Jury rules in favor of Apple in antitrust class action trial

By Kyla Asbury | Dec 17, 2014

OAKLAND, Calif. (Legal Newsline) - A federal court jury has ruled that Apple did not violate antitrust laws when it restricted music purchases for iPod users to Apple's iTunes store.

The eight-person jury deliberated for approximately three hours before voting unanimously that the firmware and software updates in iTunes 7.0, which was released in 2006, were genuine product improvements, according to the verdict form filed Dec. 16 in the U.S. District Court for the Northern District of California. The trial began Dec. 2.

"Every time we’ve updated those products—and every Apple product over the years—we’ve done it to make the user experience even better," Apple said in a statement.

The lead case was filed on Jan. 3, 2005, and, after multiple amended complaints, the final amended complaint was filed on July 9, 2010.

The plaintiffs in the lawsuit claimed when iTunes was introduced in 2001, Apple promoted the music software application as the "best way to organize, browse and play your digital media," and touted the interoperability of iTunes with "MP3 players like Nomad and Rio."

However, when Apple launched its iTunes Music Store in 2003, it restricted the iTunes Store and iTunes to work only with its own portable digital media player, the iPod, and restricted the iPod so that it could only play files embedded with Apple's own proprietary Digital Rights Management downloads, called FairPlay, and no one else's.

"Apple quickly cornered the market by selling DRM-encoded music files in a format that none of the other portable digital media players could use," the amended complaint stated. "Apple gained monopoly power through the use of its proprietary 'FairPlay' software on Audio Downloads purchased from [iTunes Store] because FairPlay prevented Audio Downloads purchased through [iTunes Store] from playing on portable digital media players other than iPod."

Anyone who purchased an audio download from the iTunes Store had to purchase an iPod in order to play the audio download on a portable digital media player, according to the suit.

Also, a purchaser of an iPod who wished to buy audio downloads for direct playback on the iPod had to purchase them from the iTunes Store.

"This restriction on DRM-embedded purchases remains to the present day: consumers are faced with the choice of paying Apple hundreds or even thousands of dollars for DRM-free versions of their previous purchases, or buying another Apple product that can play their DRM-protected music," the amended complaint stated.

Apple allegedly maintained and further entrenched its monopolies through so-called "software updates," signaling to its competitors that it would thwart any efforts to achieve interoperability with its dominant products, according to the amended complaint.

The plaintiffs' were seeking more than $350 million in damages.

The lawsuit involved iPods sold between Sept. 2006 and March 2009.

The plaintiffs were represented by Francis Joseph Balint Jr. of Bonnett Fairbourn Friedman & Balint PC in Phoenix; Alexandra Senya Bernay, Patrick J. Coughlin and Jennifer N. Caringal of Robbins Geller Rudman and Dowd LLP in San Diego; Michael D. Braun of the Braun Law Group in Los Angeles; and Todd David Carpenter of Carpenter Law Group in San Diego, among other attorneys.

Apple was represented by Amir Q. Amiri of Jones Day in San Francisco; John F. Cove Jr. and Meredith Richardson Dearborn of Boies Schiller & Flexner LLP in Oakland, Calif.; Karen Leah Dunn, Martha Lea Goodman and William A. Isaacson of Boies Schiller & Flexner LLP in Washington, D.C., among other attorneys.

The plaintiffs' attorneys could not be reached for comment.

The case was assigned to District Judge Yvonne Gonzalez Rogers.

U.S. District Court for the Northern District of California case number: 4:05-cv-00037

From Legal Newsline: Kyla Asbury can be reached at classactions@legalnewsline.com.

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