Apple Finds It Can Do That

Winning a case against the Beatles' Apple Corps, Jobs & Co. can keep using its own name in music sales. Next up: digital downloads of the Fab Four?

The legal dispute between Apple Computer and the Beatles appears to have come to the end of its long and winding road. For the computer company, what started as a sad song was made better as a London High Court judge ruled on May 8 that Apple Computer (AAPL) can continue on its present course of selling music through its iTunes Music Store under its own name.

But whether getting the suit out of the way advances the possibility of having the Beatles' catalog available for digital download on iTunes or any other digital outlet -- well, fans may have to let it be for a while. Still, Apple Computer CEO Steve Jobs held out an olive branch, saying he hoped to land a deal to distribute Beatles tunes on iTunes. "We have always loved the Beatles, and hopefully we can work together to get them on the iTunes Music Store," Jobs said in a statement.


  Getting the Fab Four on iTunes would certainly be something, since the Beatles haven't yet allowed their tunes to be distributed on any Internet download service. Yet during the trial, Apple Corps chief Neil Aspinall disclosed that the songs are in the process of being remastered in order to make them available for digital distribution. He didn't set a timetable on when he thought it would happen.

Apple is clearly interested in adding the Beatles catalog to its extensive library of two million songs, but so are other services, including Microsoft (MSFT), Yahoo! (YHOO), RealNetworks (RNWK), Napster (NAPS), and the privately held eMusic. "I'm sure all the players are courting the Beatles to make sure their catalog ends up anywhere but iTunes," says analyst Michael Gartenberg of Jupiter Research. "But Apple has a history of landing elusive artists like Madonna, and in truth, there aren't many big-name artists remaining among the digital holdouts" (see BW Online, 5/2/06, "Napster: New Tune, Same Chorus?")

The London court decision ended what on the surface was a simple trademark dispute, but also pitted two generational cultural forces -- the baby boomers' favorite LP recording artists vs. Gen Y's entrepreneurial hero Jobs and Apple's groundbreaking digital-music service.


  Apple Corps, the company founded by the Beatles in 1968 to manage their business interests, had taken the computer company to court last year over use of the Apple name to sell music. Doing so, the record company argued, constituted a violation of a 1991 agreement giving the Cupertino, (Calif.)-based Apple Computer the right to use the Apple name for a limited set of uses, namely, electronic goods, computers, telecommunications gear and, notably, data transmission and broadcasting services. For this, the computer outfit coughed up $26.5 million. The Beatles' company kept the rights to use the name in connection with music. (see BW Online, 3/29/06, "Apple vs. That Other Apple").

Once the iPod music player and the related iTunes Music Store became so popular -- and a profit center for the computer company -- the record company complained, leading to a bout of the sue-me, sue-you blues.

In issuing his ruling, Justice Edward Mann sided with the computer company, setting it free to operate iTunes under the Apple name. Mann wrote that the 1991 deal between the companies restricted Apple Computer from creating and selling its own music, not digitally distributing music created by artists working for established record companies. "I think that the use of the apple logo is a fair and reasonable use of the mark in connection with the service which does not go further and (unfairly or unreasonably) suggest an additional association with the creative works themselves," Mann wrote in a 29-page opinion.


  Apple Corps' Aspinall said he felt the judge had reached "the wrong conclusion" and promised to appeal.

Meanwhile, until the Beatles' catalog appears in digital form, fans can still put the group's tracks on their iPods or other music players by ripping them from CDs. The songs are also available digitally on peer-to-peer networks like Gnutella, eDonkey, and BitTorrent (see BW Online, 9/27/05, "BitTorrent's Grab at Respectability").But downloading them is illegal. So, as Ringo would sing, honey don't.

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