The Royal Courts of Justice came alive to the beat of the 1978 disco classic Le Freak today as two giants of the music business clashed in a battle over internet downloads and a piece of forbidden fruit.

Apple Corps, the music company set up by the Beatles in 1968, is suing Apple Computer over its iTunes Music Store, which it says infringes a 1991 trademark agreement that the computer-maker would steer clear of the record business.

Apple Computer denies infringement and says that its iTunes service is an electronic data-processing device - an argument dismissed by Geoffrey Vos QC, representing Apple Corps, as a "perversion" of the 1991 deal.

As the case opened in the High Court, Mr Vos argued that Apple Computer was clearly in the music business, having sold a billion tracks already through its iTunes service. He quoted Steve Jobs, founder of the computer firm, as saying that downloading music from the internet now was exactly the same as buying an LP in the era of vinyl.

And to prove his point that Apple Computer was using the trademark to sell music even though its download service is branded otherwise, he demonstrated to Mr Justice Mann how to download a track from the iTunes website onto an Apple iPod music player.

Choosing Le Freak - which spent six weeks at No 1 for the group Chic before the internet had even been invented - Mr Vos took the judge through the procedure, pointing out how many times the Apple logo appeared as he did so.

The song and its chorus - "Aah Freak Out! Le Freak, c'est Chic!" - boomed around court No 73. Mr Justice Mann proved no beginner: the learned judge is an iPod owner had earlier offered to disqualify himself the case on that basis.

Mr Vos told the court that both sides had respected the 1991 agreement and all had gone well between the two companies until the advent of the iPod, the portable music player that can store thousands of tracks downloaded from the internet or ripped from a user's CD collection.

He said that Apple Computer violated the agreement when it launched iTunes in 2003 and described as "plainly wrong" its argument that it uses the apple mark only in connection with a delivery system.

Customers of the service now have access to 3.7 million songs and when Mr Jobs launched Music Store in 2003, part of the presentation included exclusive tracks from artists including U2, Eminem, Bob Dylan - "tracks for the Store that you cannot get anywhere else".

Mr Vos said: "[Apple] Computer was promoting a store at which to buy music, and more particularly, Computer's musical recordings - permanent downloads - with special characteristics. No objective onlooker could think otherwise.

"What Apple Computer are not doing using the Apple mark is selling software, delivery systems, or anything of the like. They are selling music," Mr Vos added, "and that is in violation of the agreement."

The computer company’s logo is a cartoonish apple with a neat bite out of the side; the record company is represented by a perfect, shiny green Granny Smith apple.

He added that Mr Jobs wanted to use the mark "apple" for the Music Store but realised that the agreement prevented this. Before the launch of iTunes it had even approached Apple Corps and offered $1 million for the trademark Apple Records. That offer was rejected by Neil Aspinall, the Beatles former road manager, who is now managing director of Apple Corps.

Although Computer recognised that the use of "apple" marks would be impermissible, it "succumbed to its earlier desire" and used the logos with "great prominence" and the name "apple" and had continued to do so up to the present date, Mr Vos said.

Apple Corps is seeking court orders to stop Computer using the "apple" marks in connection with the iTunes Music Store and is also asking for damages after an investigation into Apple Computer’s profits from the world's dominant music download service.

Apple Corps' current owners - Sir Paul McCartney, Ringo Starr, Olivia Harrison and Yoko Ono - did not attend the hearing.

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