Apple vs Apple (and other fruitless disputes)

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The right general principle is that brand names and trade marks should be protected, not where there is a producer interest in doing so, but where there is a consumer detriment from failing to do so.

Last week, a truce was called in the long-running dispute between Apple Corps, owner of the record label, and Apple Inc, designer and distributor of Macintosh computers, over rights to the name. You now can look forward to downloading Beatles music to your iPod. Last week the Consumers’ Association launched the first class action on behalf of British consumers, seeking to recover sums overcharged for replica football shirts. There is a surprising connection here.

Dispute over ownership of the word apple is ridiculous. An apple is not a computer or a record label. An apple is a fruit, grown widely for thousands of years. One documentary account traces the merchandising of apples back to the Garden of Eden, making it the first fast-moving consumer good. If anyone has a legitimate grievance, it is not Steve Jobs or Sir Paul McCartney, but Granny Smith.

Granny Smith is not complaining. No one has ever gone into Wal-Mart to buy a refreshing snack to keep the doctor away and come out by mistake with a computer or Sergeant Pepper’s Lonely Hearts Club Band. Just as no one has entered Peter Stringfellow’s nightclub in search of a bag of Stringfellows oven chips. I doubt if many people think that the Beatles invented the iPod or endorse it, or that their music was composed on an Apple Macintosh – and it would not matter anyway.

There is a compelling public interest in the suppression of counterfeit products, which damage buyers who are misled about what they are getting and make it more difficult for reputable manufacturers to establish and uphold the reputation of their authentic products. Piracy is associated with organised crime and a conduit for its proceeds. But the good argument that the interests of the public and of honest traders require vigorous public action against deceptive products is often conflated with the bad argument that the maintenance of product quality requires that established producers should be insulated from competition.

While there is no record of merchants seeking such protection in the Garden of Eden, their demands for it began soon afterwards. By the middle ages, guilds regularly used spurious claims of consumer protection to seek action against competitors. The king would rightly support an assay office to register the purity of a merchant’s gold, but wrongly give the company of goldsmiths protection against new entrants. The analogue today is the good law that says you can only sell a replica football strip if it is marked as a replica and the bad law that says you can only sell one with the club’s authority. The first law protects consumers while the second picks their pockets. Unfortunately, the European Court of Justice ruled in favour of Arsenal Football Club and the second version of the law.

The law is not entirely an ass.

Mr Stringfellow’s claim against food manufacturer McCain was rejected. The owners of the trade mark Spam, whose tinned meat was made notorious by Monty Python, have not succeeded in preventing software houses from marketing spam filters. But they have tried. Corporate counsel often pursue claims of trade mark infringement against innocuous references to their employer’s product. Such claims are easy to make and, however absurd, costly to defend.

A liberal economy should have a presumption in favour of letting the market decide. The right general principle is that brand names and trade marks should be protected, not where there is a producer interest in doing so, but where there is a consumer detriment from failing to do so. The example of football shirts illustrates how the suppression of competition is contagious – the grant of a monopoly to clubs was rapidly followed by illegal collusion between the retailers selected to distribute their shirts.

Consumers and the compilers of the Oxford English Dictionary, not the courts, should decide on the meaning of the word apple. The proper role of the law is to prevent deception – to stop people calling things apples when they are not apples and when consumers cannot easily ascertain that they are not apples. That is true whether an apple is a fruit, a computer, or a record label – or all three.

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