Feb. 5 (Bloomberg) -- Apple Inc. ended a legal dispute with the Beatles over rights to use the Apple name and logos, potentially clearing the way for the company to distribute the group's music through its iTunes online store.

Under a new agreement, Apple Inc. owns all trademarks related to ``Apple'' and will license some rights back to the Beatles' Apple Corps Ltd. for its continued use, the companies said in a statement today. Terms weren't disclosed.

The settlement ends decades of litigation and may help Apple Inc. Chief Executive Officer Steve Jobs realize his goal of distributing the Beatles catalog, including hits such as ``Let It Be'' and ``Yesterday.'' ITunes is the most popular site for legal digital downloads and the addition of songs by the Beatles may help draw even more music fans to the site.

``The Beatles are one of the most significant artists missing from iTunes's portfolio at the moment,'' said Bill Fearnley Jr., an analyst with FTN Midwest Securities Corp. in Boston. He rates Apple shares ``buy'' and doesn't own any. ``This certainly is a step in the right direction.''

Shares of Cupertino, California-based Apple fell 81 cents to $83.94 at 4 p.m. New York time in Nasdaq Stock Market trading.

Apple Corps, which represents the Beatles business interests, doesn't distribute its music on the Internet. Jobs, 51, said in the statement that the resolution ``should remove the potential of further disagreements in the future.''

Apple Inc. spokeswoman Natalie Kerris declined to comment on the settlement or say whether a distribution agreement between the two is in the works.

Fruit Logo

Apple Corps, owned by Paul McCartney, Ringo Starr, John Lennon's widow Yoko Ono and the estate of George Harrison, first began using an image of a green Granny Smith apple on Beatles recordings in the late 1960s. Apple Inc. was founded by Jobs and Steve Wozniak in 1976, using the logo of an apple with a bite taken out of it.

Opened in April 2003, iTunes has a catalog of more than 4 million titles, operates in 22 countries and has sold more than 2 billion songs at 99 cents each. The service has more than a 70 percent share of the market for music downloads, according to researcher NPD Group Inc. in Port Washington, New York.

Songs by the Beatles, who led the ``British invasion'' of U.S. music charts in the 1960s, are among the most frequently downloaded illegally, according to NPD.

Keeping the Lead

A distribution agreement ``could be very powerful for Apple, which needs to constantly lead in this market,'' said Rob Enderle of Enderle Group in San Jose, California. ``Doing a deal like this first helps reaffirm that leadership.''

Revenue from iTunes and the iPod, the only music player that works with the service, accounted for more than half of Apple's sales in the quarter ended Dec. 30. The company has sold more than 88.7 million iPods since the device's introduction in 2001, making it the best-selling music player in the U.S.

Trying to estimate the value of the Beatles portfolio in downloadable form is impossible, said Michael Gartenberg, an analyst with Jupiter Research in New York. ``Obviously, it has a psychological impact,'' Gartenberg said in a June interview. ``The Beatles are an icon to classic rock music.''

Loving the Beatles

In the most recent legal volley between the two companies, a British court in May rejected Apple Corps's case that Apple Inc. had violated a 1991 agreement by using its fruit logo on iTunes. The High Court in London ruled that Apple Inc.'s use of its trademark on iTunes didn't mean the computer maker was branding the recordings offered for sale through the online store.

``We have always loved the Beatles, and hopefully we can now work together to get them on the iTunes Music Store,'' Jobs said in a statement after the ruling. At the time, Apple Corps said it was remastering the entire Beatles catalog to make the songs available for download.

Apple Corps had appealed the London court's May decision, with hearings scheduled for Feb. 26 and 27, according to the U.K. court service. Today's announcement heads off that case, the third lawsuit between the companies since the 1970s.

Apple Inc. paid the Beatles' company $26.5 million in 1991 to settle litigation over the trademark after it introduced new hardware and software making it easier to synthesize sound.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net; Megan Murphy in London at mmurphy41@bloomberg.net.

Last Updated: February 5, 2007 16:08 EST