Why Apple is taking the e-book case to the U.S. Supreme Court

“Apple may have lost the original case, before U.S. Circuit Judge Denise Cote. It may have failed to convince two out of three judges on the Second Circuit Court of Appeals,” Philip Elmer-DeWitt reports for Fortune. “But that doesn’t mean the issues Apple raised in its defense are settled. ”

“Antitrust law is murky mess, encrusted with ambiguities and contradictions that have grown like barnacles on the 125-year-old Sherman Antitrust Act,” P.E.D. writes. “Apple could still win the case. But even if it loses, it wins.”

P.E.D. writes, “By taking it all the way to the highest court, Tim Cook reinforces Apple’s image as the company that thinks different, the one that’s in it for the long run, the one that has principles and sticks with them, no matter what the cost.”

Read more in the full article here.

MacDailyNews Take: The current U.S. DOJ is plainly inept and the judge at the heart of this fiasco is obviously nothing more than a stupid puppet.

Lady Elaine Fairchilde (left), Judge Denise Cote (right),or vice versa
Lady Elaine Fairchilde (left), Judge Denise Cote (right), or vice versa

In pretrial view, judge says leaning toward U.S. DOJ over Apple in e-books case – May 24, 2013
Lawyers have complained for years that Judge Denise Cote pre-judges cases before she enters the courtroom – August 14, 2013

Amazon’s bogus anti-Apple crusade – January 14, 2014
Judge Denise Cote denies Apple request block her friend as ‘antitrust compliance monitor’ – January 13, 2014
Antitrust monitor Bromwich rebuts Apple accusations of ‘unconstitutional’ investigation – December 31, 2013
Apple seeks to freeze its U.S. e-books ‘antitrust monitor’ – December 15, 2013
The persecution of Apple: Is the U.S. government’s ebook investigation out of control? – December 10, 2013
Apple’s Star Chamber: An abusive judge and her prosecutor friend besiege the tech maker – December 5, 2013
Apple takes aim not just at court-ordered e-books monitor, but also at U.S. District Judge Denise Cote herself – December 2, 2013
U.S.A. v. Apple: Judge Denise Cote assigns DOJ monitor in Apple ebook price-fixing case – October 17, 2013
U.S.A. v. Apple: Judge issues injunction against Apple in ebooks antitrust case; largely in line with what DOJ wanted – September 6, 2013
U.S.A. v. Apple: Judge Denise Cote says Apple needs third-party supervision after ‘blatant’ ebook price fixing – August 28, 2013
Apple e-book judge Cote makes short work of Apple’s list of nine evidentiary ‘errors’ – August 15, 2013
U.S.A. v. Apple: Apple faces possible May 2014 trial on e-book damages – August 15, 2013
le-in-e-books-case/”>In pretrial view, judge says leaning toward U.S. DOJ over Apple in e-books case – May 24, 2013
Judge Denise Cote scolds Apple for being ‘unrepentant’ in e-book antitrust case – August 12, 2013
U.S.A. v. Apple: U.S. District Judge Denise Cote erred during e-books trial, Apple says – August 9, 2013
U.S.A. v. Apple: Cupertino wants a stay in e-books case; DOJ claims publishers are conspiring again – August 9, 2013
U.S.A. v. Apple: DOJ seeks wide-ranging oversight of iTunes Store – August 2, 2013
Apple rejects U.S. DOJ’s proposed e-book penalties as ‘a draconian and punitive intrusion’ – August 2, 2013
U.S.A. v. Apple: DOJ wants to force Apple to revamp e-book practices – August 2, 2013
U.S.A. v. Apple: Cupertino could get smacked with $500 million bill in ebook case – July 25, 2013
U.S.A. v. Apple verdict could end the book as we know it – July 11, 2013
U.S. DOJ unwittingly causes further consolidation, strengthens Amazon’s domination of ebook industry – July 11, 2013
Where’s the proof that Apple conspired with publishers on ebook pricing? – July 10, 2013
U.S.A. v. Apple ruling could allow U.S. government to monitor, interfere with future Apple negotiations – July 10, 2013
Judge Denise Cote likely wrote most of her U.S.A. v. Apple ebooks case decision before the trial – July 10, 2013
U.S.A. v. Apple: NY judge rules Apple colluded to fix ebook prices, led illegal conspiracy, violated U.S. antitrust laws – July 10, 2013
In U.S.A. v. Apple e-books case, witness Barnes & Noble VP Theresa Horner was everything Apple could hope for – June 19, 2013
The Apple e-books trial takes a detour into the absurd – June 18, 2013
Steve Jobs, Winnie the Pooh and the iBookstore Launch – June 17, 2013
Apple set to present its defense in e-book antitrust case – June 17, 2013
Steve Jobs was initially opposed to entering the e-book market – June 14, 2013
U.S.A. v. Apple: DOJ’s last best chance in e-book case has passed – June 14, 2013
Obama admin trying to throw the book at Apple; U.S. DOJ goes after an innovator whose market entry reduced prices – June 13, 2013
Apple’s Eddy Cue denies price-fixing allegations at U.S v. Apple e-books trial – June 13, 2013
Apple fires back at DOJ with email Steve Jobs actually sent – June 13, 2013
Is Steve Jobs’ unsent email a smoking gun in Apple e-book case? – June 12, 2013
Winds shift toward Apple in U.S. DOJ’s e-book trial – June 12, 2013
Day 5 of the Apple ebooks trial: Publishing execs testify; Rupert Murdoch’s role – June 11, 2013
U.S. v. Apple iBookstore case could go to the Supreme Court – June 5, 2013
Apple accuses DOJ of unfairly twisting Steve Jobs’ words in e-book case – June 4, 2013
U.S. DOJ prosecutors accuse Apple of driving up e-book prices – June 3, 2013
U.S. v. Apple goes to trial; DOJ claims e-book price-fixing conspiracy with Apple as ringmaster – June 3, 2013
U.S. DOJ takes Apple to trial alleging e-book price-fixing – June 2, 2013
Penguin to pay $75 million in e-book settlement with US State Attorneys General – May 23, 2013
The hot mess that is Apple’s e-book legal fight with U.S. DOJ – May 16, 2013
Apple: Deals with publishers improved e-books competition – May 15, 2013
Apple tells U.S. DOJ of tough talks, not collusion, with publishers – May 15, 2013
EU ends e-book pricing antitrust probe into e-book pricing; accepts offer by Apple, four publishers – December 13, 2012
Apple, publishers offer EU e-book antitrust settlement – September 19, 2012
Judge rubber-stamps U.S. e-books settlement – September 6, 2012
Apple, four publishers offer e-books antitrust concessions, says source – August 31, 2012
Apple bashes Amazon, calls U.S. DOJ settlement proposal ‘fundamentally unfair, unlawful, and unprecedented’ – August 16, 2012
U.S. antitrust settlement with e-book publishers should be approved, feds say – August 4, 2012
U.S. Justice Department slams Apple, refuses to modify e-book settlement – July 23, 2012
U.S. senator Schumer: Myopic DOJ needs to drop Apple e-books suit – July 18, 2012
Apple’s U.S. e-books antitrust case set for 2013 trial – June 24, 2012
U.S. government complains, claims Apple trying to rush e-books antitrust case – June 21, 2012
Barnes & Noble blasts U.S. DOJ e-book settlement proposal – June 7, 2012
Apple: U.S. government’s e-book antitrust lawsuit ‘is fundamentally flawed as a matter of fact and law’ – May 24, 2012
Federal Judge rejects Apple and publishers’ attempt to dismiss civil case alleging e-book price-fixing – May 15, 2012
Court documents reveal Steve Jobs email pushing e-book agency model; 17 more states join class action suit – May 15, 2012
Apple vs. Amazon: Who’s really fixing eBook prices? – April 17, 2012
Apple: U.S. DOJ’s accusation of collusion against iBookstore is simply not true – April 12, 2012
Apple not likely to be a loser in legal fight over eBooks – April 12, 2012
16 U.S. states join DOJ’s eBook antitrust action against Apple, publishers – April 12, 2012
Australian gov’t considers suing Apple, five major publishers over eBook pricing – April 12, 2012
DOJ’s panties in a bunch over Apple and eBooks, but what about Amazon? – April 12, 2012
Antitrust experts: Apple likely to beat U.S. DOJ, win its eBook lawsuit – April 12, 2012
Why the market shrugged off the Apple antitrust suit – April 11, 2012
What’s wrong with the U.S. DOJ? – April 11, 2012
Macmillan CEO blasts U.S. DOJ; gov’t on verge of killing real competition for appearance of competition – April 11, 2012
U.S. DOJ hits Apple, major publishers with antitrust lawsuit, alleges collusion on eBook prices – April 11, 2012
U.S. DOJ may sue Apple over ebook price-fixing as early as today, sources say – April 11, 2012


      1. If you don’t know that then you are living in an alternate universe. Most of the commenters here if asked would you prefer Che and Fidel’s Cuba or George Washington and Thomas Jefferson’s America, would choose Cuba without a second thought. Of course our President would do the same. He would choose any Middle Eastern Islamic government over the Founders. And that is a fact.

  1. The real problem is not the asinine judge, nor is it the DOJ misapplying the law. It is Apple’s legal team never arguing the salient facts of the case.

    The DOJ (and the judge — even before the case went to trial, and so far two of the three Justices involved) have argued that Apple insisted on a Most Favored Nation clause in its contracts with the publishers. This is blatantly false — if Apple’s legal team were to ever actually argue this. The fought over who demanded the clause. They fought over whether there was collusion over the clause. They never did what they should have done and outright showed that it was not (and is not) a Most Favored Nation clause (which can be illegal in some circumstances) but rather that it was a Best Customer clause, which is NEVER illegal. Apple’s legal team really dropped the ball on this one!

    The second thing that Apple’s legal team never argued is that what is said in contract negotiations is ALWAYS supplanted by the plain texts of the contracts that result. In contract negotiations you can say or demand anything — so long as those statements in and of themselves are not illegal, e.g., threaten someone’s life or make slanderous remarks — and the final verbiage in the contract takes over. Steve’s oft quoted statement during negotiations and discussions of, “I know you want to raise prices.” is supplanted by the fact that Apple gave up pricing control to the publishers. If they raised — OR LOWERED — prices, it was the publishers who had that power in the final contracts. Apple had no such power to control prices. I have personally been in major, 10s of million dollar negotiations presided over by a sitting justice in California, and in that situation the justice was very clear to everyone that the final agreement, once committed to a written document, was the “be all, end all”. None of the statements made (within the law) or offers or demands meant anything outside the negotiation room itself unless it made it explicitly into that written document. Again, Apple’s legal team completely dropped the ball on this one.

    Because I believe that Apple’s legal team will likely still follow the same stupid arguments they already tried and failed at using, I expect Apple’s legal team to fail at the Supreme Court. (That said, there are, unfortunately, certain legal restrictions on the Justices of the Supreme Court allowing Apple to insert new arguments into the case. Apple may have already excluded the possibility of bringing them up by never arguing them before. the Justices could say they won’t hear any arguments not brought up before and only want to hear why Apple thinks the lower courts’ rulings were wrong on Apple’s previous arguments.)

    Saying that even failing, Apple wins, is just plain stupid. Failure will have long term negative effects on anyone trying to break into a new segment like Apple was doing with e-books. It will also add a great deal of ammunition to all the Apple haters who will point to a Supreme Court failure as “clearly showing that Apple is a much worse corporate citizen than Apple’s fanbois claim Samsung is”.

    1. From reading up a bit on the definition and use of Most Favored Customer clauses, it makes no sense to have had it (if it actually is a most favored customer clause) since MFCs prevent suppliers from giving a lower price to one customer over the customer with which the MFC exists. In the agent model, Apple is no longer the “customer” but rather an aggregator charging a 30% fee on sales through their channel. I suppose it can be argued that Apple IS a customer if they were actually contracted to sell a certain minimum units of the product(s) to maintain such a status.

  2. Totally agree, Shadowself.

    It is also important to define the relevant “market” appropriately. You cannot cherry-pick publishers’ new and best-selling titles as indicative of the entire “e-book market”. You need to include all e-books.

    It is also necessary to examine the anti-trust impacts over a relevant time frame, which is fairly long (years) in publishing. The relevant time frame is not weeks, or months, or even several years. That’s how long the effects of e-book decisions may take to be felt in the marketplace.

    Furthermore, raising prices above _predatory low price levels_ is not exactly the definition of “causing consumers harm”. So the simplistic fact that prices (of some books) might rise, over a short period, in this scenario does not imply anti-competitive behavior. It simply indicates a market correction.

    Also, it is clear the publishers made a mistake in agreeing to sell e-books to Amazon on the (traditional) wholesaler basis, rather than on the agency basis, which is much better suited to e-book sales (for example, there is really no need to transfer legal title for an e-book to a middleman). Any student of Game Theory (developed in the 1930s, but which really came of age much more recently) can tell you that the publishers made a bad decision — in fact, their decision is contrary to their own best interests. They realized it too late, however. But this should not mean that must NOT change their mind. There is no reason why the publishers should not be able to change their business deal with Amazon and put e-book sales on the agency basis of sale. This does not constitute anti-trust. Fair and healthy market competition does not require players to shoot themselves in the foot…

    Lastly, economics and data analysis have seen huge innovations in the past 100 years. Apple and/or Apple’s legal team needs to hire some kick-ass statisticians to analyze the e-book market w.r.t. the same criteria that the US DOJ utilizes when determining potential anti-trust implications of various proposed mergers.

    1. Judge Cote would not allow Apple’s legal team to argue certain points at all. She ignored Apple’s team’s requests to bring certain legal experts into court, ruling their testimony to be irrelevant even though they were experts in the very field under discussion. She had made up her mind immediately after reading the Department of Justice’s brief and would not hear any evidence to the contrary. She basically stated so at the beginning of the trial. She listened to the Apple witnesses with a biased view that they were automatically liars, and so stated in her decision which was written, she admitted, except for slight revisions to add those comments, before the trial started. Other attorneys who have appeared before Judge Cote have stated this is a pattern for her. She writes her opinions before trial and then only revises them to adjust for anything she wants to add from the testimony.

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