RealTime IT News

Apple Hit by Lawsuit

Lawyers filed a 10-count lawsuit against Apple earlier this week, claiming the ties between the company's iTunes music download service and its iPod violate state and federal antitrust law.

Slattery v. Apple, filed Monday in the U.S. District Court, Northern District of California in San Jose, is a plea to allow the case to become a class action lawsuit on behalf of anyone who has used the iTunes service or bought an iPod from Apple since April 28, 2003, the day iTunes first opened shop.

The suit is also seeking compensation for the affected users and to "disgorge its ill-gotten gains, and awarding the proceeds of this disgorgement to" the plaintiff and class action members.

Officials from Apple were not available for comment at press time. Eric Belfi of New York-based Murray, Frank & Sailer LLP, one of the lawyers representing Thomas Slattery, a California resident, declined to comment on the suit.

The suit claims Apple broke the law when it altered the industry standard Advanced Audio Codec (AAC) file format and used it to restrict the music's usage outside the iPod. Songs sold to the public on iTunes use the AAC with Fairplay Digital Rights Management (DRM), called AAC Protected.

With the altered AAC files, the suit claims, users can't play the music on any other portable digital music player than iPod and they can't convert the music files to MP3 files. Also, the suit claims Apple has rigged the hardware and software on its iPod so that files downloaded from other online music stores can't be directly played on the device.

"At the same time, by engaging in this unlawful conduct, Apple has managed to unlawfully maintain its monopoly market power in the market for online music sales because owners of the monopolized iPod product who wish to purchase music tracks online have no choice, given Apple's conduct, but to purchase these tracks only from Apple's iTunes store," the suit reads.

The iTunes store is one of the most popular legal online music download sites. Last month, Apple announced it had reached the 200 million song milestone, and according to the suit, Apple CEO Steve Jobs said the service had at least 80 percent of the legal music download market. Other services include Real's Rhapsody, Sony Connect, Napster and Buy.com.

Apple has been more than willing to cut deals with the iPod's popularity, but has come down hard on anyone trying to circumvent its technology. A year ago, HP arranged a tit-for-tat arrangement that let the company sell HP-branded digital music players based on the iPod in exchange for pre-installing the iTunes software on certain of its desktop and notebook lines.

Rival online music providers have had a harder time, though. RealNetworks CEO Rob Glaser reportedly sent an e-mail to Jobs in April requesting Apple's Fairplay DRM license so his Rhapsody subscribers could listen to music on iPods. The deal didn't go through, and three months later Glaser came out with Harmony Technology, which reverse-engineered Apple's technology. Apple officials responded by calling Real hackers and mulling a lawsuit.

The lawsuit filed this week states Apple's defense of its Fairplay DRM is to protect copyrights owned by the artists or music labels.

"That defense, however, is both irrelevant and unavailing," the suit reads. "In fact, other than Apple's iTunes, no other online music vendor has such a restriction in place; yet these other online vendors still manage to provide copyright protection mechanisms to artists and record labels -- often the same artists and labels whose same songs are sold online through iTunes."

In related news, reports abound over a lawsuit filed by Apple against Web sites publishing details of forthcoming hardware and software products. According to CNN Money, information published on Mac rumor site ThinkSecret.com contained what Apple officials say are trade secrets, and that the site's owner, Nick deLume, induced individuals with access to pre-released products to make them public.

"Apple's DNA is innovation, and the protection of our trade secrets is crucial to our success," an Apple statement to the media outlet read.

Last month, Apple filed a lawsuit in the U.S. District Court in San Jose against 28 individuals who violated the company's Apple Developer Connection (ADC) program. The program, used by third-party software developers to create products that interoperate with Apple's, give members restricted access to pre-release software. Apple lawyers will argue the defendants took copies of Apple Tiger builds 8A294 and 4A323 and distributed them through file-sharing networks.

According to AppleInsider.com, another Mac rumor site, the builds are pre-release versions of Mac OS X 10.4 "Tiger." The site also reported a similar lawsuit in December for leaked details on a music device code-named Asteroid.

"Acting in concert, [the] Defendants have deliberately and systematically misappropriated and distributed through the Internet thousands of copies of confidential, unreleased Apple software," the suite reads. "Using a publicly accessible Web site and "BitTorrent" technology that permits users to send and receive data files simultaneously, [the] Defendants have enabled, assisted and induced others to make and use illegal copies of this misappropriated software."