Apple v Apple: Beatles' record label renews its battle with computer giant in Internet dispute

The Beatles' record label Apple and the Californian computer giant of the same name began a trademark battle yesterday to tap into the riches of downloading music through the internet.

In the latest of a series of legal disputes dating back to the 1970s, lawyers for both companies traded the first blows at the High Court in London over who had the right to exploit the Apple brand online.

A legal grey area has been created because when lawyers from both sides thrashed out their last agreement in 1991 they failed to envisage the sudden move from vinyl, cassettes and CDs to online music.

For Apple Computer, the company founded by Steve Jobs and Steve Wozniak in San Fransisco in 1976, a victory would hand them an enormous commercial advantage.

Their online iTunes music service accounted for 70 per cent of legal downloads in the United States last year in contrast to Apple's dwindling share of the computer market.

Due to be introduced imminently in Britain, the iTunes service will charge customers 62p per song for downloading pre-recorded music onto its iPod digital music player - the "must-have" item of last Christmas.

However the Apple record label, which issued the writ on behalf of owners Sir Paul McCartney, Ringo Starr and the widows of John Lennon and George Harrison, insist previous agreements mean that it has rightful use of the Apple brand in anything related to music.

The Apple record label, which released the White Album and Hey Jude in 1968, aims to control the use of the Beatles' image and work by issuing licences and retaining final approval on any products. Recent research commissioned by the label showed that a third of Beatles records are being bought by people under the age of 24.

The original Apple trademark agreement of 1981 restricted the Californian company to using the name for computers. It was sued by the record label in 1989 when it used its computer logo to edit and record music.

At the start of the preliminary hearing, Lord Grabiner QC, for Apple Computers, contended that under the 1991 agreement it was granted exclusive rights to use the name in relation to data transmission services. This applied even if that data included material, or music, which was within the Apple music label's "field of use".

He accused the record label of "attempting to frustrate our position or business conduct or to extract money from us because of the success and innovative qualities of our product".

Mr Justice Mann introduced some much needed mirth to proceedings when he confessed that he owned an Apple iPod and asked whether that disqualified him from hearing the case. Lord Grabiner said he was delighted to hear the judge had an iPod and added: "We would perhaps have sent you one free if that would not have been improper."

Speaking before the case opened, John Linneker, a partner in intellectual property at London law firm Taylor Wessing, said: "Providing both businesses stay within their particular areas, then trademark law allows them to co-exist. It's when computers meet the music industry that the conflict blows up. The problem is that where you once had a division between music and computers there is now a fuzzy interface."

With the stakes so high each side has hired two QCs and spent an estimated £500,000 on bringing the case to the High Court - a "high-risk" move that experts warned may result in a ruling that suits neither side.

The High Court case is scheduled to last up to three days but lawyers for the computer company are pushing for the case to be heard in San Jose, where the courts are already dealing with similar cases and where they hope they may get a more favourable hearing.

Legal experts predicted that, with neither side preparing to blink first, a judgement may result in the case going to the Court of Appeal and then the House of Lords. Previous legal battles between the two point to a lengthy case - the last, in 1991, spent more than 100 days at the High Court.

The proceedings will be closely followed by record companies increasingly switching their investments to music downloads. If the judge rules against the Apple music label it could prompt a legal challenge to the online activities of other major labels, Mr Linneker said.

Legal battles over a shared brand name remain rare. In August 2001 the World Wildlife Fund for Nature overcame the considerable muscle of the World Wrestling Federation in a legal tussle over the use of the acronym WWF. The charity initiated legal proceedings to protect its global brand from unwanted connection with the wrestling organisation, whose stars include The Rock and Hulk Hogan.

The Ritz Hotel and Nabisco, the makers of Ritz crackers, reached an out-of-court settlement which prevented the hotel from using the name on food products.

The hearing continues.