gregp@pro-carolina.cts.com (Greg Prevost) (02/28/89)
>From the San Francisco Chronicle:
The company representing the disbanded Beatles raised an unexpected
challenge yesterday to Apple Computer Inc.'s use of the word "apple".
In a lawsuit filed in London, Apple Corps Ltd. charged that the
Cupertino-based computer company violated a secret 1981 agreement under which
the Beatles' company granted Apple computer the right to use the trademark on
computer products.
The agreement reserved Apple Corps' right to use the fruit as a trademark
in the music business worldwide. Apple Computer promised not to branch into
that field, according to a draft of the copy of the suit.
But music sysnthesizing capabilities in Apple's top selling new hardware
break that promise, the Beatles' company elleges.
"We do not believe we are in breach of the 1981 agreement," an Apple
spokeswoman responded. She added, however, that company officials have not
seen
the suit and could not immediately comment in detail.
Apple Corps' suit asks the court for an injunction preventing Apple
Computer from breaching the agreement around the world, plus unspecified
damages, legal fees and interest.
Such a verdict could theoretically halt sales of computers that accounted
for roughly $2.7 billion of Apple Computer's $4 billion in sles for the year
ended in September. More likely, experts in trademark law say, is a verdict or
settlement that could force the computer company to change its labeling or pay
millions of dollars in damages.
The November 1981 pact agreement ultimately may attract as much attention
as the lawsuit. Apple Computer, then four years old, evidently paid the
Beatles
an unknown amount for the rights to keep using what by then was already the
most famous trademark in the computer industry.
Apple Computer's founding in 1977 and it's early years have been the
subject of several books, but the existence of the agreement has not been
revealed before.
"It's one of the deepest, darkest secrets in modern business," said Wayne
Cooper, a San Francisco lawyer with the firm of Farrand Cooper & bruineiers,
which represented the Beatles' company.
The music company was founded in 1967, primarily to shelter the Beatles'
income from a British individual tax rate that then stood at 94 percent for
their tax bracket. Its activities included releases under the Apple label and
a
short-lived chain of clothing stores.
The Beatles broke up in 1970, but London-based Apple Corps still
represents
the business interests of the three surviving members of the singing group and
the late John Lennon's estate. Records are still being sold with the Apple
label in some countries, Cooper said.
Of late, however, Apple Corps has mainly been involved in lawsuits over
Beatles' recordings. Last week, for an example, the Beatles joined with singer
Micheal Jackson [he owns the rights to all of the Beatles' songs] to stop a
video distributer from selling videocassettes featuring the "Fab Four".
Apple Computer's name was suggested by company co-founder Steve Jobs as
early as 1975. Some company histories trace the name to Jobs' fond
recollections of working in Oregon apple country and his conviction that
apples
are a perfect food.
Steve Wozniak, the company's other co-founder, said yesterday that he had
never heard of the 1981 agreement. "I never heard anything about a fuss over
the name," said Wozniak, who no longer is associated with Apple Computer.
According to the suit, filed in the chancery division of Britain's High
Cort of Justice, the 1981 pact barred Apple Computer from using the trademark
on hardware, software or services "specifically designed and inteded for
synthesizing music."
Since 1986, however, Apple has added semiconducter chips and softtware
that
give its machines many musical capabilities. Products singlesd out in the suit
are Apple Computer's Macintosh II, Macintosh SE, Macintosh Plus, Apple IIgs, a
kit to add IIgs functions for the Apple IIe, a storage device called Apple CD-
SC, and a so-called MIDI interface device for exchanging information between
musical instruments and computers.
The Beatles tried to give peace a chance with the folks at Apple, Cooper
insisted. But negotiations between the parties reached a "screeching
explosion"
at a meeting in London on February 13, he said.
Apple Corps' suit also accuses the computer company of breaching the 1981
agreement by trying to get Apple Corps' trademarks canceled in Britain, West
Germany, Sweden and Belgium and by licensing four software companies to use
the
Apple trademark in connection with music. Besides the parent company in
Cupertino, the suit names Apple computer subsidiaries in Britain and West
Germany.
Experts say it is difficult to assess the strength of Apple Corps' case.
"It seems to me the agreement may be enforceable, even if Apple Corps has
weak trademark rights," said Ronald Laurie, a Menlo Park lawyer who is an
expert in computer industry law.
But Neil Boorstyn, a San Francisco attorney who rapresented the Beatles
between 1963 and 1969, said Apple Corps cannot argue that the public is
confused about the identities of the two companies. The most likely penalty
against the computer maker, if any, would be a requirement that the company
put
some sort of disclaimer label on its products, he said.
Other followers of the computer company were more amused than concerned
when informed of the suit.
"That's funny," said David Korus, an analyst at Kidder Peabody & Co., a
New
York investment firm. "It's a nuisance suit," added Kimball Brown, an analyst
for Prudential Bache Research.
The suit could hardly have come at a worse time for Apple Computer,
however. The company's stock and credibility on Wall Street have been damaged
lately by a surprise forcast of lower second-quarter profits, as a result of a
falloff in demand for its most sophisticated products and excess inventory of
high-priced semiconductor chips.
<end of article>
Thought you all might find that of interests. I picked it off a board in CA.
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