Statements from Neil Aspinall on behalf of Apple Corps Lt.d. (the Beatles) and Nicholas Valner, one of the Beatles lawyers

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PRESS RELEASE

for

APPLE CORPS LIMITED

When the two Apple companies reached their agreement in October 1991 over future use of the apple name and marks, they did so on the clear basis that Apple Computer would be unable to use these on or in connection with pre-recorded music. That was to remain the exclusive province of The Beatles' company, Apple Corps. The launch by Apple Computer of its iTunes website selling pre-recorded music, coupled with its extensive marketing and advertising campaign, clearly, in our view, broke that agreement because the apple name and logos were and are used very extensively in connection with pre?recorded music.

Commenting on the judgment handed down today by Mr Justice Mann, Neil Aspinall, Manager of Apple Corps, said:

"With great respect to the trial judge, we consider he has reached the wrong conclusion. We felt that during the course of the trial we clearly demonstrated just how extensively Apple Computer had broken the agreement. We will accordingly be filing an appeal and putting the case again to the Court of Appeal. We have been advised by our legal team, including two eminent specialist QCs and our solicitors Eversheds, that we have every prospect of reversing this decision on appeal.”

End

EVERSHEDS' COMMENTS ON Apple v Apple DECISION

Commenting upon the judgment in Apple Corps v Apple Computer handed down by Mr Justice Mann today, 8 May 2006, Nicholas Valner, partner at Eversheds, solicitors to The Beatles' Apple Corps Ltd, said:

"This is a particularly disappointing decision. The judgment is curious. So much of what the judge says is right. It will be noted that he rejected pretty much every argument advanced by Lord Grabiner for Apple Computer.

He expressly found (paragraph 83) that Apple Corps' exclusive province includes recordings transmitted in intangible form and says "[Apple] Computer has no right to apply its marks to such matters". He thereby expressly agreed with Mr Vos' submission (paragraph 60) that Apple Corps' area of exclusivity covers a download over the internet.

But since the only visible element in such a music download process would be a store like iTunes Music Store (or one of its rivals) appearing on a computer screen, it is inconsistent then to hold, as the judge does, that the use of the apple logos is not use in connection with the downloaded music.

The way the judge seeks to avoid this inconsistency is two-fold: first, he places a narrow construction upon the words "on or in connection with", and expressly rejects their normal English meaning in favour of a very limited 'trade connection' sense. In doing so, the judge ignores what is referred to as 'the Golden Rule' of construction[1] - that the words of a contract should be construed in their grammatical and ordinary sense. Secondly, he gives an interpretation of clause 4.3 of the contract (the clause is set out on page 6 of the judgment) which Counsel for neither party advanced because they both knew it was wrong. It involves implying into it the words "fair and reasonable use when applied to the service" (see paragraph 78). English law on implied terms is clear: terms cannot be implied if they contradict express terms in the contract. Since the judge's implied term imported into clause 4.3 has the direct effect of contradicting the clear terms of clauses 4.2 and 4.9 (which expressly forbid Apple Computer from using their marks on or in connection with Apple Corps' exclusive field (which includes downloaded music - as the judge concedes)), the judge cannot be right.

It is for these reasons, among others, that Apple Corps has been advised that an appeal has every prospect of success. It will be appealing."

End

Eversheds, 8 May 2006

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