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Apple, Beatles back in court
By Jim Welte - MP3.com
March 28, 2006 at 10:16:00 AM | more stories by this author

For the third time, the Fab Four's business arm will square off with the House that Jobs built, with Apple's ability to use the Apple name to sell digital music.

Steve Jobs' Apple Computer and Apple Corps, the corporate guardian of all that is the Beatles, are set to square off in a London courthouse tomorrow over the digital music giant's right to sell music under the Apple name.

The battle marks another chapter in the Apple-Apple Corps standoff over the use of the Apple name in connection to music. Apple has already paid out two settlements. The latest suit stems directly from its 2003 launch of its iTunes digital download store.

The Beatles set up Apple Corps in 1968 to represent their business interests. It operates as a de facto record label for all of the Beatles' post-1968 recordings and is solely responsible for licensing and selling anything related to the Beatles. The company has refused to license any of the Fab Four's music to a digital download service.

Apple Corps first sued Apple in 1980 over the use of its name reportedly after George Harrison spotted an ad for Apple Computer in a magazine and was concerned that fans would think the then-fledgling Apple Computer was connected to the Beatles. The companies reached an unspecified agreement that said Apple would stay out of the music business.

As audio-technology advancements made it easier for Macintosh computers to synthesize sound, Apple Corps sued Apple again in 1989. The result was a $26.5 million settlement in 1991 that allowed Macs to play music but prevented Apple from selling music. When Apple launched iTunes in 2003, Apple Corps sued again, saying the House of Jobs had strayed over the line again by selling music.

The crux of the current case comes down to whether that 1991 settlement agreement, which stipulated that Apple could not sell music on "physical media… such as compact discs," included yet-to-be invented digital music formats like MP3 and Apple's chosen AAC format. Apple contends that the agreement did not prohibit it from selling online data transfers, even if that data is a digital music file.

Apple Corps is seeking to force Apple to stop selling digital music under the Apple name and for unspecified damages. A settlement in the case has been rumored for months.

The trial begins tomorrow in the UK High Court before Justice Mann, who disclosed in pretrial hearings that he is an iPod owner. Neither side has asked the judge to recuse himself, however.

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