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You are here: Home / Mobile Gadgets / Apple Prevails in iPod Antitrust Case
Apple Prevails in Class-Action iPod Antitrust Lawsuit
Apple Prevails in Class-Action iPod Antitrust Lawsuit
By Jennifer LeClaire / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
DECEMBER
17
2014
Apple has emerged victorious in a potential $1 billion antitrust lawsuit against it -- and it only took a few hours to get a verdict. iPod users brought the suit against Apple, alleging iTunes software updates worked to block competitors' music.

A federal jury in Oakland, California, sided with Apple after a quick deliberation. Some newspapers reported the jury was out three hours and others reported four hours. Either way, Apple defended itself well and put the kibosh on damages, which could have ranged from $351 million to more than $1 billion paid to consumers who bought iPods between September 2006 and March 2009.

"We thank the jury for their service and we applaud their verdict," Apple said in a statement. "We created iPod and iTunes to give our customers the world's best way to listen to music. 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."

Plaintiffs' Case Misses the Mark

The lawsuit against Apple claimed the company violated both federal and state laws with a 2006 software update for its iPod. That software, the plaintiffs argued, blocked iPods from playing songs users hadn't purchased on Apple's iTunes platform. The plaintiffs also argued that the prohibition paved the way for Apple to push prices up on future iPod models.

The trial in the U.S. District Court in Oakland lasted two weeks. Apple's attorneys argued that the allegedly restrictive software update, iTunes 7.0, improved the iPod experience for consumers and did not affect iPod prices. Eight jurors agreed that Apple's update was a "genuine product development," the Los Angeles Times reported. And that settled it, at least for now.

"I think the jury had a really tough decision," Patrick Coughlin, a lawyer for the plaintiffs, told the Times. "We at least got the case to a jury and we hoped for a different result, but you have to always respect the jury process."

Coughlin told Bloomberg News that the judge had narrowed the focus of which product enhancements to consider in a case involving Microsoft. He explained that Redmond was found to have violated antitrust law by bundling its Internet Explorer Web browser with the Windows 95 operating system without consideration of other product improvements.

'Waste of Money'

As part of the trial, the late Apple CEO Steve Jobs offered video testimony recorded before he passed away. The recording was taped in April 2011, just months before his death. A transcript of the 27-minute deposition was made public earlier in December.

In the deposition, Jobs said he was "very scared" about failing to comply with the record labels' terms, which demanded iTunes carry digital rights management (DRM) protections. He explained that hackers typically found ways around DRM. The iTunes updates, he indicated, often aimed to patch DRM holes.

Jobs has had his last word, but Coughlin has not. The attorney for the plaintiffs plans to file an appeal.

We caught up with Rob Enderle, principal analyst at the Enderle Group, to get his take on the case. He told us Apple likely should have lost because a service called Music Match was forced out of business by the behavior the plaintiffs cited.

"However, the plaintiffs were also very inexperienced and didn't even have anyone on their side who had actually experienced the problem suggesting the case should have been thrown out," Enderle said.

"I think Apple let it go through so that they would have a win they could use to prevent anyone else from bringing a similar case. Apple has an excellent legal team and you won't win against them, even if the law is on your side, if you don't bring your A game. The plaintiff's didn't even bring their C game. It was a total waste of money as a result."

Read more on: Apple, iPod, iTunes, Antitrust, DRM, Tech News
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