Originally created 09/13/03

Beatles' company sues over trademark



SAN JOSE, Calif. -- The Beatles want to take another bite out of Apple Computer Inc.

Their record company, Apple Corps Ltd., said Friday that it was suing Apple Computer because the technology company violated a 1991 agreement by entering the music business with its iTunes online store.

When Steve Jobs co-founded Apple Computer in 1977, he is said to have chosen the name in part as a tribute to the Beatles. The 1991 agreement dealt with the future use of the name "Apple" and of both companies' well-known logos.

Apple Corps, founded in 1968, is owned by Sir Paul McCartney; Ringo Starr; John Lennon's widow, Yoko Ono; and the estate of George Harrison. It sued on July 4, about a month after Apple Computer launched its iTunes Music Store, a download music service.

The Beatles' suit, filed in the High Court in London, seeks an injunction to enforce the terms of the 1991 agreement, and monetary damages for the alleged contract breach.

"Unfortunately Apple and Apple Corps now have differing interpretations of this agreement and will need to ask a court to resolve this dispute," said Katie Cotton, an Apple Computer spokeswoman.

The stakes could be high: Apple's iTunes Music Store has sold more than 10 million songs at 99 cents each since its April 28 launch, and is central to Apple's strategy to promote its computers as digital entertainment hubs.

Shares of Apple closed Friday at $23.10, up 54 cents, on the Nasdaq Stock Market.

The London lawsuit is the latest legal spat between the two cultural icons.

In 1981, the Beatles, who had released most of their recordings on the Apple label, sued Apple Computer over the corporate name. The case ended after the tech company agreed to only use the name for computer products, according to Apple Corps.

A decade later, the Beatles sued again, alleging Apple Computer was violating the initial agreement by using its apple logo on music-synthesizing products. That case was settled out of court with Apple Computer paying an undisclosed amount to the Beatles company and signing the agreement around which the latest lawsuit revolves.

Terms of the 1991 settlement were kept confidential, with Apple Computer allotting $38 million at the time to settle the litigation.

Some think the latest case may lead only to a walk down penny lane.

Charles Wolf, analyst with Needham & Co., predicted Friday that the two companies will settle if a judge doesn't throw out the lawsuit.

The Cupertino-based company is already paying hefty royalties to the five major record labels for the right to distribute their music online. It pays the labels an estimated 65 cents per song in addition to about 25 cents per song in other distribution and credit card processing fees.

Wolf thinks the Beatles company would only manage to exact perhaps a half penny per song from Apple.

"They'll never stop the iTunes Music Store," Wolf said. "The point of the suit is to collect money and they won't get any money if they cut off the store."

Wolf thinks Apple Computer's lawyers must have considered the Beatles agreement prior to the online music store launch.

"They named it the 'iTunes Music Store,' right?" Wolf said. "They must have thought about this because (the name) 'Apple Music Store' has more brand equity."