Apple Corps Ltd. v Apple Computer, Inc, Court of Appeal - Chancery Division, May 08, 2006, [2006] EWHC 996 (Ch)

Resolution Date:May 08, 2006
Issuing Organization:Chancery Division
Actores:Apple Corps Ltd. v Apple Computer, Inc
 
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Neutral Citation Number: [2006] EWHC 996 (Ch)

Case No: HC03C02428

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 08/05/2006

Before :

MR JUSTICE MANN

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Between :

| |APPLE CORPS LIMITED |Claimant |

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| |APPLE COMPUTER, INC |Defendant |

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MR. G. VOS Q.C., MR. D. ALEXANDER Q.C. and MR. R. MEADE (instructed by Eversheds LLP) for the Claimant.

LORD GRABINER Q.C. and MR. D. TOLEDANO (instructed by Freshfields Bruckhaus Deringer) for the Defendant.

Hearing dates: 29th, 30th, 31st March 2006, 3rd and 5th April 2006

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Judgment

Mr Justice Mann :

Introduction

  1. This is a claim for breach of an agreement made between the claimant and the defendant in 1991 in which they sought to arrive at an agreement as to how they would each use their respective similar marks. The claimant, whom I will call “Corps”, claims that the defendant, whom I will call “Computer”, has acted in breach of that agreement in circumstances arising out of the creation and operation of Computer’s iTunes music download service. At this stage of the trial I am asked to determine liability only. If I determine that question in favour of Corps any damages or other financial compensation will be determined at a separate inquiry; whether any, and if so what, injunction is necessary or appropriate will also be dealt with once liability is determined.

    The Parties

  2. As is widely known, Corps is the record company synonymous with the Beatles. It was incorporated as The Beatles Limited on 20th June 1963. On 4th December 1967 it changed its name to Apple Music Limited and on 9th February 1968 it changed its name again to its present name. From that time at the latest the apple mark, both in the sense of the word and as a graphic symbol, became an important part of its business. Its symbol was a sideways view of a whole apple. On 19th March 1968 the first apple trade mark was registered. Corps owned, and still owns, the rights to a large number of Beatles recordings, and extensive other rights both in relation to the Beatles and in relation to other artists. For many years its principal activity has been the continued exploitation of those rights in a variety of ways which it is not necessary for me to go into. In the course of exploiting those rights, its apple marks have been an important benefit for it. In this case Mr Geoffrey Vos QC led for Corps.

  3. Computer was founded in 1976. It is the well known computer and software house. It started producing computers (the Apple I and II) at the end of the 1970s and has continued to develop computers and software ever since. While it has had nothing like the market share of Windows-based computers, its market share in the personal computer market is nonetheless significant and it has large numbers of devotees. It too has adopted apple marks, including the word “Apple” and a stylised apple with the bite taken out of it. Its own marks have been important to it in the development of its business. In this case Lord Grabiner QC led for Computer.

    The Genesis of the Agreement sued on

  4. From time to time, the marks of Corps and Computer created conflicts. In November 1981 they entered into an agreement concerning the use and registration of the word “Apple” and various apple logos. I do not need to set out the detailed terms of that agreement. In general terms, Computer was allowed to use its marks in relation to computer goods and services, but not use them in relation to computer equipment specifically adapted for use in the recording or reproduction of music, or in relation to operational services relating to music. It was also prevented from using its marks in relation to apparatus specifically designed and intended for synthesising music unless certain restrictions were met. Corps could use its marks in relation to sound and video recording, and reproducing apparatus and instruments, and sound and video records, but not computers and computing systems. That was how the parties divided up the product territories at the time.

  5. Thus the parties co-existed for a period. However, after a few years the situation became one which was not to the liking of Computer. It started to conduct activities which Corps considered to be in breach of the agreement, and in 1989 Corps sued Computer in this jurisdiction and obtained interlocutory injunctive relief. The matter got as far as a trial, and the trial went on for over 100 days before it was settled by two agreements, namely the so-called Settlement Agreement and the Trade Mark Agreement, both dated 9th October 1991. The agreement sued on in this action is the latter of those two agreements; I shall call it the “TMA”. The settlement agreement dealt with the mechanics of settlement. The TMA provided a new regime to avoid the conflict of the parties’ respective marks and allotting to each party their own areas of exclusive use.

    The relevant terms of the TMA

  6. The TMA is dated 9th October 1991. It contains no express choice of law clause, but in 2004 I held that it was an English law agreement. The relevant parts of the recital read:

    “Whereas, the context in which this Agreement arises is the parties’ desire to reserve for Apple Corp’s field of use for its trademarks, the record business, the Beatles, Apple Corp’s catalog and artists and related material all as set forth in section 1.3 herein and to reserve for Apple Computer’s field of use for its trademarks, the computer, data processing and telecommunications business as set forth in section 1.2 herein and to co-ordinate the use of their respective trademarks in such fields of use as set forth in section 4 herein.”

    Then there are some definitions, of which the material ones are as follows:

    “1.2 ‘Apple Computer Field of Use’ means (i) electronic goods, including but not limited to computers, microprocessors and microprocessor controlled devices, telecommunications equipment, data processing equipment, ancillary and peripheral equipment, and computer software of any kind on any medium; (ii) data processing services, data transmission services, broadcasting services, telecommunications services; (iii) ancillary services relating to any of the foregoing, including without limitation, training, education, maintenance, repair, financing and distribution; (iv) printed matter relating to any of the foregoing goods or services; and (v) promotional merchandising relating to the foregoing.

    1.3 ‘Apple Corps Field of Use’ means (i) the Apple Musical Artists; the Apple Catalog; personalities or characters which appear in or are derived from the Apple catalog; the names, likenesses, voices or musical sounds of the Apple Musical Artists; any musical works or performances of the Apple Musical Artists; (ii) any current or future creative work whose principal content is music and/or musical performances; regardless of the means by which those works are recorded, or communicated, whether tangible or intangible; (iii) promotional merchandise relating to any of the foregoing; …

    1.4 ‘Apple Computer Marks’ means (i) any design, reproduction or other depiction of an apple, in whole or in part, except for a whole green apple or a half apple (of any color(s)); and (ii) the word ‘Apple’.

    1.5 ‘Apple Corps Marks’ means (i) any design, reproduction or other depiction of an apple, in whole or in part, except a ‘rainbow’ or multicolour striped apple (in whole or in part) or any apple (of any color(s)) with a ‘bite’ removed; and (ii) the words ‘Apple’, and ‘Zapple’.”

    …….

    The use of those marks is regulated by the important provisions of clause 4:

    “4. Rights to use Trademarks

    4.1 Apple Computer shall have the exclusive worldwide right, as between the parties, to use and authorize others to use the Apple Computer Marks on or in connection with goods and services within the Apple Computer Field of Use.

    4.2 Apple Corps shall have the exclusive worldwide right, as between the parties, to use and authorize others to use the Apple Corps Marks on or in connection with goods and services within the Apple Corps Field of Use.

    4.3 The parties acknowledge that certain goods and services within the Apple Computer Field of Use are capable of delivering content within the Apple Corps Field of Use. In such case, even though Apple Corps shall have the exclusive right to use or authorize others to use the Apple Corps Marks on or in connection with content within subsection 1.3(i) or (ii), Apple Computers shall have the exclusive right to use or authorize others to use the Apple Computer Marks on or in connection with goods or services within subsection 1.2 (such as software, hardware or broadcasting services) used to reproduce, run, play or otherwise deliver such content provided it shall not use or authorize others to use the Apple Computer Marks on or in connection with physical media delivering pre-recorded content within subsection 1.3(i) or (ii) (such as a compact disc of the Rolling Stones music).

    4.4 Notwithstanding Section 4.2, Apple Computer shall have the right to use or authorize others to use the Apple Computer Marks on or in connection with goods within Section 1.3(ii) (but not within section 1.3(i)) which are not charged for separately (other than for costs of shipping and handling) for the bona fide purpose of training, advertising, promoting, or demonstrating the use of goods within the Apple Computer Field of Use.

    4.5 Except in connection with the other...

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