The Beatles' Apple Corps Label Suing Apple Computer Over iPod, iTMS

by , 8:00 AM EDT, September 12th, 2003

I'll buy you a diamond ring my friend
If it makes you feel all right
I'll get you anything my friend
If it makes you feel all right
'Cause I don't care too much for money
For money can't buy me love

- "Can't Buy Me Love," by Lennon/McCartney

When Apple's iTunes Music Store was new, there were rumblings that Apple Corps, the Beatles' record label, could possibly sue Apple Computer once again for breaching an agreement between the two companies that stipulated that Apple Computer would stay out of the music business.

The last such legal victory was in 1999, when The Beatles won a payment of US$26 million from Apple Computer. That payment was supposed to have been the final action of a 1990 court case, where The Beatles successfully sued Apple for breach of a 1981 an agreement not to make musical products. The agreement was reached when The Beatles and Apple Corps. took exception to the very name of Apple when the company was formed in 1977.

Fox News reported late yesterday that Eversheds of London, the Beatles and Apple Corps' law firm, is suing Apple for breach of contract, citing the iPod and the iTMS. From Fox News:

"When it first happened with the iPod, we said, "What could they be thinking?" said a Beatles legal insider, who agreed that posters announcing the iPod from "AppleMusic" were among the most egregious violations. "They knew we had the agreement, and that we'd won a lot of money from them already."

Fox News also reports that the lawsuit was filed a "short time ago." You can read the full article at Fox News' Web site.

The Mac Observer Spin:

The last time we published something based on a Fox News story, it was about The Beatles possibly suing over the iTMS. At the time, we noted that Fox News was hardly the most credible of news sources, but the media company definitely got this one right. Somewhere there's a blind squirrel who just found a nut, too.

Can The Beatles win this lawsuit? Perhaps. Apple Corps. has a big fat court win to its credit against Apple, and involved an agreement that Apple Computer was not to be allowed in the music biz. Add to that the dubious move of initially pointing all the iTMS stuff to AppleMusic.com (since changed to redirect to http://www.apple.com/itunes/), and the fact that Apple is directly selling music through the iTMS, and things don't look so good for the Mac maker in terms of beating this suit.

What's silly, though, is that today there is zero chance of any confusion in the market place in any way whatsoever between Apple Corps. and Apple Computer. Trademarks are granted to prevent confusion in the market place, but who could possibly think the iTMS or an Apple iPod could possibly be involved with The Beatles or Apple Corps? If anything, Apple Computer has the stronger brand, but The Beatles had the trademark first, and are thus dealing from a position of strength.

Should the band sue? It depends on what the corporate side of the musical act that brought us such words as "All you need is love," and "Money can't buy me love" wants. If Apple Corps. is merely protecting its trademark, then yes, it has to sue to do so. If The Beatles are after a bit of unearned profits, then we deplore the action. Who knows which is the case?

What is a fact, though, is that Apple Computer simply had to know this was coming. Again, we point to how Apple initially used AppleMusic.com as the domain for the iTMS. What was the company thinking? In the meanwhile, did the Legal Eagles at 1 Infinite Loop try to work something out with The Beatles beforehand? Did The Beatles or Apple Corps. try and work out something with Apple Computer? Was this simply a case of it being easier to say I am sorry (by writing a check), rather than asking please?

At this point, those questions are rhetorical, but it's doubtful that anyone will truly win by dragging this through the courts; hopefully the companies can settle out of court. Our guess is that this will result in another US$50-US$100 million paid out to The Beatles (that's what insurance is for), with a final agreement that allows Apple to continue to compete in the music business. Certainly Apple can not settle for anything less than such an agreement. If you take anything from this article, it should be that last sentence. Many of Apple's eggs are riding in the iPod/iTMS basket.

A best case scenario would include an end-agreement to get The Beatles to join the late 20th Century and allow their music to be sold on the iTMS.

Fox News