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Not Guilty: Apple Beats Beatles Trademark Dispute

Justice Edward Mann of London’s High Court today issued a ruling in favor of Apple Computer in its current trademark dispute with the Beatles’ record label Apple Corps, finding Apple Computer had not breached a trademark-sharing agreement between the two companies by using its Apple logo on its iTunes digital music service.

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Getting Better — According to the 1991 agreement, Apple Computer was to have use of the trademark in the computer business, while Apple Corps would have exclusive use in the music industry. In rejecting Apple Corps’ claims of infringement, Justice Mann found Apple Computer’s logo in the iTunes Music Store constituted a “fair and reasonable use of the mark in conjunction with the service.” It seems that in the eyes of the court, Apple’s iTunes Music Store is just a new kind of shop, not a record label or music publisher. The companies’ 1991 agreement (which became public only as documents submitted in the current dispute) are silent about digital music distribution, focusing solely on prohibiting Apple Computer from distributing pre-recorded music on physical media: Justice Mann found no matter how lawyers spun it, the iTunes Music Store just didn’t count as physical media.

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Apple Corps, of course, immediately announced plans to appeal the decision, but the ruling is an unexpectedly positive outcome for the computer maker. Apple has now sold well over 1 billion songs via its online store (not to mention tens of millions of its now-iconic iPod music players) and was widely believed to be vulnerable to substantial trademark infringement damages from Apple Corps. Instead, Apple Corps now owes Apple Computer court costs, currently amounting to some 3 million British pounds. With the burden of the trademark suit largely lifted, Apple can focus on operating and expanding its iTunes offerings – and just maybe getting the Beatles recording catalog online.

Got To Get You Into My Life — One interesting outcome of the trademark trial is that Apple Corps head Neil Aspinall submitted that Apple Corps has been remastering the Beatles’ material (yet again!) and preparing to take the Beatles’ music online. Currently, Beatles material is not legally available for download, and, despite admitting to in-house preparation, Apple Corps says it has not made any decisions about when or how Beatles recordings might be for sale online.

Apple Corps has apparently investigated exclusive, time-limited arrangements with online music distributors (including Microsoft) but hasn’t been able to reach a deal – which probably means the Apple Corps asking price was too high for the low-margin digital download business. Now that Apple Corps can’t reasonably expect a fiscal windfall from Apple Computer, they may be more motivated to take the Beatles into the Internet age – and, without a doubt, Apple Computer would love to bring the Beatles into iTunes.

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