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The long-running legal tussle between The Beatles' company, Apple Corp, and technology giant Apple Computer returned to London's High Court on Wednesday - this time, focused on the latter's move into music services through its iPod player and iTunes download system.

Apple Corp is accusing the US company of breaching a trademark agreement, by effectively "selling music" through its online music store and using the Apple name and logo in connection with this.

The agreement, which the two parties eventually hammered out during their last bout of litigation in 1991, aimed to make clear who could use the apple name in what context. The result, claimed Geoffrey Vos, QC, opening the case for The Beatles' company on Wednesday put it, was: "We do music, you do computer delivery systems".

But at that stage, development of the internet was in its early stage, and Apple Computer’s business strategy has moved on. The current problem, Mr Vos claimed on Wednesday, is that "the sale of the music itself is the rationale and the raison d'etre of the iTunes music store".

"They are selling music and that is exactly what they cannot do," he told Mr Justice Mann.

Apple Computer, by contrast, maintains that iTunes is a software delivery system which acts as a conduit for supplying music. It denies that this breaches the 1991 agreement.

But on Wednesday, Mr Vos attempted to counter that argument, saying that it "grossly belittled" Apple Computer's role. "It is doing something new and special", he said, pointing out that, not only were individual songs available from the music store, but so were compilations, "celebrity playlists", and "boxed sets".

"We say what Apple Computer is doing is going in the biggest possible way into the record business," he claimed.

Opening the case, Mr Vos also revealed that Steve Jobs, Apple Computer's chief executive, had phoned Neil Aspinall, The Beatles' former road manager who is now managing director of Apple Corp, to ask if his company could buy the "Apple Records" mark for $1m about a month before the launch of the online music store.

Lawyers, not involved in the case, say that a good deal is riding on the outcome. The iTunes music store features 3.7m tracks available worldwide, and the court was told that the company has sold about 1bn songs through the website.

This is also the third major legal clash between the two parties over the past 25 years. The 1991 trademark agreement - which supplanted an earlier 1981 deal - followed a High Court action which had lasted 116 days by the time the deal was struck. The settlement was confidential but reportedly involved millions of dollars being paid by the US company to Apple Corp.

If The Beatles' company was to win the current case, Rosalind Messer, an intellectual property lawyer with Norton Rose, believes the figure could be even higher this time round - and it might also be possible for some form injunction to be sought. "Damages are the most likely remedy, but it would depend on how strongly the parties feel," she says.

Given the scale of the stakes, some lawyers believe the case will eventually settle - although there was little sign of that on Wednesday, as Mr Justice Mann, a self-confessed iPod user, sat surrounded half-a-dozen different computer screens and laptops on which evidence will, in due course, be displayed.

Copyright The Financial Times Limited 2017. All rights reserved.
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