In the world of modern commerce, the situation frequently occurs that two enterprises find themselves using an identical or similar trade mark to market their own products or services, without each company’s actions necessarily interfering with the business of the other. Coexistence agreements are often used to formalise the parties positions in such situations, wherein each party recognises the right of the other party to their respective mark, and an agreement is reached as to the terms on which they may exist together in the marketplace.
But what happens when the situation envisaged by the coexistence agreement changes? In this article, Dawn Ellmore Employment take a look at exactly such a situation involving Apple Corps and Apple Computer.
Apple Corps Ltd. is the record label founded in 1968 by the members of The Beatles. Apple Computer, Inc. probably needs no introduction; now known simply as Apple, Inc., it was founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. The two companies obviously have the main word of their names in common, and each holds trade marks including the word “Apple”. In 1991, the two companies entered into a trade mark coexistence agreement, which provided that Apple Computer would have the right to use its Apple trade marks on or in connection with “electronic goods, computer software, data processing and data transmission services”, while Apple Corps would have the right to use its own Apple trade marks on or in connection with “any current or future creative work whose principle content was music and/or musical performances, regardless of the means by which those works were recorded, or communicated, whether tangible or intangible.”
Technology changes mean the parties can’t Let It Be
At the time, this agreement suited both party’s needs – it allowed them to continue with their own business activities without infringing on the other party’s rights. However, the calm didn’t last long. No-one in 1991 could have foreseen the changes in how consumers purchase their music, that would act to bring the activities of the two Apple companies uncomfortably close. Fast forward a decade, and the launch of the iPod portable media player and iTunes software by Apple Computer was seen by Apple Corps as an infringement of the coexistence agreement, and an infringement into their field of business. They sued for breach of contract, in a case brought before the High Court of England & Wales in 2006.
The judge, looking at the issue from the point of view of the consumer, held that there had been no breach of the agreement. His reasoning was that, as the Apple Computer logo had been used in connection with the software and not with the music provided by the service, a consumer downloading music using iTunes would not think they were interacting with Apple Corps.
The parties Come Together… eventually
Apple Corp were understandably unhappy with this judgement, with Chief Executive Neil Aspinall initially indicated that the company would be appealing the decision. However, by February 2007 the two Apple companies had reached a settlement in which Apple Inc. (the name by which Apple Computer, Inc. was now known) would own all of the trade marks related to the term “Apple”, and would license certain marks back to Apple Corps for their continued use.
This arrangement allowed Apple Inc. to continue using its name and logos on iTunes – and allowed the later launch of the Apple Music service. The financial terms of the settlement were kept confidential, although it was reported at the time that Apple Inc. paid $500 million to gain control of Apple Corps’ trade mark rights.
Commenting on the settlement, Apple Inc. CEO Steve Jobs said, “We love the Beatles, and it has been painful being at odds with them over these trade marks. 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”. Neil Aspinall echoed this sentiment: “It is great to put this dispute behind us and move on. The years ahead are going to be very exciting times for us.
We wish Apple Inc. every success and look forward to many years of peaceful co-operation with them.” It still took until 2010 for The Beatles’ catalogue to appear on iTunes and, subsequently, Apple Music, but from then the coexistence of the parties seems to be holding up – perhaps until the next unexpected technology shift…
About Dawn Ellmore Employment
Dawn Ellmore Employment was incorporated in 1995 and is a market leader in intellectual property and legal recruitment.