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Friday, June 14, 2024 | Back issues
Courthouse News Service Courthouse News Service

IPod Antitrust Trial Underway After a Decade

OAKLAND, Calif. (CN) - Lawyers presented opening arguments in an antitrust lawsuit that accuses Apple of creating a monopoly between 2006 and 2009 by making it impossible for iPod users to play songs purchased from music stores other than iTunes.

The suit, brought in 2005 and since modified, centers around software updates to iTunes that plaintiffs claim limited their iPods' ability to play songs and sometimes resulted in lost data.

Two attorneys made an opening statement on behalf of lead plaintiffs Melanie Tucker and Marianna Rosen.

"The evidence will show that Apple made changes to software after top executives learned that competitors had figured out a way to have their songs play on the iPod," said Robbins Geller Rudman & Dowd attorney Bonny Sweeney, who is representing the plaintiffs in the case. "There was a concern that this would eat into their market share."

The plaintiffs, representing more than 8 million consumers and more than 500 retailers, claim that these changes helped Apple maintain a monopoly by allowing the tech giant to charge more for its iPods. They seek $351 million in damages.

U.S. District Judge Yvonne Gonzalez Rogers instructed jurors to decide whether the iTunes software updates were "genuine product improvements."

Plaintiffs' attorneys spoke at length about updates to iTunes in 2006 and 2007, known as "7.0" and "7.4."

One of these software updates made it so that if a user tried to upload a song bought from another music store onto an iPod, the device would stop working until it was reformatted, plaintiffs' attorneys said.

The details of the case are complex, harkening back to the days when record labels and music companies protected digital music with digital rights management (DRM) code in an attempt to prevent pirating. Apple created its own DRM called FairPlay, which was included in songs purchased through its iTunes store.

In 2004 - the year after the iTunes store opened - RealNetworks introduced a competing store called RealPlayer Music Store. That same year it announced software called Harmony, which allowed songs from its store to be played on the iPod by "translating" Apple's DRM, plaintiffs' attorneys said.

In her opening statement, Sweeney showed internal Apple emails that expressed concern about Real's developments - including one where Steve Jobs likened the software to hacking.

The iTunes upgrades, plaintiffs' attorney Patrick Coughlin said, were "really directed at competitors" and were not genuine software improvements. Harmony stopped working when iTunes was updated, Coughlin said.

Apple's attorney William Isaacson, of the firm Boies, Schiller & Flexner, fired a shot in his own opening statement, saying 2006's iTunes 7.0 was "the most significant update since the initial launch of iTunes."

This not only updated Apple's FairPlay DRM software, but also allowed iTunes to play movies, show album art and other changes, he said.

Harmony stopped working because it was outdated when Apple's FairPlay was updated, Isaacson said.

"Harmony didn't work because it was re-engineered based on an old version of FairPlay," Isaacson said. "That's what happens when you reverse-engineer a product and there's an update."

Apple's attorney also told jurors that iPod prices actually decreased from 2005 to 2009, while storage capacity increased.

"There should be no damages here because prices went down and quality went up," he said.

After opening statements, the jury began hearing evidence from plaintiffs' witnesses, including a former retailer and a computer expert. The trial continues Wednesday. Plaintiffs' attorneys will be using deposition video of Steve Jobs on Wednesday or Thursday, Coughlin told Courthouse News.

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