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Apple Computer on Monday emerged victorious from its latest legal battle with the Beatles’ record company, Apple Corps, when a High Court judge in London ruled that the former’s iTunes music store had not breached a trademark agreement between the two groups.
The decision means that Apple Computer will be allowed to continue selling music through its iTunes music store using the Apple logo and name, without risking fines or an injunction.
Shares in Apple Computer rose as much as 2 per cent in early trading in New York, reflecting investor relief at the decision. They later pulled back, rising 0.7 per cent to $72.36 by midday.
More than 1bn songs have been downloaded from iTunes for use on Apple’s iPod music player since its launch three years ago. ITunes, together with iPod accessories and services, accounted for more than 10 per cent of Apple’s $4.4bn in revenues last quarter.
Apple Corps had claimed the 1991 agreement did not permit the US software company to use the Apple mark on or “in connection with” music content – and that this was what iTunes was doing.
Apple Computer maintained the iTunes music store was essentially a delivery service and that the Apple mark was being used to “frank” the software, not the content.
Mr Justice Mann said the trademark agreement – drawn up long before iPods and the iTunes download system existed – had been attempting to cater for a potential situation in which Computer had a service, within its field of use, which was being used to transmit content which was within Corps filed of use.
The agreement’s intention, said the judge, was “to protect a fair and reasonable use of the mark when applied to the service”.
“Provided the mark is used in a reasonable and fair way on or in connection with the service, and genuinely …to denote a trade connection with that service (rather than with anything else), then the line will not be treated as crossed,” he ruled.
Steve Jobs, chief executive of the software group, said his company was “glad to put this disagreement behind us”.
“We have always loved the Beatles, and hopefully we can now work together to get them on the iTunes Music Store,” he said.
But Neil Aspinall, the Beatles’ former road manager who has managed Apple Corps for more than 30 years, said that “with great respect to the trial judge, we consider he had reached the wrong conclusion” – and immediately confirmed that his company would appeal.
The clash between the companies over the successful iTunes Music Stores is the third major legal tussle they have had over use of the Apple mark during the past 25 years.
Had the Beatles company won the case, it could have gone on to ask either for damages or even some form of injunction against Apple Computer. As it is, Apple Corp - which, as the loser, must pay the winner's costs - will be left with a multi-million pound legal bill.
The court was told yesterday that Computer had racked up legal expenses of £1.8m by January, when Corps' own costs were around £1m. Since then, the trial costs themselves will have added substantially to both bills.
Apple Computer still faces legal challenges in Europe. French lawmakers are this month reviewing a new law that would require Apple to make songs downloaded through the iTunes service compatible with rival music players.