PC World Business

Apple Computer will face another legal challenge Wednesday in a London court from the company representing the Beatles, which alleges that the sale of music through iTunes violates a 1991 agreement restricting how the computer maker would use its logo.

Apple Corps says those restrictions prevent the computer company from using its logo for the popular iTunes music service, which sells songs over the Internet.

Apple Computer says it is allowed to run a data transfer service under the agreement, but Apple Corps contends the computer company was not permitted to sell music.

The two companies have had long-standing quarrels over the fruit logo even though the company names are different. Apple Corps uses a green apple, while the computer company has used black, grey and rainbow-colored apples with a distinctive bite mark.

In Apple Computer's early days, Apple Corps sued over trademark disagreements. In 1989, Apple Corps sued again, and the computer company settled out of court in 1990, paying about US$25 million. The two signed an agreement in October 1991 defining the use of the Apple Computer logos at the center of the current dispute.

A settlement may be the easiest route for Apple Computer, whose iTunes music service continues to hold about 70 percent market share worldwide for downloaded music. Apple Computer announced in February it has sold one billion songs on iTunes.

But selling music is only mildly profitable for Apple Computer. Music sales act as a lure for its line of music players. It's estimated that iTunes generates revenue for the company of around US$0.33 per track, a sum quickly gobbled up by overhead for running the service, said Jonathan Arber, analyst at Ovum. The company won't reveal specific revenue figures related to iTunes, he said.

The two living Beatles, Ringo Starr and Paul McCartney, and widows of George Harrison and John Lennon, have not authorized Beatles songs to be distributed online through iTunes.

Apple Corps and Apple Computer could not be reached for comment Tuesday.