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Apple's SEC Filing Discusses Lawsuits
by , 9:00 PM EST, December 29th, 2006
Apple Computer filed fiscal 2006 financial documents with the Securities and Exchange Commission on Friday that disclosed improperly handled backdated stock options. The documents also revealed several federal lawsuits, including one that purports that iPod+iTunes amounts to an illegal monopoly, according to Forbes.
The suit claims that Apple created an illegal monopoly by limiting songs and videos purchased at the iTunes Store to function only on iPod media players. The case was filed on July 21, and a motion to dismiss the complaint was denied on December 20. The plaintiff is seeking unspecified damages and other relief.
Interestingly, the same argument could be used to say that iTunes Store competitors are committing similar violations since they offer media downloads that are not compatible with Apple's iPod.
On October 24, PhatRat Technology filed a lawsuit against Apple claiming the company is infringing on patents with the Nike+iPod product. Apple and Nike jointly developed the athletic training aid that works with the iPod nano. Apple has not yet responded to the suit.
On November 7, a case was filed against that alleges the logic boards in iBook G4 portable computers fail at an abnormally high rate. The plaintiff in this case is seeking unspecified damages, and Apple has not yet responded to the suit.
Pending cases against a company are routinely disclosed in SEC financial reports, so revealing these lawsuits in and of itself does not indicate that Apple executives are concerned about their financial impact. They do show, however, that Apple lawyers will be spending a considerable amount of time in court rooms in 2007 - just like they did in 2006.
Apple stock is currently trading in the after-hours market at US$84.70, down 0.14 (0.17%).
If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.
Observer Comments
QuoteIntruder wrote:
Read my lips: iTS/iPod is NOT a monopoly.
Is the same lawsuit in place against Sony for ATRAC? Thought not.
People are just complaining because the other music download sites don't offer what the iTS offers.
I'm not an attorney, but this seems very different from the Microsoft case.
1. The MS case involved MS's illegal actions deliberately attempting to damage (or kill) other companies (e.g., Netscape), not through direct competition on price or value, but through behind-the-scenes threats, agreements, etc. MS deliberately wrote its OS to make it difficult to use other browsers than Internet Express, for example. (Apple, OTOH, makes the Webkit--the basis for Safari--available to developers. Other browsers and software use it.) If I recall correctly, MS also forced PC manufacturers to either not ship any PCs without Windows installed or to pay the licensing fee for all their PCs, even if they shipped with Unix, Linux, etc. (My memory is hazy on just which.)
2. MS's case involved other companies (the PC manufacturers) as part of the scheme. That's what made it an antitrust action. As I understand it, antitrust laws are aimed at companys that collude (e.g., price-fixing). The difference here was that, as I recall, MS was shown to have forced the other companies to participate in the scheme.
3. Dominance of a market, by itself, would not seem to be a case for an illegal monopoly. For example, a company with a patent might have 100% of the market for its product. iTS has a large share of the market, to be sure, but nowhere near the dominance of Windows (<80% vs 95%--that may seem close, but look at it the other way around: competitors have 20% vs 5%--4 times as much).
4. There are other download sites with songs that will play on Creative, Rio, SanDisk, etc. players, but NOT on iPods.
a. So, the users of other players DO have sources for songs. They can also buy and rip CDs.
b. As Intruder said, the other sites are doing somewhat the same thing, thought their songs are compatible with players from several manufacturers.
c. Of course, MS is doing exactly the same thing with the Zune.
5. I would think that one might make the case the iTS songs are "software" for the iPod and that it's no more illegal for Apple to sell software that works only on the iPod than it is for Apple to sell iWork and iLife that work only on Macs. Apple also ensures that OS X can't be loaded on any computer other than a Mac.
Sat Dec 30, 2006 1:15 pm Subject:
If the case could be made for software, then MS should be sued over Project, which is only available for Windows, and is horrendously ovepriced (gouging businesses, quite frankly). It is $453.99 US at PCMall. Even FastTrack Scheduler, which is also expensive, is $100 less (and cross platform), but MS has a lock on the business.
I've double-posted, sorry, but....
TMO editors. Do you have a licensing arrangement with SmartHouse News that allows them to copy your articles and add their own byline to it?
http://www.smarthousenews.com.au/Business_News?Article=/Business%20News/F7H5L4D6
Where I come from, we call this plagiarism - in the absence, of course, of any agreements between publishers, although a lack of attribution even in the case of an agreement is poor form.
The other possibility is that both of you copied the story, verbatim, from another source. Please say it isn't so.
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