Court denies motion to dismiss lawsuit accusing Apple of ‘unlawfully tying’ iPod+iTunes

“Apple Computer Inc. said Friday it is facing [a lawsuit] alleging the company created an illegal monopoly by tying iTunes music and video sales to its market-leading iPod portable players,” Betsy Schiffman reports for The Associated Press.

“The case, filed July 21, is over Apple’s use of a copy-protection system that generally prevents iTunes music and video from playing on rival players. Likewise, songs purchased elsewhere aren’t easily playable on iPods,” Schiffman reports.

Schiffman reports, “The plaintiff is seeking unspecified damages and other relief. The court denied Apple’s motion to dismiss the complaint on Dec. 20.”

Full article here.

From Apple’s 10-K for Fiscal Year Ended September 30, 2006:
Tucker v. Apple Computer, Inc.
Plaintiff filed this purported class action on July 21, 2006 in the United States District Court for the Northern District of California alleging various claims including alleged unlawful tying of music and videos purchased on the iTunes Store with the purchase of iPods and vice versa and unlawful acquisition or maintenance of monopoly market power. The complaint alleges violations of §§1 and 2 of the Sherman Act (15 U.S.C. §§1 and 2), California Business & Professions Code §16700 et seq. (the Cartwright Act), California Business & Professions Code §17200 (unfair competition), and the California Consumer Legal Remedies Act. Plaintiff seeks unspecified damages and other relief. On November 3, 2006, the Company filed a motion to dismiss the complaint, which was heard on November 20, 2006. On December 20, 2006, the Court denied the motion to dismiss.

A similar lawsuit also detailed in Apple’s 10-K:
Charoensak v. Apple Computer, Inc. (formerly Slattery v. Apple Computer, Inc.)
The original Plaintiff (Slattery) filed this purported class action on January 3, 2005 in the United States District Court for the Northern District of California alleging various claims including alleged unlawful tying of music purchased on the iTunes Store with the purchase of iPods and vice versa and unlawful acquisition or maintenance of monopoly market power. Plaintiff’s complaint alleged violations of §§1 and 2 of the Sherman Act (15 U.S.C. §§1 and 2), California Business and Professions Code §16700 et seq. (the Cartwright Act), California Business and Professions Code §17200 (unfair competition), common law unjust enrichment and common law monopolization. Plaintiff sought unspecified damages and other relief. The Company filed a motion to dismiss on February 10, 2005. On September 9, 2005, the Court denied the motion in part and granted it in part. Plaintiff filed an amended complaint on September 23, 2005 and the Company filed an answer on October 18, 2005. On May 8, 2006, the Court heard Plaintiff’s motion for leave to file a second amended complaint to substitute two new plaintiffs for Slattery. In August 2006, the court dismissed Slattery without prejudice and allowed plaintiffs to file an amended complaint naming two new plaintiffs (Charoensak and Rosen). On November 2, 2006, the Company filed an answer to the amended complaint denying all material allegations and asserting numerous affirmative defenses. The hearing on class certification is set for April 16, 2007.

Related articles:
Judge allows antitrust suit against Apple for iPod+iTunes illegal ‘tying’ to proceed – February 06, 2006
Antitrust suit filed against Apple, alleges iPod and iTunes Music Store illegally ‘tied’ together – January 05, 2005

63 Comments

  1. Fine, then we also need the following lawsuits to happen…

    Sue Microsoft for unlawfully tying the Zune exclusively to the Zune Marketplace
    Sue Microsoft for unlawfully tying Xbox games exclusively to Microsoft Xbox hardware
    Sue Sony for unlawfully tying PlayStation games exclusively to Sony PlayStation hardware
    Sue XM for unlawfully tying XM programming exclusively to XM radio hardware
    Sue Dish Network for unlawfully tying Dish programming exclusively to Dish hardware

    Those are just a few examples of why this lawsuit is an absolute joke. Companies do this stuff all of the time and there is nothing illegal about it.

  2. Well, the repercussions of this case (if the plaintiffs win) will be other lawsuits to follow including Microsoft and its Zune player, which not only is tied to its Zune software and Marketplace, but is Windows-only, which already has been a monopoly problem.

    MDN; keep us abreast on this lawsuit.

  3. The fact that Microsoft entered the market with the Zune makes the argument that Apple has a monopoly less tenable (despite Zune’s likely demise). It shows M$, at least, does not consider it to be a closed market.

  4. This is standard operating procedure for Apple. They force you into their “solutions” with proprietary formats and software. Hey iPod lemmings, you want freedom from this tyranny? Go with Microsoft + Zune! Redmond doesn’t play the proprietary game. They level the playing field with open formats like .DOC, WMA and ActiveX. They don’t have to hide behind proprietary schemes to secure a market position and then have the gall to call their platform “open”.

    Leave behind the constraints of burning purchased music to CD’s, or sharing it on up to 5 computers, or streaming it to powered speakers anywhere in range of an Airport Express Base Station. Free yourselves from the shackles of putting hundreds of songs on an iPod and using it anywhere: at home, in a car, out on a jog, connected to powered speakers. Apple has you snookered. I bet dealing with Apple’s DRMed files is miserable. You can’t do anything but play them on an also-ran, wish-I-was-half-a-Zune iPod. What’s worse is you probably can’t drag non-DRMed MP3 files to a non-iPod music player right from the godawful Finder or magnificent Explorer in Windows. Apple sure ain’t gonna give you a right-click access to the MP3 file right from iTunes. You can’t even convert DRMed AAC files to MP3, or even better, the wide-open independently-approved industry standard WMA either. Losers.

    With Zune it’s totally different, and that’s why 2007 will be the year of the a Zunatic.

    Welcome to the Social.

  5. harry, what have lawsuits got to do with democratic freedom? if anything, lawsuits are a perfect example of democratic freedom – dispute resolution according to the rule of law.

    Our system of juriprudence encourages suits which amount to legal extortion. It encourages law firms to take on plaintiffs with no case, knowing that the defendent will make a business decison to settle. Businesses do this because the cost of defense is most times greater than the cost of settling out of court.

    The plaintiff’s lawyers get paid hard cash, while the defendent gets coupons for free product.

  6. I’m sure the asswipes who bring these lawsuits are so “damaged” from iTunes’ proprietary integration with iPod. I can just imagine their pain. How do they get through the day? It must be torture. Poor, poor babies. Greedy, worthless pukes!

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