Apple Antitrust Case Over iPods Nears Jury Deliberations

A software update for Apple Inc's iPod music player was not a product improvement, but was intended to improperly raise costs for consumers who wanted to switch to newer devices, an attorney for Apple customers said in court.

Closing arguments were delivered on Monday in an Oakland, California, federal courtroom in an antitrust trial that has cast fresh scrutiny on Apple's onetime virtual domination of the digital music market.

The plaintiffs, a group of individuals and businesses who purchased iPods from 2006 to 2009, are seeking about $350 million (roughly Rs. 2,166 crores) in damages from Apple for unfairly blocking competing device makers. That amount would automatically triple under antitrust law.

Plaintiff attorney Patrick Coughlin told jurors the 2006 software update was a "one, two punch" designed to restrict the iPod to music purchased on iTunes.

"This is all about competition," Coughlin said.

However, Apple attorney William Isaacson said the evidence is "overwhelming" that the software update was meant to improve consumers' experience and protect against music theft. The new software contained many desirable features, Isaacson said, including movies and auto-synchronization.

"We now have a plaintiff and a case asking you to hold Apple liable for innovating," Isaacson said.

The jury will deliberate first on the sole issue of whether the update had benefits for customers. If it agrees with Apple, the company will prevail in the case. If the eight-member jury disagrees, they will deliberate on other antitrust issues, and damages.

At the time the software update was rolled out, Apple faced a challenge in the online music market from Real Networks, which developed RealPlayer, its own digital song manager, the plaintiffs claimed. It included software that allowed music purchased there to be playable on iPods as well as competing devices.

Apple's 2006 update restricted the iPod to music bought on its iTunes website. The plaintiffs in the case said that step discouraged iPod owners from buying a competing device when it came time to upgrade.

The trial included emails and video deposition testimony given by Apple co-founder Steve Jobs shortly before he died in 2011. On Monday, Isaacson cited a Jobs email to demonstrate how concerned Apple was about security.

"We need to take a bright, hard line on theft," Jobs wrote to Apple colleagues. "There is no gray area on theft."

The case in U.S. District Court, Northern District of California is The Apple iPod iTunes Anti-Trust Litigation, 05-37.

© Thomson Reuters 2014