Taking a Bite Out of a Trademark Apple

William H. ShawnCo-Managing Partner, ShawnCoulson

The law provides for the protection of trademarks primarily to prevent confusion about the origin of goods and services. Sometimes, however, well-known companies can co-exist with similar names without any confusion. Agreements outlining the appropriate use of respective trademarks can help sustain the harmony.

This was the case between Apple Corps Ltd., the record company formed by The Beatles, and Apple Computers, Inc., the firm that started the home computer revolution. Take a look:

Apple Corps Ltd.  logo

Apple Computers, Inc. logo
  • The corporate names of both companies are similar, although not identical.
  • Both are commonly known by the identical single-word name of Apple.
  • Both use an apple as a logo, illustrated in the right-hand box.

These days, the computer maker is the first company that most people think of when they hear the name “Apple.” But the Beatles’ record label existed for nearly a decade before Steven Jobs and Steve Wozniak first set out in business from a Northern California garage. (Jobs has acknowledged that the name Apple was partly chosen as a tribute to The Beatles.)

In the 1980s and early 1990s, Apple Corps raised concerns about the computer maker’s use of the Apple name. The companies avoided litigating the issue by reaching an agreement in 1991 that limited the type of businesses in which each company would use the name. The record label claims the agreement prohibits the computer maker from using the name and logo in conjunction with a music-related service.

For awhile, this seemed to be an effective solution.

Both sides realized the public would not confuse the record label with Apple home computers. Likewise, they acknowledged that Apple Computers was not likely to be seen by the public as the source of recordings by artists including The Beatles and Badfinger. It was agreed that consumers were not going to confuse apples with oranges — or Apple with Apple.

This co-existence came under attack in 2003 after Apple Computers introduced its new iTunes Music Store, which allows customers to find, purchase and legally download the music they want for just 99 cents per song. The computer company announced that customers have downloaded more than billions of songs so far.

Apple Corps filed suit seeking an injunction to enforce the terms of the 1991 contract, regarding both the use of the name and the companies’ respective apple logos.

The suit is not terribly surprising. The chance that consumers would find the logos confusingly similar increased with the introduction of the Internet music service.

The lawsuit was finally settled in 2007. The financial settlement terms remain confidential but under the agreement, Apple Computers Inc. will own the related trademarks and license selected marks to Apple Corps for its use.

This case can be instructive to all trademark holders, regardless of the industry. Agreements such as that signed by Apple Computers and Apple Corps can be useful tools to avoid litigation while still protecting a valued trademark from infringement by outside companies.

The fine print: It’s possible that this potential point of contention was foreseen by those involved in negotiations back in 1991, but that neither side fully considered this eventuality. Agreements of this type, while useful, must be written with a full respect for what is always unknowable — the future.

Consult with your attorney about your situation.