iTunes court battles continue for Apple

January 8, 2007


Apple is facing a slew of legal challenges to its iTunes and iPod businesses, the company disclosed in a regulatory filing with the Securities and Exchange Commission.

Four of the cases disclosed in Apple’s most recent Form 10-Q include pending legal actions challenging the legality of the digital rights management technology used in the iTunes music store.

The company revealed for the first time that a San Francisco district court recently denied a motion by the company to dismiss a complaint lodged in July 2006.

The suit alleges that Apple violated federal and state anti-trust laws with the bundling of music and video from the iTunes store with its iPod portable media player.

The suit seeks to prevent Apple from tying music purchased from the iTunes store exclusively to the iPod, and requests that monetary damages are awarded to anyone who purchased an iPod or music from the iTunes store after 28 April 2003.

Older iTunes/iPod cases continue to dog the company as well. The case of Charoensak v. Apple dates back to early 2005, when a plaintiff claimed that the tie-in between iTunes and the iPod created an illegal monopoly.

Apple attempted unsuccessfully to have the case dismissed in September 2005. The original plaintiff, Thomas Slattery, was dismissed in May and replaced by two other plaintiffs.

Apple filed an answer to the complaint in November 2006, and further hearings in the case are scheduled for April.

The SEC filing also outlined the company’s ongoing French courtroom battle, where a consumer group claims that the company failed to disclose that music from the iTunes store would play only on the iPod, and that the company unlawfully bundled the two products.

Apple also remains under investigation by the European Union in a 2004 case in which UK consumer group Which? complained that the iTunes store charged UK customers more for song downloads than in other parts of Europe.

The iTunes challenges are not the only legal issues that Apple is facing. The company delayed its third-quarter filings last year after news broke of a scandal involving the back-dating of stock options.


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