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Judge scolds Apple for lack of remorse in e-book antitrust case

Joab Jackson | Aug. 12, 2013
A federal judge took Apple to task on Friday for showing no contrition about potentially defrauding its customers of hundreds of millions of dollars.

In their proposed remedy, the DOJ and AGs advised modifying the way Apple contracts with publishers in order to limit the company from dictating terms that publishers would use with other retailers.

They also wanted Apple to allow third-party e-reading software on Apple devices, such as the Kindle software offered by Amazon, to directly link into their electronic bookstores. Today, as a general policy for its app store, Apple requires a 30 percent commission on any goods sold through third-party apps.

In response, Apple chiefly argued that, because it plans to appeal the court's decision, the court should stay all further actions. Apple argued that it has compelling reasons for believing that an appeal would be successful for the company.

Cote declined to place a stay on proceedings, however, expressing doubt that Apple had that strong of a case.

Short of being granted a stay, lead Apple attorney Orin Snyder argued that the company would need time to prepare for the upcoming trial to determine damages, which could cost Apple and the publishers hundreds of millions of dollars.

The DOJ had argued that consumers paid significantly more for their e-books from April 2010, when the contracts were signed, until May 2012, when the proceedings for the trial began.

Snyder vigorously argued that Apple needed at least nine months to determine what it thinks proper damages would be. Because some e-books were reduced in price after the move to Apple's agency-model contracts, Apple would need to calculate how much consumers saved under the new model, to offset it against how much they lost previously, Snyder said.

Apple would also need to obtain marketing plans from Amazon, Barnes & Noble and other e-book sellers to get an idea of what those companies' plans were prior to Apple's entry into the market, in order to estimate how much money the market would have generated if Apple hadn't entered the fray.

However, Cote insisted on a shorter time frame, giving Apple only until December to conduct this fact-finding and analysis, noting the company already had a year since the trial began to collect preliminary evidence. She indicated that she would like to hold the damages trial within the first few months of 2014.

Cote also offered a potential remedy: Apple would be allowed to sign new contracts with the publishers, one at a time. It would have eight months to sign a contract with one publisher, then the next eight months to sign with another publisher, and so on. In this way, Apple would not be dealing with all the publishers at once, preventing more collusion, Cote said.



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