Apple, Beatles Come Together Over Lawsuits

Apple Inc. (Nasdaq: AAPL) has reached a settlement with the company that manages the Beatles' intellectual property holdings, ending a trademark lawsuit and possibly paving the way for Beatles songs to be sold through the iTunes Music Store.

On Monday, Apple announced the pact with The Beatles' music publisher Apple Corps, in which both firms reached a deal to replace a 1991 agreement and to settle an Apple Corps lawsuit that claimed the computer and gadget maker had violated the existing agreement by moving into the music business with its iTunes products.

The deal gives Apple Inc. full use of the company name and the apple logo, even when the trademark applies to music, an area the earlier agreement deemed to be off limits, according to Apple Corps.

In addition, Apple said it had agreed to license the use of the name and logo back to Apple Corps.

'The Long and Winding Road'

Exact terms of the settlement were not released, but each company will pay for its own legal costs, which could add up to millions of dollars. Apple Corps' logo is a plain green apple, known as the "Granny Smith," while Apple's is a silhouette of an apple with a curved bite taken out of it.

"We love the Beatles, and it has been painful being at odds with them over these trademarks," said Apple CEO Steve Jobs. "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 companies did not disclose any plans to license Beatles tunes for sale through the iTunes Music Store, but the door was left open to such a deal.

The Beatles music publishing house is happy to settle the dispute and "look[s] forward to many years of peaceful cooperation" with Apple, said Neil Aspinall, manager of Apple Corps.

'Baby, You're a Rich Man'

Both companies have been at odds over similar looking logos since the early 1980s, when Macintosh computers made a splash.

At that time, the companies went to court and in 1991, after several years of discussions and more than three months of court proceedings, agreed to a deal that gave Apple Inc. the right to use its apple logo in other instances, including computer hardware and software.

Apple paid the Beatles company US$26.5 million at the time, in part to ensure it could continue to sell music software packaged with its computers.

After Apple launched the iTunes Music Store in 2003, Apple Corps -- which is owned by Paul McCartney, Ringo Starr, John Lennon's widow Yoko Ono and the estate of George Harrison -- complained that the computer company was in violation of the earlier agreement. It wanted Apple to steer clear of using the apple logo in relation to music products.

Apple argued that it was not in the music publishing business; instead, it was simply distributing songs published by third parties. Around that time, Apple attempted to license Beatles songs for iTunes, but was unable to do so.

The dispute had been the subject of breathlessly analyzed pretrial hearings and other motions before UK courts.

Even though Apple Corps made a strong argument that the 1991 deal had been broken, a judge threw out the case last May. Apple Corps had the option of appealing, but the two sides apparently continued to talk outside of court.

'All You Need Is Love'

The settlement did little to light a fire under Apple Inc.'s stock, which has fallen from record highs in recent weeks. The shares were down just a fraction of a percent in morning trading Monday to $84.44.

Still, having the vast Beatles catalog -- they've released more than 275 songs -- available on iTunes could be a major boost for Apple.

Speculation about such a deal ramped up when Jobs used a Beatles song and Beatles album cover to display some of the music features of Apple's upcoming iPhone.

Such a partnership would undoubtedly benefit both companies. Currently, The Beatles' songs are not available online and with a 70 percent market share of digital downloads, according to the NPD Group, the iTunes Music Store would be a logical venue for the songs.

Beatles songs are among the most heavily pirated, according to the NPD Group.

Taken together with the changing of the company name to drop "computer," the move underscores the transformation of Apple into a consumer electronics and media distribution powerhouse, said Gartner (NYSE: IT) analyst Van Baker. "This is an entirely different company from the one that signed those previous agreements," Baker said.