And when I write “Apple”, whom do you think of? The computer maker? Thought so. Today, Mr Justice Mann found for Apple Computer, Inc. in the lawsuit between it and Apple Corps Ltd (the Beatles). My intro is possibly a little misleading, however, as the case was not directly about the classical trade mark concerns of confusion between two particular marks.

Rather, it concerned the interpretation of a settlement agreement between the two parties executed in 1991 in order to avoid some of the sporadic conflicts the two had previously had in exploiting their similar marks. However, notions of applications and use of trade marks do surface in construing just what that agreement meant.

Apple Corps (“Corps”) began using an Apple mark in 1968; Apple Computer (“Computer”), in 1976. The parties had previously had differences, and indeed the 1991 agreement modified an earlier settlement agreement from 1981.

The 1991 agreement allowed Computer to use its trade marks exclusively “within the Apple Computer Field of Use”, and Corps to use its marks exclusively “within the Apple Corps Field of Use”. The “Apple Computer Field of Use” was defined in section 1.2 as:

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.

The Apple Corps Field of Use was defined in section 1.3 as:

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; …

Importantly, the 1991 agreement contained this provision:

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).

That is, beyond the two exclusive fields of use, Computer could use its marks in the delivery of content other than in connection with physical media delivering pre-recorded content such as CDs. The question was, what exactly was the boundary of the respective exclusive fields of use — particularly that of Corps.

The principal breach of which Corps complained was the display in iTunes of the Apple Computer logo while the iTunes Music Store (iTMS) was on-screen and being accessed (Corps did not complain that the display of Apple’s logo when iTunes was simplying playing music already on the hard disk was a breach). It was said that the display of Computer’s mark was “in connection with” the content, and hence within Corp’s exclusive Field of Use (section 1.3). This was despite the fact that the logo was not displayed when iTunes was actually communicating with Apple’s servers or playing music; the logo was removed during those activities, and re-appeared after they had finished. Corps therefore argued that the display by Computer of its logo was one “on or in connection with” Corps’ exclusive field of use, being a creative work which was principally music, and in breach of the agreement.

Corps also complained of the use of the Apple Computer logo in various television ads (a number of those silhouette+white headphones ads featuring various musicians), although these contentions do not appear to have been pressed with as much vigour.

In finding for Computer, Justice Mann held that the proper interpretation of the “on or in connection with” wording in section 4.3 of the 1991 agreement was that they meant “some form of trade mark related connection”, and that:

what it is doing is implicitly acknowledging that there might be arguments about whether (for example) a Computer apple-branded data transmission service which transmitted music was, in doing so, using the apple mark “on or in connection with” musical content, but avoiding those arguments by accepting that an application to the service, without more, would not be taken as being a use “in connection with” the content (or technically the creative work). In other words the mere running of a data transmission service, transmitting musical content, under a Computer apple mark would not, of itself, be a breach.

The result was that Corps’ field of use was not just the use of an apple logo in any possible relation to music content; it had to be a trade mark usage. That is, one importing some kind of guarantee of commercial origin, or badge of origin. This is not surprising, given the nature of the agreement as a settlement of trade mark disputes.

In so finding, his Honour rejected the interpretations offered by each of the parties, reaching a result in between Computer’s (which he rejected as being “a little too narrow”) and Corps’ (which he rejected as being “far too wide”).

As to the boundaries of Computer’s rights, the line that his Honour drew was:

There remains the question of the whereabouts of the proper boundaries of such use. There must still be some limits. This approach to the meaning of clause 4.3 does not mean that once Computer has used its mark on its own services it then has a licence which allows it to refer to content by suggesting some sort of trade connection going beyond the service. It does not have that right. In my view it is intended to protect a fair and reasonable use of the mark when applied to the service. Provided that the mark is used in a reasonable and fair way on or in connection with the service, and genuinely (non-colourably) to denote a trade connection with that service (rather than with anything else), then the line will not be treated as crossed. The expression “fair and reasonable” is, of course, my expression. It does not appear expressly in the TMA. But in my view it is necessarily to be implied in order to make the provision work. In my view it achieves what the parties sought to achieve in clause 4.3.

As a result, “[w]hat Computer does have the right to do is to use its mark in connection with the service which sells content without automatically being in breach of the [agreement], and to be able to avoid being in breach providing that it is acting fairly and reasonably. Corps retains the exclusive right to apply its marks to the “creative works”, however communicated. ”

On this interpretation of the agreement–which seems, with respect, correct–it was not surprising that Corps failed on the facts: “the presence of a logo which is the logo of the download service would not be likely to be taken by such a user, without more, as a sort of trade association with the content beyond that of being a retailer. That is not, in my view, the sort of association that falls within the [agreement]. A retailer offers goods which have originated from others, very often under the mark of others. In doing so, and in advertising his sales service by the copious use of his own mark, he does not suggest that the goods are his in terms of trade origin or trade source, particularly if the originator’s mark is used.”

Corps therefore failed in its arguments that iTMS and the various advertisements breached the agreement. Computer’s use of an apple logo was to brand the service (iTMS), and not the goods being sold through that service (ie the music).

The judgment is one of those IP judgments that is worth a read. It is well-written, not over-long, and it summarises and deals with the technology for the most part correctly and without undue fuss, and gives a good, practical and commercial interpretation to a commercial agreement. It is difficult to see any obvious error, although Corps has apparently announced it plans to appeal.