Apple Corps Limited was founded in 1968 by members of the UK band, The Beatles – John Lennon, Paul McCartney, George Harrison, and Ringo Starr. The corporation is privately- held by the four, 1968 members of the band. Its purpose was to manage the rights and royalties associated with the band’s copyrights in an entity that reduced the tax burden on all four members. The Beatles have sold more albums than any band in history (over 800 million worldwide as of 2019) and more songs (singles) than any other band in history (over 3 billion). Apple Corps owns all of the trademarks and copyrights associated with The Beatles and owns its own copyrights and trademarks associated with the “Apple” brand. From 1960-1962, The Beatles had a drummer, Pete Best. In 1963, Best was replaced by Ringo Starr. The Beatles became famous and produced their

most recognizable hits from 1964 onwards. In 1995, 25 years after they broke up, Apple Corps released Anthology I, the first of three albums with previously unreleased recordings of The Beatles. These included songs recorded from 1960 to 1965. Pete Best is the drummer on at least one-fourth of the recordings.

Apple Inc. was founded in 1977 as “Apple Computer” by Steve Jobs and Steve Wozniak in California as a company that sold personal computers. The corporation was privately-held until it first issued publicly-traded securities in 1980. Since 1980, Apple Inc. has become one of most valuable companies in the world, including being the first company ever to be valued at over $1 trillion. Apple Inc. today still sells personal computers, but makes the bulk of its revenues from other areas, such as mobile devices like the iPad and iPhone, entertainment through its iTunes/Apple Music digital store, and through devices such as the Apple Watch.

For nearly 30 years, Apple Corps (The Beatles-founded record label and holding company) and Apple Inc. (then Apple Computer) litigated a series of disputes involving the use of the name "Apple" as a trademark and its association with music. In 1978, Apple Corps filed suit against Apple Computer for trademark infringement and the parties settled in 1981 with Apple Computer paying $80,000 ($227,780 in 2020 dollars). A primary condition of the settlement was that Apple Computer agreed to stay out of the music business. In 1991, after Apple introduced the Apple IIGS with music recording capability, Apple Corps alleged the product to be in violation of the terms of their settlement. The parties then reached another settlement agreement and Apple Inc. paid Apple Corps around $26.5 million (approximately $50 million in 2020 dollars), with Apple Inc. agreeing it would not package, sell, or distribute physical music materials. In 2007, Apple Inc. and Apple Corps announced another settlement of their trademark dispute, agreeing that Apple Inc. would own all of the trademarks related to 'Apple' and would license some of those trademarks back to Apple Corps for its continued use. The Beatles entire catalogue began appearing for sale on iTunes

two years later.

Beginning in 2004, Apple Inc. began to use a network of tax treaties signed by Ireland to avoid paying tax on its non-US income. Known as the “Double Irish”, the tax loophole allowed companies, primarily US multinationals like Apple, to sell and loan intellectual property rights from wholly-owned subsidiaries in different national jurisdictions in order to avoid paying taxes on those assets. Use of the “Double Irish”, long considered legal, led to the EU fining Apple Inc. 13 billion euros in unpaid taxes and forcing Ireland to change some of its tax laws. Apple Inc. plans on appealing the tax fine by the EU. In order to do so, Apple Inc. must put the full amount of the fine in “escrow”, or a third party account, that will pay out the fine if the appeal fails and

return the money to Apple Inc. if it wins. In order to raise the 13 billion euros, Apple Inc. issues a “Fine Bill” for anyone who wants to pay into the fine escrow to be paid back their money plus any increases in the value of the cash due to inflation. The money will only be paid back if Apple Inc. wins its appeal. Ireland is a part of the EU on the basis of a series of treaties it has signed with other EU nations. Ireland and the US have a bilateral investment treaty like all others (including equal treatment and compensation for any asset seizures).

John Lennon was killed in 1980 and was survived by his wife Yoko Ono. George Harrison died of lung cancer in 2011 and was survived by his wife Olivia Arias. Paul McCartney, Ringo Starr, and Pete Best are all still alive.

Because of its cultural and national importance, the British government decides to purchase Apple Corps Limited. Paul McCartney and Ringo Starr sell their shares, giving the government exactly 50% ownership.

Question 1 – Assume for this question only that Apple Corps Limited did not follow the legal incorporation steps in 1968. When the British government purchased the shares of Apple Corps Limited, a clerk noticed the defect and informed the local court. No one had noticed the defect prior to the clerk. Who owns Apple Corps Limited? Explain.

Question 2 – Assume for this question only that Apple Corps Limited is left, for whatever reason, with no assets except a building that used to house the recording studio (valued at $15 million), but liabilities in excess of $100 million. These liabilities include: a plumber with an unpaid bill for work on the recording studio worth $500,000; an electrician with an unpaid bill for work on the recording studio worth $1.5 million; Bank A which loaned Apple Corps Limited $70 million for a marketing campaign that failed miserably; and an accountant for Apple Corps Limited who is owed $28 million for all the unpaid work she has done over the past twenty years. The creditors want to trigger an involuntary liquidation proceeding. Describe the process they will have to follow and how much each creditor is likely to receive in as much detail as possible.

Question 3 – Who owns the intellectual property rights related to The Beatles mentioned in the case? Explain.

Question 4 – Is the “Fine Bill” issued by Apple Inc. a “security” that should be regulated under either the ’33 and/or ’34 Acts? Explain.

Question 5 – Apple Corps Limited, now owned by the British government, violates the terms of earlier settlement agreements with Apple Inc. Apple Inc. sues to enforce the agreement in US court. Does the US court have jurisdiction? Explain.

Answer rating: 100% (QA)

Question 1 ANSWER Apple Corps Limited would be owned by the three surviving members of The Beatles P... View the full answer