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Apple, Beatles case hinges on out-moded agreement

Firms' 1991 deal says they're both right

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Apple vs Apple Apple Comp. yesterday rejected arguments made by Apple Corp. lawyers that its iTunes Music Service goes beyond the terms of the two companies' 1991 trademark usage agreement, as the their legal confrontation in the English High Court moved into its second day.

Quite the reverse, Apple Comp. advocate Anthony Grabiner QC said. The agreement allows Apple Comp. to "distribute digital entertainment content". He added: "Data transmission is within our field of use, that's what the 1991 deal says and it is inescapable."

Well, let's take a look, shall we? Court documents seen by Reg Hardware reveal that the 1991 agreement defines each firm's "field of use" for their apple trademarks - essentially, what goods and services each is allowed to put their name and logo to.

Apple Comp.'s covers "electronic goods, including but not limited to computers, microprocessors and microprocessor controlled devices, telecommunications equipment, data processing equipment, ancillary and peripheral equipment, and computer software of any kind on any medium". (our italics)

It also encompasses "data processing services, data transmission services, broadcasting services, telecommunications services" and "ancillary services relating to any of the foregoing, including without limitation, training, education, maintenance, repair, financing and distribution" (our italics again).

Finally, it covers "promotional merchandising relating to the foregoing".

That, Apple Comp. argues, is sufficient to allow it to run the iTunes Music Store.

Apple Corp., on the other hand, has the rights to market under its brand "any current or future creative works whose principal content is music and/or musical performances; regardless of the means by which those works are recorded, or communicated, whether tangible or intangible" (our italics).

It's entirely possible to argue that iTunes' digital downloads can be defined within the scope of the phrase "computer software of any kind" and ITMS is both a "data processing service" and a "data transmission service". Unfortunately is is also exactly what what the Apple Corp. field of use forbids.

In short, the agreement is - or rather has become - contradictory: it renders both arguments valid. When it was drawn up, the idea of downloading songs that never become encoded on a physical medium was the stuff of a madman's dream. No wonder the two companies have fallen out over the one data type/creative work that spans both fields of use.

It's a classic spirit of the agreement vs the letter of the agreement argument, and both firms could have saved time and money if they'd have sat down and thrashed out a new sets of terms and conditions. Apple Corp. can hardly argue its brand has been damaged by Apple Comp., even if its successfully shows breach of contract. Few people these days associate the Apple name with the Beatles, and the 1991 agreement clearly specifies which styles of apple icon each of the two companies have a right to, and - so far as our unlearned opinion goes - they are clearly distinguishable, even in the music market. ®

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