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Apple, Beatles: 'We can work it out'

“We can work it out.” That was the message that iPod maker Apple Inc. and The Beatles’ guardian Apple Corps Ltd. sent Monday in burying nearly three decades of trademark strife over the iconic apple logo and name.
/ Source: The Associated Press

“We can work it out.”

That was the message that iPod maker Apple Inc. and The Beatles’ guardian Apple Corps Ltd. sent Monday in burying nearly three decades of trademark strife over the iconic apple logo and name.

Like the warring lovers striving for reconciliation in The Beatles’ 1965 hit tune, the two Apples agreed to quash a long-simmering rivalry and years of vicious legal battles between one of the world’s largest music sellers and one of history’s most beloved bands.

The settlement gives Cupertino-based Apple Inc. ownership of the name and logo in return for agreeing to license some of those trademarks back to London-based Apple Corps — guardian of The Beatles’ commercial interests — for their continued use.

It ends the ongoing trademark lawsuit between the two companies, with each side paying its own legal costs. Other terms of the settlement were not disclosed.

But the truce was silent on a crucial issue for consumers about whether the catalog of Beatles songs will become available for download any time soon.

The Beatles have so far been the most prominent holdout from iTunes and other online music services, and Apple’s overtures to put the music online have been stymied by the ongoing litigation.

And it appears consumers will still have to wait to buy such Beatles hits as “Love Me Do” or “Hey Jude” on Apple Inc.’s iTunes online store, though industry analysts said a resolution on putting The Beatles’ music online is likely already in the works.

“It goes from impossible to a lock that it’s going to happen — it’s a function of time at this point,” said Gene Munster, senior research analyst with investment bank Piper Jaffray & Co. “I bet they move pretty fast. For Apple, it was critical that they got this taken care of.”

Jaffray estimates that Apple Inc. paid The Beatles $50 million to $100 million for the rights to the Apple name. That would come on top of more than $26.5 million Apple paid to settle past disputes with Apple Corps.

It’s no secret that Steve Jobs — Apple Inc.’s chief executive officer and a huge Beatles fan — has wanted the British band’s music on iTunes, which has sold more than 2 billion songs worldwide and has catapulted Apple into the top ranks of music sellers.

Jobs even cued up some Beatles music and album art in unveiling the company’s highly anticipated iPhone gadget at the Macworld Conference and Expo last month, setting off rampant speculation that some type of deal might be in the works.

However, decades of legal disputes between the two companies have thus far made any partnership all but impossible.

“We love the Beatles, and it has been painful being at odds with them over these trademarks,” Jobs said in a statement. “It feels great to resolve this in a positive manner, and in a way that should remove the potential of further disagreements in the future.”

The Beatles had been one of the few remaining big-name musical acts to reject any legal distribution of its work on the Internet. Formerly hesitant artists from Madonna to Metallica have made peace with online customers as digital downloads have continued to grow in popularity — with iTunes holding the bulk of the market.

Artists have complained that online distribution leaves them with too small a profit and that iTunes wrecks the artistic integrity of an album by allowing songs to be purchased for 99 cents apiece. Bands such as AC/DC have sold albums only at other, more flexible sites.

But the Beatles’ recording label, Britain’s EMI Group, has rebuffed all suitors.

Elizabeth Freund, the U.S. spokeswoman for Apple Corps, said EMI would first need an agreement with Apple Corps before licensing any music to Apple Inc. or other online services. She said no such deal has been reached yet.

EMI officials declined to comment.

Apple Corps was founded by the Fab Four in 1968 and is still owned by Paul McCartney, Ringo Starr, the widow of John Lennon and the estate of George Harrison.

The Beatles’ company, whose corporate logo is a giant green Granny Smith apple, first sued what was until last month Apple Computer Inc. for trademark infringement in 1978. The computer maker agreed in 1981 to pay $80,000 and never enter the music business.

Apple Corps sued again nearly a decade later, alleging the musical instrument digital interface, or MIDI, software included on Apple’s Macintosh computers violated those terms. Apple Inc. again settled, agreeing in 1991 to pay $26.5 million to secure the rights to the apple logo for selling computers and software, while Apple Corps would get it for producing and selling music.

But the tension flared again in 2003 while Apple Inc. was signing up recording labels to offer their songs through Apple’s new iTunes download store and attempted to woo The Beatles’ management.

Apple Corps contended that Apple Inc.’s use of the logo on iTunes amounted to a breach of the 1991 agreement. Lawyers for Apple Inc. have argued that music lovers are smart enough to tell the difference between the logos. Apple Corps uses a shiny green apple as its logo, while Apple Inc. has a cartoon-like apple with a bite taken out.

A British judge ruled in May that Apple Inc.’s logo is used in association with the store — not the music — and thus permitted. The settlement announced Monday replaces the 1991 agreement and makes an appeal of that ruling unnecessary.

Neil Aspinall, manager of Apple Corps, said the company was glad to resolve the dispute.

“The years ahead are going to be very exciting times for us,” he said in a statement. “We wish Apple Inc. every success and look forward to many years of peaceful co-operation with them.”

Apple Inc. still faces another high-profile trademark lawsuit, one over its much-hyped iPhone.

Networking equipment company Cisco Systems Inc., whose Linksys division has an identically named product, sued Apple last month.

Shares of Apple Inc. fell 81 cents to close Monday at $83.94 on the Nasdaq Stock Market.