By Aaron O. Patrick
The Wall Street Journal
Thursday, March 30, 2006
LONDON, March 29 -- Playing a 1970s disco hit to illustrate his point, a lawyer for the Beatles' record company asked a British court to order Apple Computer Inc. to stop using the Apple logo to promote its iTunes music store.
Geoffrey Vos, a lawyer for the Beatles' Apple Corps, told England's High Court that Apple Computer had engaged in a "flagrant violation" of an agreement the two sides had reached over use of the Apple name and logo.
The case could settle a long-running flap between the companies over use of the Apple brand name. In 1991, the companies agreed to share use of the name. Apple Computer, of Cupertino, Calif., was allowed to use the brand for computers as well as for equipment and software to distribute music. London's Apple Corps had the right to use it to produce and sell music.
Then Apple began promoting its iTunes service, a popular computer program that allows people to download songs from the Internet and transfer them to Apple's iPod portable music players. The Beatles' company argued in court that iTunes violated the agreement by placing the Apple logo on the program and in advertisements for it.
The case requires the judge, Edward Mann, to interpret an agreement over the sale and distribution of music that was written before the phrase "music download" came into existence. Apple Computer is scheduled to begin laying out its case Thursday. The hearing is expected to end next week.
The case is likely to hinge on whether Apple Computer is found to be packaging and selling music or merely distributing it. Vos cited examples that he said showed Apple had eagerly entered the music industry, including paying for recording sessions for singers Elvis Costello and PJ Harvey. He presented technical information about the ability of the iTunes program to alter song formats, which he said proved Apple Computer was more than a music distributor.
"What they want now is to be in the music business," Vos told the court. "Which is okay as long as they use a name that is unrelated [to Apple]."
To show how the iTunes store works, Vos downloaded a track during Wednesday's hearing. He played part of "Le Freak," by '70s band Chic.
The Beatles' company wants the judge to find that Apple Computer is in breach of their 1991 deal and to order Apple to stop using its logo on the program and in iTunes advertisements. If Apple Computer is found to have violated the agreement, the Beatles' company would be able to seek damages. The iTunes service wouldn't be shut down.
The companies have discussed the matter for years. In January 2003, Apple Computer asked Apple Corps to put Beatles' songs on the iTunes service.
The Beatles' company, unhappy with Apple Computer's move into music, refused.
Two months later, Apple Computer chief executive Steve Jobs offered to buy the name Apple Records for $1 million, Vos said. The Beatles' company rejected the offer. The band's songs still aren't among the 3.6 million offered on iTunes.