Apple is a company known to take copyright and trademark infringement
very seriously.
Throughout the years, the company has sued multiple businesses in an effort to
protect the trademarks of its products.
But, this hasn’t been done without controversy.
In 2011, Apple filed suit against Amazon for using the App Store name in its
alternative Android Appstore,
which Apple claimed was trademark infringement.
In 2009, the company sued an Australian grocery store, Woolworths, for applying
for a trademark to use this logo on Consumer Electronics among other
things.
Now, both of these cases were eventually settled with Apple and Woolworths
coming to an agreement,
and, in the case of the Amazon Appstore, the judge siding with Amazon and
rejecting Apple’s claim of trademark infringement.
But did you know that one of the longest- running cases of trademark infringement
involving Apple was when they actually got sued by another company?
A company that was also named “Apple?”
In today’s video, we’re gonna be discovering the history of an almost 30-
year-long trademark dispute between Apple and The Beatles.
Our story begins in 1978, just about one year after the release of the Apple II.
While this was the second model of computers produced by Apple, it was the
first commercially successful one.
While the Apple I was more of a hobbyist machine requiring users to provide their
own keyboard and power supply,
the Apple II was ready to use right out of the box.
It essentially combined the best of both worlds,
as the computer was still being designed with a very open architecture, making it
easy install expansion cards and other hardware upgrades down the road.
The machine was an overnight success, making Apple $770,000 in 1977,
and almost $8 million in 1978.
As bizarre as it sounds, this success caught the attention of The Beatles.
More specifically, the group’s record label called Apple Records.
Apple Records was a division of The Beatles’ official holding company,
Apple Corps.
This company was founded in 1968, eight years before Apple Computer was even a
thing.
It was created in part to help The Beatles manage their profits and assets.
Eventually, Apple Corps became somewhat of a conglomerate, having
multiple divisions including Apple Films,
Apple Electronics,
Apple Publishing,
Apple Retail,
and Apple Records.
The latter of which filed suit against Apple Computer in 1978 siting trademark
infringement over the use of the Apple name.
This case was settled two years later in 1981 between the two companies.
Apple Computer paid Apple Corps a once- undisclosed sum,
believed to be $250 million, but was later revealed to be just $80,000.
Definitely not as much money, but still somewhat significant.
The two Apples ultimately agreed to divide up usage of the trademark.
As a condition of this deal, both companies agreed to not involve
themselves in each others’ main businesses,
meaning that Apple Corps agreed they would not enter the computer business,
and Apple Computer agreed that they would not enter the music business.
This agreement worked out very well,
until Apple Computer decided to enter the music business.
But, we’ll get to that in a moment.
Six years later in 1987,* Apple Computer released the Apple II GS, which added
MIDI support.
MIDI, which stands for Musical Instrument Digital Interface, allows
certain musical instruments to connect to and communicate with computers.
Before doing this, however, Apple Computer attempted to contact Apple
Corps asking them to renegotiate the license agreement to make it less
restrictive,
fearing that another lawsuit could occur.
These talks, unfortunately for Apple, never happened,
prompting Apple Corps to again file suit against Apple Computer in 1987
citing the 1981 settlement agreement which prohibited Apple Computer
from entering into the music business,
which Apple Corps claimed Apple Computer was doing by adding MIDI
support to their machines, enabling users of their product to create music.
This case went on for four years until it was settled out of court in 1991, when
another settlement agreement was reached.
This new agreement provided a more specific definition of what rights Apple
Computer had in terms of using the Apple trademark on materials relating to music.
The two parties agreed that Apple Computer had the rights to use the Apple
name on:
“(software, hardware or broadcasting services) used to reproduce, run, play or
otherwise deliver such content,” meaning music, “provided it shall not use or
authorize others to use the Apple Computer Marks on or in connection with
physical media delivering pre-recorded content [...] (such as a compact disc of
the Rolling Stones music).”
In layman's terms, this means that Apple Computer could not sell music on
physical media like a CD.
In addition to that, Apple Computer paid $26.5 million to Apple Corps.
At the time, this was an extremely significant court case.
Apple Computer feared that if they lost the suit or did not come to an agreement,
it might’ve prevented the company from manufacturing any device which had
anything to do with music,
which would essentially remove them from the computer industry entirely.
The suit also had an impact on how certain system sounds in still-being-
developed System 7 were named.
One sound, originally named “chime,” was ruled to be a “musical term,” which
required Apple Computer to change the name of the sound.
The sound’s creator, Jim Reeks, had a little bit of fun with this and renamed the
sound to “sosumi,”
which, although he claimed was a Japanese word unrelated to the music
industry, it actually was a homophone and was pronounced as, “so sue me.”
After the 1991 agreement was finalized, the two companies appeared to be on
good terms.
Apple Corps began to release their music on CDs,
and Apple Computer almost went bankrupt, but was resurrected as a
company due in part to the massive success of the iMac G3 in 1998.
Speaking of, if you want to hear more about how the first iMac helped to save a
dying company, check out my history video here.
With the return of Steve Jobs to Apple in 1997, the company started to go in a new
direction;
For one, Apple’s product line was simplified to include just four main
product categories,
and in 2001, Apple expanded their reach beyond the computer industry,
and into the music industry with the iPod.
A few years later in 2003, Apple launched the iTunes store, an online marketplace
that sold music.
Sound familiar?
Well, it definitely did to Apple Corps,
who, once again, sued Apple in 2003 claiming that Apple Computer failed to
honor the terms of the 1991 contract.
Thus, more settlement talks began.
Apple Computer initially offered Apple Corps $1 million to continue using the
Apple name on the iTunes Store.
But this settlement offer was rejected by Apple Corps,
and the issue returned to the courtroom.
The trial concluded on May 8, 2006, when the judge ruled in favor of Apple Computer.
In his ruling, Judge Edward Mann concluded that through the iTunes store,
Apple Computer was not marketing music, but was delivering such content to
its customers,
a provision that was granted to the company by Apple Corps in the 1991
agreement.
The ruling also stipulated that Apple Corps pay for Apple Computer’s legal
expenses,
which came to about £2 million.
Apple Corps felt that the judge’s ruling was incorrect,
and attempted to appeal the decision to the Court of Appeal, the second-highest
court in the United Kingdom, but failed.
It wasn’t until 2007 when the two companies reached one final agreement.
The two Apples finally settled their dispute out of court.
In the terms of this 2007 agreement, Apple Computer was granted any and all
rights to use the Apple name, including for the use of music distribution.
The full terms of this deal are confidential, but it is believed that Apple Computer,
who since changed their name to Apple Inc., simply purchased Apple Corps’ rights
to use the Apple name for an estimated $500 million.
Apple would then license certain uses of the name back to Apple Corps so that
they could continue marketing and using the Apple trademark in the manner that
they had been previously.
Apple Corps also amended their official logo, adding the word, “Corps” to it.
The effects of Apple Corps’ new licensing deal with Apple can first be seen in 2009
on the official website of The Beatles Rockband.
On the bottom of the page, near the copyright information, we can see the
text,
So, that’s the story.
The story of an almost 30-year legal dispute between two unrelated companies
with the same name.
That’s all for today’s video.
I hope you enjoyed this one and if you did, be sure to give it a like and get subscribed.
And as always, I just wanna thank you all so much for watching and I will see you...
in the next video.
[♫ Music ♫]