with the Boston firm of Bromberg & Sunstein. “The only risk to the record company is the cost of the litigation,” Bromberg says. “It has nothing to lose here, and they may feel that it’s time to roll the dice.”

If Apple lets the matter go to trial, the argument could be that downloads are comprised of digital data, and it could point to clauses in the $26 million 1991 deal that cover “data transmission services” and the promotion of those services, according to Hesseldahl.

Apple Corps has so far refused to license the Beatles’ music catalog for digital sales. That makes it one of only a handful of bands still unavailable via legitimate online music sites, and that might be a reason why the record label is so fierce about protecting its trademark (or digging into big Apple’s pockets for money).

BussinessWeek Online reported that for the record company, a big settlement could be “a way of getting its hands back on one of the crown jewels of The Beatles’ legacy: the publishing rights to some 250 songs that are controlled by Sony/ATV, a joint venture between the singer Michael Jackson and Sony (SNE ), his record company.”

The New York Times (http://www.nytimes.com) reports that in the London trial, which is likely to run into next week or perhaps even longer, Apple Computer is expected to argue that it merely serves as a conduit for the transmission of music in digital form. “A lawyer for Apple Computer, Anthony Grabiner, declined to comment outside the courtroom, citing legal restrictions.”

According to the NY Times, in his opening argument, Geoffrey Vos, a lawyer representing Apple Corps, dismissed the conduit argument. Vos contended that the lack of “interoperability” with other companies’ music stores undermined Apple Computer’s stance.

“The agreement was intended to say, We do music, you do computer software delivery systems,” Mr. Vos said of the 1991 deal. “The moment you cross the line is when you say you’re in the record business.”

“Apple Computer can go into the recorded music business in any way they want,” Vos told the English High Court in London. “What they cannot do is use Apple [trade]marks to do it.”

Apparently, Apple Computer tried to purchase the rights to the Apple Corps name for $1 million in 2003, but the offer was rejected by Neil Aspinall, managing director of Apple Corps. This is the first lawsuit between the Apples in the digital age, so the stakes are higher, but the ruling from Judge Mann is not expected for a long time.