Apple Corps v Apple Computer

• 1. Introduction

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  Apple Corps v Apple Computer names a set of trademark disputes that ran from 1978 to 2007. On one side stood Apple Corps, the holding company the Beatles founded to run their label, Apple Records. On the other stood Apple Computer, the company later renamed Apple Inc. Both wanted the word Apple. Both used a logo built from the profile of an apple. Over nearly thirty years the two companies sued each other, settled, then ended up back in court. The case became a well known example of a trademark test called 'a moron in a hurry.' It also left behind a computer alert sound built on a private joke. It even created a case of mistaken identity that put the wrong man on live television. Why did two companies making such different products keep fighting over one name, and what would settling the dispute finally cost?

• 2. The First Truce

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  In 1978, Apple Corps sued Apple Computer for trademark infringement over the shared use of the name Apple. The case was resolved in 1981. At the time the settlement figure was not made public, though it was later reported at $80,000. As part of the deal, Apple Computer agreed to stay out of the music business, and Apple Corps agreed to stay out of computers. Neither promise would hold for long. Within five years, Apple Computer began adding sound capabilities to its machines, a move that would pull both companies back into court.

• 3. Splitting The Word

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  In 1986, Apple Computer added MIDI and audio recording capabilities to its computers. Part of that upgrade came from the Ensoniq 5503 DOC sound chip, taken from synthesizer maker Ensoniq and built into the Apple IIGS. That addition led Apple Corps to sue again in 1989, claiming a violation of the 1981 settlement. A new settlement followed in 1991, with Apple Computer paying Apple Corps roughly $26.5 million.

  The 1991 agreement also drew a specific line between the two companies' trademark rights. Apple Corps kept the right to use Apple on creative works whose main content was music. Apple Computer kept the right to use Apple on goods and services that reproduced, ran, or played that content. It could not use the name on physical media carrying that content. Put plainly, Apple Computer agreed it would not package, sell, or distribute physical music products under the Apple name. That single distinction, between delivering music and distributing a physical product, would resurface more than a decade later.

• 4. So Sue Me

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  Jim Reekes, an Apple Computer employee working on the System 7 operating system update, built a new sampled alert sound and named it Chimes. Company lawyers worried the name Chimes was too musical, and that it might add weight to the ongoing case with Apple Corps. Reekes resubmitted the sound under a different name, Sosumi, without telling the legal team how it would sound out loud. Spoken aloud, Sosumi reads as 'so sue me.' Mac OS 7 shipped to the public in 1991, the same year the two companies' legal fight quieted down again. The peace that followed would not last long.

• 5. The iTunes Fight

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  In September 2003, Apple Corps sued Apple Computer again. This time the claim was breach of contract, over Apple Computer's use of the Apple logo on its iTunes Music Store. Some observers thought the wording of the 1991 agreement actually favored Apple Computer this time. Others speculated that if Apple Corps won, it could become a major shareholder in Apple Computer. A win might even force Apple Computer to spin the iPod business off into its own company.

  Apple Computer tried, in 2003 and 2004, to get the case dismissed in California, or moved there from an English court. Both efforts failed. The trial opened on the 29th of March 2006 in England, heard by a single judge of the High Court. In his opening argument, a lawyer for Apple Corps described an earlier offer. Shortly before the iTunes store launched in 2003, Apple Computer had offered Apple Corps $1 million to use the Apple name on the store. Apple Corps turned it down.

  On the 8th of May 2006, the court ruled in Apple Computer's favor. Mr Justice Mann held that, in his words, 'no breach of the trademark agreement had been demonstrated.' The judge pointed to a clause in the 1991 agreement. It used the example of a compact disc of Rolling Stones music. Only Apple Corps had the right to sell that kind of physical product under the Apple name. He found that Apple Computer's iTunes store, which delivered music rather than selling a physical product, fell outside that restriction.

  Neil Aspinall, the manager of Apple Corps, rejected the ruling right away. 'With great respect to the trial judge, we consider he has reached the wrong conclusion,' he said. '… We will accordingly be filing an appeal and putting the case again to the Court of Appeal.' The judgment ordered Apple Corps to pay Apple Computer's legal costs, estimated at £2 million. The judge still declined Apple Computer's request for an interim payment of £1.5 million while that appeal was pending. That same verdict would cause an unrelated commotion a few miles away, live on air.

• 6. The Wrong Guy

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  Guy Goma had come to the BBC on the day of the ruling for a job interview, nothing more. BBC News 24 staff mistook him for Guy Kewney, a computing expert booked to discuss the case, and put Goma on air live instead. Within months, the mood between the two Apple companies would shift away from courtroom combat entirely.

• 7. Buying The Word

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  At the January 2007 Macworld conference, Apple Inc. CEO Steve Jobs featured Beatles content heavily in his keynote, during his demonstration of the iPhone. At that year's All Things Digital conference, Jobs quoted the Beatles song 'Two of Us.' He used it to describe his relationship with Microsoft chairman Bill Gates, his co-panelist. Speculation grew about the Beatles' music finally arriving on iTunes.

  On the 5th of February 2007, Apple Inc. and Apple Corps announced a settlement. Apple Inc. would own all of the trademarks related to Apple, and would license some of them back to Apple Corps for continued use. The lawsuit ended, with each side covering its own legal costs, and Apple Inc. kept using its name and logos on iTunes. The settlement terms stayed confidential, though newspapers at the time reported the buyout at $500 million.

  Steve Jobs summed up the moment plainly: 'We love the Beatles, and it has been painful being at odds with them over these trademarks. It feels great to resolve this in a positive manner, and in a way that should remove the potential of further disagreements in the future.' Neil Aspinall, speaking for Apple Corps, said, 'It is great to put this dispute behind us and move on. The years ahead are going to be very exciting times for us. We wish Apple Inc. every success and look forward to many years of peaceful co-operation with them.'

  In April 2007, Apple Corps settled a long running dispute with EMI. Around the same time, Neil Aspinall retired as Apple Corps' manager and was replaced by Jeff Jones. That fueled further speculation that the Beatles' catalogue would soon land on iTunes.

  Ahead of the June 2007 release of Paul McCartney's solo album, Memory Almost Full, Apple aired an ad for his single 'Dance Tonight.' The ad promoted Apple's iPods. That September, Apple issued a press release for the new iPod touch, related iPod updates, and an iPhone price cut. Its title was 'The Beat Goes On.' That was the same title the Beatles had used for their own last press release, issued before they split up. The Beatles' own catalogue was still absent from the iTunes store, though each Beatle's solo work could already be downloaded there. McCartney told Rolling Stone that the catalogue would reach digital stores such as iTunes in the first quarter of 2008. The Beatles' catalogue would not reach iTunes until 2010, two years after McCartney's own prediction.