Apple found not liable by Jury of violating anti-trust laws

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A US federal jury decided Tuesday that Apple didn’t compete unfairly when it sold music players and songs with copy-protection software that was incompatible with rival devices and music from competing online stores.

The plaintiffs complained that Apple had locked out all streaming music sites except for iTunes, on early models of the Apple iPod. At the same time, iPod competitors were locked out of iTunes. The bottom line, argued the plaintiffs, was artificially high prices for the iPod.

After the plaintiffs’ lawyers showed the court a picture of an Apple product purchased outside the lawsuit’s certification dates – then struggled to provide any certified plaintiffs — the verdict was nearly a foregone conclusion.

The plaintiffs had been seeking $350 million, which could have been tripled to over $1 billion based on anti-trust rules. The class-action suit included 8 million members who had purchased an iPod between September 2006 and the end of March in 2009. Ironically, the two named members of the class had to withdraw from the suit, when it was discovered that their iPod purchases were made outside of the accepted time period.

Delivering a unanimous verdict today, the group said Apple’s iTunes 7.0, released in the fall of 2006, was a “genuine product improvement,” meaning that new features (though importantly increased security) were good for consumers. Plaintiffs in the case unsuccessfully argued that those features not only thwarted competition, but also made Apple’s products less useful since customers could not as easily use purchased music or jukebox software from other companies with the iPod.

The decision means Apple did not violate antitrust laws, something that would have potentially led to damages of more than $1 billion. The complaint originally asked for damages of more than $350 million to pay a class of 8 million people who bought certain iPod models between September 2006 and the end of March in 2009. This verdict means there are no payments for consumers that purchased an iPod between 2006 and 2009.

The verdict is an unequivocal win for Apple, which argued that its music distribution system, including iTunes, the iTunes store, and iPods, comprised an integrated system, and that it would be unexpected for music purchased from other services to work with it. The plaintiffs were arguing that Apple’s decisions were clearly anti-competitive and ultimately froze users out from their own music, even pointing out that iPods between 2007 and 2009 suggested restoring factory settings when users tried to download music from rival services.

“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.”

Following the verdict, the plaintiff’s head attorney Patrick Coughlin said an appeal is already planned.

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