Apple vs. Apple case listens to iTunes testimony

An Apple Computer executive took the witness stand Monday to defend the company against a lawsuit filed by The Beatles’ record company for allegedly breaching a trademark agreement.

An Apple Computer executive took the witness stand Monday to defend the company against a lawsuit filed by The Beatles’ record company for allegedly breaching a trademark agreement.

Eddy Cue, vice president of iTunes at Apple Computer, on Monday sought to deflect Apple Corps’ charge that the computer company violated a 1991 agreement that it would stay out of the music business.

The iTunes Music Store is a feature within Apple Computer’s iTunes music jukebox software application. Since the feature debuted in April 2003, Apple Computer says it has sold more than one billion songs, pushing sales of its hard-disk and flash-memory music players, which firmly hold 70% of the market.

Apple Corps attorney Geoffrey Vos asked Cue to confirm that the Music Store had offered exclusive tracks from artists such as U2 and Bob Dylan.

“We have tracks that are temporarily exclusive to us in the Music Store, and so do most of the other services,” Cue said in the High Court in London.

James Hoffman, an Apple Corps witness, testified earlier that Apple Computer converts its music files to a proprietary format to restrict how the files are used. Hoffman is chief executive officer of Woodstock Systems.

The similarity of the two Apples’ names and logos has prompted three lawsuits from the record company since the early 1980s. This round, lawyers are contesting a 1991 agreement that limited the services and business areas where the companies could use their trademarks.

But the agreement, which resulted from a $25 million settlement paid by Apple Computer from the second lawsuit, hasn’t kept up with the Internet era.

Vos has argued that the agreement said Apple Computer can’t use its logo to sell downloaded music. Apple Computer counters that the agreement permits data transfers, and the content it sells is generally available elsewhere online.

The subjective answer lies in just a few lines of legalese from the agreement. The High Court’s official, Justice Edward Mann, has an iPod and said he has used iTunes, a familiarity that attorneys on both sides have warmly accepted.

Apple Corps is seeking an injunction that would bar Apple Computer from using the logo in connection with music sales. If granted, Apple Computer may have to remove the trademark from advertisements and software that use it in connection with the Music Store.

The record label could then pursue damages against Apple Computer, a potentially expensive thrust.

Apple Corps, founded in 1968 by The Beatles, administers the band’s continuing commercial interests with an acute legal scrutiny. The label is still owned by Paul McCartney, Ringo Starr and the heirs of deceased members John Lennon and George Harrison.

As a group, The Beatles have shunned selling their music online. But in July 2005, concert renditions of “The Long and Winding Road” and “Sgt. Pepper’s Lonely Hearts Band” by Paul McCartney from a Live 8 performance in London were sold through the iTunes Music Store.

John Lennon’s solo work was licensed in November 2005 to several download services. Ironically, that deal excluded iTunes, despite Apple Computer co-founder Steve Jobs’ professed affection for the band.