Apple Computer's lawyers have roundly rejected Apple Corps arguments that the company has breached any deal between the two firms.

Anthony Grabiner QC said an existing agreement between the two firms allowed Apple Computer to "distribute digital entertainment content."

Apple Corps told the courts yesterday that Apple Computer's music distribution business "was flatly contradictory to the provisions of the agreement."

Founded in 1968, Apple Corps is owned by Sir Paul McCartney, Ringo Starr and the widows of John Lennon and George Harrison. Apple Computer was founded in 1976.

At issue is a 1991 deal between the two companies in which both agreed to certain definitions that would regulate both firms' use of the logo.

It's interesting to note that the deal was agreed one year before the invention of the WorldWide web. The current litigation clearly underlines the impact of convergence between computer and media companies.

Apple Corps is demanding millions of dollars in damages and that Apple Computer remove all traces of the apple logo from its music sales and consumption products.

It argues that Apple Computer had agreed not to use the logo in connection with any CD releases of musical content. It wants the judge in the case, iPod user Judge Martin Mann, to agree that the original definition should include online sales.

Apple Corps' courtroom representative Geoffrey Vos QC yesterday argued that "permanent downloads are the new CDs".

Discussing the situation when the deal was originally determined, he said: "They were the people who were supplying computer systems, computer software, computer hardware. We were the people supplying the music."

He also told the court yesterday that Apple Computer had approached Apple Corps with an offer of $1 million for the right to use the mark prominently before it launched its music store, but The Beatles' company had declined the deal.

He demonstrated the service to the court yesterday in an attempt to show how often the apple logo appears when using it.

Apple rejects this argument. Anthony Grabiner QC said: "Data transmission is within our field of use, that's what the 1991 deal says and it is inescapable."

The trial is expected to last at least five days.