Business News Digital Labels & Publishers

Apple anti-trust case hangs in the balance due to lack of eligible plaintiffs

By | Published on Tuesday 9 December 2014


So this is fun. There have been some interesting developments in the anti-trust case against Apple over the IT giant’s iTunes software which means – as we write – the lawsuit stands, but without a plaintiff. Which means Apple is facing legal action that could cost it billions, but no one is actually suing the company.

As previously reported, Apple is accused of anti-competitive behaviour between 2006 and 2009, when it was selling tracks on iTunes as AAC files with its own FairPlay digital rights management technology embedded.

The then market-leading iPod could only play MP3s (with no DRM) and Apple’s own brand of AAC (with DRM). Because during this period the major labels would only sell downloads that came with DRM protection, that meant that iPod owners could only buy major label content from Apple’s own iTunes store.

Other digital firms, most notably Real Networks, which were unable to licence Apple’s FairPlay system for their download ventures, tried to backwards engineer their own AAC files with DRM protection that would work on the iPod. But Apple kept updating its iPod software to stop such files from working; so much so that an iPod software update might delete music files bought from rival companies using backwards engineered DRM technology.

Apple argues that it was obliged to stop files using unofficial DRM from working on the iPod because of its licensing deals with the majors, and that it was prevented from licensing its FairPlay system to third parties because doing so would have meant making the software more adaptable, which would have compromised user-experience. iTunes boss Eddy Cue noted in court last week how God awful Microsoft’s rival DRM system was, because his company’s main rival tried to make its DRM work across different devices.

Anyway, all this has finally reached court as the result of a class action instigated by a small number of former iPod owners who argue that they were negatively impacted by Apple’s anti-competitive actions. As a class action, though, if Apple was to lose the case any former iPod owners who had been similarly impacted could claim compensation, which is why losing the legal battle could cost the IT giant billions.

But as the lawsuit has progressed certain parameters have narrowed – specifically what period of the iPod’s history the case relates too – and as a result some of the plaintiffs were struck off the lawsuit last week because it was shown they had not been iPod owners/Apple customers at the relevant time.

As a result, as this week began the case had just one claimant leading the proceedings, one Marianna Rosen. She claimed to have bought a number of iPods over the years, but yesterday – according to the Associated Press – Apple’s lawyers proved that [a] some of those iPods had not been used between 2006 and 2009, [b] some had not been using the software at the heart of this case and [c] two iPods bought in 2008 were purchased on Rosen’s husband’s company credit card, so she didn’t have a direct contractual relationship with Apple and therefore can’t sue over them. Boom.

Having managed to have all of the plaintiffs in the case deleted from the files, Apple hoped that it could have the whole lawsuit thrown out of court – even with a class action, there needs to be at least one named eligible plaintiff at the top of the legal papers.

But the judge hearing the case has given lawyers leading the battle against Apple 24 hours to find another claimant who is eligible under the current parameters of the case. Its thought that some eight million people bought iPods in the US during this time period, and said lawyers reckon they’ve already found a few willing to take on the battle against Apple.

Who, what, how and why we should find out later today.