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Apple Computer (Nasdaq: AAPL) is free and clear to use its apple logo with its iTunes Music Store. So said a United Kingdom judge on Monday as he rejected a suit by Apple Corps.
Judge Edward Mann of Britain's High Court ruled that Apple Computer used the fruit logo in association with its iTunes Music store, not with the music itself. That, he ruled, was not a breach of contract.
"I conclude that the use of the Apple logo ... does not suggest a relevant connection with the creative work," Mann said in his written judgment. "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."
Reviewing the Contracts
Apple Corps said it would appeal, according to Neil Aspinall, the manager of Apple Corps. "We felt that during the course of the trial we clearly demonstrated just how extensively Apple Computer has broken the agreement," he said.
Apple Corps, the guardian of The Beatles' commercial interests, claimed that iTunes is violating a 1991 contract that prohibited Apple from using the name "apple" or an apple logo in connection with any music distribution. That pact was reached before the birth of the commercial Internet -- but the Beatles have used an apple logo since the 1960s.
A judgment for The Beatles' Apple Corps could have cost Apple Computer millions of dollars. The complicated case involved the apple logo, which is a trademark dispute, but contracts were an important part of the equation.
Apple settled an earlier allegation of breach of contract for US$30 million. Now, the dispute hinges on whether Apple has entered into the music production business or is simply selling services, which happen to include music, over the Internet.
An Exploding Market
The suit marked the third face off between Apple and the music publishing firm, controlled by Paul McCartney, Ringo Starr, and the widows of George Harrison and John Lennon, in two decades.
Apple Computer has sold more than 1 billion songs through its iTunes Music Store. The store peddles digital music throughout Europe as well as the U.S., Canada, Japan and Australia. No Beatles songs are among the 3 million available tracks.
Overall, digital music sales tripled last year to $1.1 billion, according to the International Federation of Phonogram and Videogram Producers (IFPI). Consumers downloaded 420 million tracks as digital music sales grew to make up 6 percent of the music industry's revenue.
Evolution of Apple
Because computers are becoming more like digital media appliances, it's important that Apple is able to use its brand in this evolving market, said Phil Leigh, senior analyst with Inside Digital Media.
"Apple went after a market that evolved organically from the changes in the computer technology," Leigh told MacNewsWorld. "Typically the judicial branch has been conservative and traditional. I was pleased to see that, at least over in the U.K., the court could recognize that the technology has changed and it wasn't just a blatant attempt to pirate or infringe on a trademark."
