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Apple vs. Apple: Name at Core of Beatles Lawsuit : Trademark: Apple Corps, the company created by the British group, is in court to keep Apple Computer's logo off all products that are related to show business.

August 04, 1991|JEFF KAYE | SPECIAL TO THE TIMES

LONDON — It was George Harrison--the quiet, but not-oblivious-to-trademark-law Beatle--who in 1980 first noticed the potential for conflict.

Leafing through a British magazine, Harrison saw an ad for an Apple Computer Inc. retailer. So the composer of the "Sue Me, Sue You, Blues" quickly rang up the trademark agents at the Beatles' company, Apple Corps Ltd., and asked them to investigate.

The two firms have been at odds over the name they share almost since--most recently in a London courtroom.

Apple Computer, the company that gave birth to the personal computer industry from a Cupertino, Calif., garage in 1977, and Apple Corps, set up by the Beatles in 1968 to manage their creative affairs, have passed the nine-month mark in a trademark infringement and breach of contract trial being held in Great Britain's gothic Royal Courts of Justice.

The trial, which adjourned last week for a two-month break, is not expected to end until at least December.

Apple Corps--Paul McCartney came up with the pun--filed suit against its computer namesake in February, 1989, for allegedly violating the terms of a 1981 pact that divvied up rights to the Apple name and the similar logos each uses worldwide.

A mind-boggling array of legal issues has been raised since the non-jury trial began last October. But the central question is clear: Did Apple Computer break the decade-old agreement by selling computers and other equipment used to produce music?

Under terms of the deal--struck at a time when the personal computer industry was still in its infancy and the Beatles had long since disbanded--Apple Computer would use its name and logo only in the computer business and the Beatle company would stick to entertainment.

No one, apparently, foresaw the day when computers would enter show business.

Today, Apple Computer's machines and equipment--particularly the Macintosh--are used extensively in producing, composing and synthesizing music.

"You see Macs popping up at Pink Floyd concerts and that kind of thing," says Robert DeMarzo, deputy executive editor of Computer Reseller News.

"Macintosh products are utilized day in and day out," adds Tim Finnegan, general manager of a New York outlet of the Sam Ash music store chain that is an authorized Apple dealer specializing in music-related computer systems. "It is by far the most popular computer in the recording business."

Apple Corps--whose four shareholders are Harrison, McCartney, Ringo Starr and Yoko Ono, widow of murdered ex-Beatle John Lennon--is seeking to block the computer company from using the Apple name on products with music applications.

The Beatle company is also asking $250 million in damages, although that figure is only an estimate of alleged damages and will be revised at a subsequent court hearing if Apple Corps wins this case.

Apple Computer, for its part, contends that it owns the right to use its trademark on all its products worldwide and has not violated the 1981 agreement.

Christopher Escher, spokesman for the firm, readily acknowledges that some Apple computers are compatible with music equipment. But he terms the products "general purpose productivity tools" that are capable of "lots of different things. They're computers with sound capabilities."

Apple Computer officials also question whether the Beatle company should be allowed to defend its trademark.

"Do they really do any business other than sue people?" Escher asks. "If they're not doing any business, why do they need trademark protection?"

The difference in size between the two companies is considerable. Apple Computer earned $475 million last year; Apple Corps less than $10 million, mainly in royalties on Beatles recordings. But the Beatle company is a visible and viable business entity, its lawyer says.

"We are the company known as Apple in the music business," attorney Nicholas Valner says. "We're very concerned to draw the line so they don't come into the music business. That is where our identity is. We still feature very prominently."

The Beatles continue to sell millions of records annually, and Apple Corps is readying a video about the band, "The Long and Winding Road," which will contain new material, he says. Should the label sign new artists or enter new fields, Valner adds, having the Apple logo "will be tremendously value-enhancing."

Before the trial began, Apple Computer had initiated legal action to strike out the Apple Corps trademark in countries throughout the world. But the Beatles' firm obtained an injunction from the British High Court to freeze those cases pending the outcome of the current case.

Exactly why founders Steve Jobs and Stephen Wozniak chose the name Apple for their start-up computer company is not entirely clear. The company denies speculation that the name resulted from Jobs being a Beatles fan.

"There's no connection," spokesman Escher says. "They wanted to be in front of Atari in the phone book."

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