Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Name Games: Apple vs. Apple

By

When it comes to heated trademark disputes, Apple is as hypocritical as they come.

PrintPRINT
In the world of technology, Apple (AAPL) wants to be in a class of its own. Bigger, better, and unlike any company or product that fails to bear a logo of half-eaten fruit. But in its fervent battle to become a unique name among thousands of competitors, dozens of innocent bystanders have been been caught in the crossfire.

This past September, the startup company Sector Labs became the latest in Apple's long line of targets accused of infringing on its trademarks. Sector Labs created a video projector but made the ghastly error of dubbing it the Video Pod. Although it's unlikely consumers would mistake the Video Pod for an Apple product that had the backing of incessant TV ads and a massive press conference, Apple is fighting the matter in court. Not only that, it's in the process of trying to trademark the word "pod."

But this Sector Labs matter is hardly uncommon. Apple has gone after arcade machine gadgets, laptop covers and bags, an Australian supermarket chain, a Vancouver college, and even the Big Apple itself. Basically, the lesson here is: Anyone who designs a logo in the shape of the biblical MacGuffin will be smitten by Steve Jobs and his team of high-priced lawyers.

Of course, the reverse doesn't necessarily apply. Apple has cribbed names and logos for several high-profile products. The iPad name had already been established by Fujitsu for a handheld PC device, and Cisco (CSCO) owned the rights to the iPhone name before Apple allegedly used underhanded methods to co-opt it. And unlike an Australian supermarket chain, these products were quite similar and susceptible to confusion.

But whereas table computers and touchscreen smartphones are one thing, a company name is entirely another.And for anyone wondering why you couldn't find The Beatles catalog anywhere in the iTunes Store until recently, this might have something to do with it.

In 1968, the Fab Four founded Apple Corps, a multimedia company which began handling the group's recordings under its Apple Records arm. In case you're unaware, The Beatles were a fairly popular outfit and had enough cache to push their record label into the public consciousness. And apparently, it did enter the consciousness of a few punk kids who began a computer business in their garage. In 1976, Apple Computer was born and thus began the 30-year trademark feud with Apple Corps.

In 1978, Apple Corps filed a suit against the upstart computer company for infringing on its trademark. The matter was settled in 1981, allowing Apple Computer to keep its name but pay the British company a sum of $80,000. One condition of the settlement, however, would become a matter of contention for decades: The agreement stipulated that Apple Computer could never enter the music business -- a condition that everyone knows has been broken several times over.

Through the years, Apple's developments in audio often caught the eye of Apple Corps and cost the tech company dearly. Its introduction of a MIDI interface and system sounds led to further legal trouble, with a settlement in 1991 totaling over $26 million. And we haven't even gotten to iTunes yet!

The terms of the 1991 settlement gave Apple Corps the right to sue if Apple Computer lent its name to sell "creative works whose principal content is music." When iTunes was launched in 2001, Apple Corps sprang into action and sued the company for breach of contract. Amazingly, when the case went to trial in 2006, the English judge ruled in favor of Apple Computer, citing that the company was delivering music rather than marketing it. A pretty dubious outlook.

The following year, after Apple ditched "Computer" from the company name, the two companies exchanged an olive branch and moved beyond the lawyers and court dates. The new agreement allowed Apple to retain rights to the Apple name and logos in perpetuity. In exchange, Apple "will license certain of those trademarks back to Apple Corps for their continued use." How very gracious of them!

Today, Apple Corps has continued success with its back catalog and was recently voted by Fast Company as one of the "Most Innovative Companies" for its work with MTV Games (VIA) and Electronic Arts (ERTS) on The Beatles: Rock Band game. Concurrently, Apple is the leader in music downloads and synonymous with portable digital media. Not only that, on November 16, iTunes became one of the few outlets to make Beatles music available in MP3 form -- a massive win for Cupertino.

Which goes to show you -- to paraphrase The Princess Bride: Never go up against Apple when multimillion dollar litigation is on the line.

No positions in stocks mentioned.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE