Saturday, October 13, 2012
Wednesday, October 10, 2012
Sunday, June 3, 2012
Apple:
The Good Guy or The Bad Guy? Or—perhaps—a bit of both. A look at their chaotic courtroom debacles.
Please
note that bold formatting has been added to stress points, commentaries, and
facts that I consider particularly significant.
I want the reader to understand that I am in no way claiming to
understand all the content and context of legal considerations. All included are based on my research and interpretation
based on my present understanding of legal issues.
All
data is based on most recent information and in particular court cases. Many of the cases did not include final
commentary and decisions. My research is
intended to reflect the complexity of the myriad lawsuits that surround both
Apple and other industry leaders. Any
corrections in regard to my analysis are both welcome and encouraged. Contact me at billgerardino08@gmail.com.
I’ve selected the recent court
cases involving Apple and other major players in the iPhone, computer, and
iPads market. It is my firm belief that
marketing, promotion, branding, and product development in regards to the areas
of education and entertainment are being driven by the very force of nature to
making full or more complete use of hand-held devices. As such any copyright, patent, trademark, or
trademark secrets that define this industry often become the subjects of heated
debate. This is because the entities
with a similar vision know that whatever transpires within the business
ecosystem and the courts have a direct impact on how to make the most effective
use of time, resources, and money in making important business decisions as
listed above.
In this writing I’ve taken a
careful look at Apple v. Nokia who only recently have settled a major
disagreement that has not only meant billions of dollars trading hands but
significantly impacted the cost of goods, the return on investment, and the
customer’s hard earned expendable cash.
The Nokia v. Apple (Nokia Corporation v. Apple Inc.. 09-791-GMS) case also reveals that the notion
of trade secrets and patent protection can easily spill out to other companies
as well. In this scenario Nokia involved
in fact discovery while preparing for their suit ran into significant
challenges in obtaining essential documentation from a third party that held
drawings and writings that significantly impacted the validity and success of
their case. Nokia in fact announced
after settlement of the case against Apple that it may very well consider
future law suits with similar claims. On
May 17, 2011 argued in the Delaware courts that Nokia was requesting protected
company information that did not fall into the scope of Nokia’s lawsuit. Further, Apple claimed to have offered a
compromise if Nokia narrowed the scope of the subpoena at which point Apple
would supply the requested information. Non-parties
Motion to Quash Nokia Subpoena and for a Protection Order, Civil Actions No.
1-09-cv-00791-GMs, heard by the United States District Court District of
Columbia)
And so, the individuals laying out
their business plans and measuring their financial forecasts watch with great
concern. The artists seeking out
distribution channels on hand-held devices watches with equal concern asking
themselves where do the go for base channels and how much will these channels
cost? Will future patent squabbles result
in them not being able to deliver their own intellectual property to
market?
The other case I focused on is the
Department of Justice’s recent allegations regarding Apple and large publishing
houses attempting—according to the charges—to raise and fix the price of e-book
while mounting an attack on Amazon’s $9.99 E-books. The controversy lies around the legal
validity of what is called the Agency Model.
In this Model, large and small companies operate in unison sharing trade
secrets (the notion of IP seems to enter into this concern at this point) and
what impact it will have on the bottom line cost to the customer. It also has a disturbing impact on the
emerging artist who wants to market his or her own IP via the Internet in the
most economical fashion it can. Thus a
concern that seems so rooted in the patent end of the business does in fact
translate into very real issues involving the artist’s ability to effectively
manager his or her own business on the internet. And since sales via Internet and—specifically
hand-held devices—this is a genuine and real concern that all emerging talent
should be watching carefully.
Finally, I am concerned about the
government offices involved in patent and copyrighting that seem to be unable
to put together an objective criteria that reflects the tremendous growth of
technology. I would suggest that some
coherent and substantive efforts into restructuring their guidelines and
requirement are seriously in need at this juncture. I would suggest that this writing in some
small way validates these observations, commentaries, and concerns.
I hope you enjoy the read and
welcome your comments.
Nokia vs. Apple: A Series of unfortunate Circumstances
Case Number: Nokia
Corporation v. Apple Inc.. 09-791-GMS
Oct 22 2009, 2:18pm
EDT
Description and overview.
Nokia filed a lawsuit against Apple
entitled Complaint For Patent infringement and Declaratory Judgment. The court document goes on to say that the
“Plaintiff Corporation (“Nokia”), on personal knowledge as to it’s own acts,
and on information and belief as to all others [. . .] [knowingly] infringed on
Nokia’s patents.
As stated in the 2009 Court
document, Nokia claimed that Apple infringed on patents U.S. Patent Nos.
5,802,465 ("the '465 patent"), 5,862,178 ("the '178
patent"), 5,946,651 ("the '651 patent"), 6,359,904 ("the
'904 patent"), 6,694,135 ("the '135 patent"), 6,775,548
("the '548 patent"), 6,882,727 ("the '727 patent"),
7,009,940 ("the '940 patent"), 7,092,672 ("the '672
patent"), and 7,403,621 ("the '621 patent").
In response Apple alleges that
Nokia infringed U.S. Patent Nos. 5,634,074 ("the '074 patent"),
5,555,369 ("the '369 patent"), 6,239,795 B1 ("the '795
patent"), 5,315,703 ("the '703 patent"), 6,189,034 B1 ("the
'034 patent"), 7,469,381 B2 ("the '381 patent"), 5,455,854
("the '854 patent"), 7,383,453 B2 ("the '453 patent") and
5,848,105 ("the '105 patent").
Source: NOKIA Corporation, Plaintiffs, v. APPLE INC. See references.
Nokia claims that it offered Apple
license for the patents and a fair market price and was refused. Nokia sought remedy to the situation in the
District Courts of Delaware.
In December of 2009, Apple
countersued Nokia claiming that it had infringed on Apple patents.
Nokia then responded with a
countersuit filed with the International Trade Commission. Nokia made the audacious claim that virtually
all of Apple’s products and technology had violated “least one of seven Nokia
technology patents.” (Foresman 2012)
The matter has turned into a
protracted argument that was settled in June of 2011 in favor of Nokia. It should be noted that Nokia and Apple
settled the dispute prior to a trial scheduled for 2012.
Nokia is to receive an undisclosed
one-time settlement in addition to 1% of sales of all Apple iPhones using the
patents. While this is good news for
Nokia, the consensus on Wall Street seems to be that this hardly puts Nokia out
of its financial woes. Its stocks have
steadily decreased and are now some 25% lower the historical value.
‘Nokia is likely looking to
obtain a patent royalty of 1 percent to 2 percent ($6-12) on every iPhone sold
in compensation for its IPs concerning GSM, 3G and WiFi technologies on mobile
devices,’ Munster further explained. However, a $12 royalty per iPhone is
highly unlikely, he said, and even if the suit is decided in Nokia's favor, it
shouldn't have serious material impact on Apple's performance.’[1]
Source: (Foresman 2012)
Nokia has stated that this
settlement will make for a positive quarterly report. Further, there is speculation that Nokia,
flushed with its victory, is looking into suing other iPhone companies for
similar sorts of legal action. I’ve
discussed the controversies and my professional concerns in the introductory
passages.
Apple and
“Conspirators” face the DOJ
Department of Justice (DOJ) vs. Apple and Co-defendants
Case Number 12-cv-08261
Note: All court
papers can be accessed at this site with the exception of Apple’s response to claim
that is referred to in resources.
Any material in quotes unless otherwise indicated in citing
follows this methodology.
The DOJ alleges that Apple along
with co-conspirators (Hatchette Book Group, Inc., HarperCollins Publishers,
Verlagsgruppe, Holtzbrinck GMBH, The Penguin Group (USA) and Simon &
Shuster, Inc.) conspired to raise and fix the prices of e-books by applying an
agency model that would cause considerable damage to Amazon e-books.
The agency model effectively made a
contractual agreement between the defendants to eliminate Amazon’s ability to
sell the e-books at its discounted $9.99 per unit price. The defendants informed Amazon that they
would no longer provide them with the licenses to sell their publications
unless the ‘joined in’ the agency model.
Further, the defendants ‘pressured’ other outlets both hard copy and
on-line to adhere to the above mentioned model.
The defendants agreed to raising the price approximately 30% to 40%
making the average price anywhere from $12.99 to $14.99 and as high as $16.99
depending on the circumstances.
At the time Apple was about to
release their iPads along with its e-book on-line outlet. Apple would receive a 30% fee from all
companies who signed on with the agency concept. In the documentation it is suggested that
Apple not only looked for the substantial profit but also actively sought out
ways to destroy what they and others perceived to be Amazon’s considerable
market share. Apple also argued that
selling eBooks at $9.99 did not generate a fair return on investment ant that
Amazon was preventing them from effectively competing in the e-book market.
The DOJ maintains that the activity
smacked of price fixing and conspiracy that violated the first section of the
Sherman Act.
While apple prepared a response[2] on
the charges to the court and still maintains that the charges are without
merit, several of the defendants have elected to settle the matter with the
DOJ.
The U.S. Department of Justice and
Attorney Gen. Eric Holder just announced (via
CNN) a settlement with three publishers—Hachette, HarperCollins, and
Simon & Schuster— following this morning’s report
that it would launch an antitrust suit against Apple, Macmillan, and Penguin,
which refused to settle. The settlement is said to give publishers the “freedom
to reduce the prices of their e-book titles,” allowing Amazon to return to its
previous wholesale model.” (Kahn 2012)
Kahn writes that
The settlement is said to give
publishers the ‘freedom to reduce the prices of their e-book titles,” allowing
Amazon to return to its previous wholesale model.’ (Kahn 2012)
McMillan CEO Sargeant has remained
steadfast in the company’s innocence and claims that the ‘agency model’ is the
way of the future. This seems to be the
way Apple is approaching this matter. In
a sense, these entities are turning this case into a matter of practical
business strategy and a system of review by the DOJ that is out of touch with
the present market conditions.
‘Let me start by saying that
Macmillan did not act illegally. Macmillan did not collude,’ Sargent writes.
He acknowledges that the costs of fighting the DOJ’s suit — ‘in time,
distraction, and expense” — are “truly daunting,” but “we have decided to fight
this in court.’ (Owen 2012)
This matter is significant to me because I am presently
authoring a book that—as part of its marketing and product distribution
strategy—heavily factors in on-line sale in e-book fashion through such outlets
as Apple on-line bookstore, Amazon, and others similar to these operations of
various sizes and market share.
I notice that Apple seems to have
taken a similar position to this matter that they took in their case with Nokia. They claim that Amazon is in fact potentially
holding an unfair advantage—a monopoly of sorts—in the growing e-book market
because of its $9.99 price tag. Further,
they maintain that Amazon is eroding the hard cover sales of books in multiple
venues. Therefore, their move from a
market driven price and marketing strategy to an agency seems to suggest a fair
response to the present situation.
However, the DOJ claims that this
is merely price fixing and that the consumer and smaller retailers are footing
the bill. Further the DOJ claims that
the defendants were sharing company secrets thereby removing the notion of
active and dynamic competition.
The DOJ states:
When a company takes a
pro-competitive action by introducing a new product, lowering its prices, or
even adopting a new business model that helps it sell more product at better
prices, it typically does not want its competitors to copy its action, but
prefers to maintain a first-mover or competitive advantage. [3] In
contrast, when companies jointly take collusive action, such as instituting a
coordinated price increase, they typically want the rest of their competitors
to join them in that action. Because
collusive actions are not pro-competitive or consumer friendly, any competitor
that does not go along with the conspirators can take more consumer friendly
actions and see its market share rise at the expense of the conspirators. Here, the Defendants acted consistently with
a collusive arrangement, and inconsistently with a pro- competitive arrangement,
as they sought to pressure another publisher (whose market share was growing at
the Publisher Defendants' expense after the Apple Agency Contracts became
effective) to join them.
( United States
v.
Apple, Inc., Hachette Book Group, Inc., HarperCollins
Publishers L.L.C., Verlagsgruppe Georg Von Holtzbrinck GmbH, Holtzbrinck
Publishers, LLC d/b/a Macmillan, The Penguin Group, A Division of Pearson PLC,
Penguin Group (USA), Inc., and Simon & Schuster, Inc.
On a side note I cannot help but wonder why the DOJ has not
targeted the Oil industry in its obvious efforts to justify climbing oil costs
based on pre-existing oil reserves. This
based not on specific research but general impression and, therefore, somewhat
subjective. I suggest this merely because
of my concern that the Sherman Act addresses all efforts at price fixing rather
than the latest favorite flavor.
In my opinion Apple and those
remaining true their position have already lost what they initially aimed to
accomplish. Their plan relied heavily on
a group effort that would adjust the overall competitive and product strategy
that would 1) raise their return on investment and 2) negate Amazon’s strong
market position and competitive edge. Is
it now a matter of principle or genuine concern to level out the competitive
playing field? Should the consumer be
getting the worst end of the deal by elevated pricing and possibly a limited access
to new material? The question seems to
come down to this. Is this ‘agency
model’ really a dressed up version of price fixing that eliminates competition
under the Sherman Act? Or is it possibly
time to reconsider the overall impact of IP and Internet commerce that would
fuel changes in the Sherman Act. I make no claims to understand all of the
legal complexities of this matter.
However, as a consumer, author, and publishing entity I certainly have
multiple questions.
In regard to the Nokia case and all
the attending and related court matters I see yet another situation where todays
entertainment industry must grapple with an exponentially growing technology in
regard to patent and copyright law.
Resources:
Apple Inc.’s Answer To Consolidated, Amended
Class Action Complaint. Scribd. Retrieved from http://www.scribd.com/doc/95290793/Apple-Response-to-Class-Action.
By Laura Hazard Owen Apr.
11, 2012. Paid Content. Retrieved from http://paidcontent.org/2012/04/11/macmillan-ceo-sargent-why-we-wont-settle-against-doj/.
Apple Inc.’s
Answer To Consolidated. Amended Class
Action Complaint case 1:11-Md-02293-Dlc
Document 165. Retrieved from ????
Foresman,
Chris. Nokia hurls new salvo in spat with Apple, complains to ITC. Retrieved from http://arstechnica.com/apple/2009/12/nokia-hurls-new-salvo-in-spat-with-apple-complains-to-itc/. (June 1, 2012)
Kahn,
Jordan. DOJ
explains settlement with three publishers, Macmillan CEO explains why. April 11, 2012. Retrieved from 9TO5Mac Apple
Intelligence. http://9to5mac.com/2012/04/11/doj-explains-settlement-with-three-publishers-macmillan-ceo-explains-why-he-wont/.
Nokia Corporation
v. Apple Inc.. 09-791-GMS. amlawdaily.
Retrieved from http://amlawdaily.typepad.com/applenokiastip.pdf.
Nokia Corporation, Plaintiffs, v. Apple Inc. Defendants., C.A. No.
09-791-GMS, United States District Court For The District Of Delaware, 2011
U.S. Dist. Retrieved from LEXIS 58773.
Nonparties Motion
to Quash Nokia Subpoena and for a Protection Order. Retrieved from http://law.justia.com/cases/federal/district-courts/district-of-columbia/dcdce/1:2011mc00295/148263/1/
Owen, Laura
Hazard. Macmillan CEO Sargent: Why we
won’t settle against DOJ. paidContent. Retrieved from http://paidcontent.org/2012/04/11/macmillan-ceo-sargent-why-we-wont-settle-against-doj/.
United States
v.
Apple, Inc., Hachette Book
Group, Inc., HarperCollins Publishers L.L.C., Verlagsgruppe Georg Von
Holtzbrinck GmbH, Holtzbrinck Publishers, LLC d/b/a Macmillan, The Penguin
Group, A Division of Pearson PLC, Penguin Group (USA), Inc., and Simon & Schuster,
Inc. Retrieved from http://www.justice.gov/atr/cases/applebooks.html.
[2]
While I have included Apple’s in this
document I was not entirely clear on what particular court document Apple was
responding to. That having been said I
decided that Apple’s response along with other cites in this document warranted
the inclusion of this response.
[3] If
Apple’s claims that Amazon was in fact practicing efforts to unreasonably
control the market is this not also the subject of analysis under the Sherman
Act. This is a question that is based on
my observations and not a matter of law.
Apple v. Nokia. Important court cases to follow
I’ve selected the recent court
cases involving Apple and other major players in the iPhone, computer, and
iPads market. It is my firm belief that
marketing, promotion, branding, and product development in regards to the areas
of education and entertainment are being driven by the very force of nature to
making full or more complete use of hand-held devices. As such any copyright, patent, trademark, or
trademark secrets that define this industry often become the subjects of heated
debate. This is because the entities
with a similar vision know that whatever transpires within the business
ecosystem and the courts have a direct impact on how to make the most effective
use of time, resources, and money in making important business decisions as
listed above.
In this writing I’ve taken a
careful look at Apple v. Nokia who only recently have settled a major
disagreement that has not only meant billions of dollars trading hands but
significantly impacted the cost of goods, the return on investment, and the
customer’s hard earned expendable cash.
The Nokia v. Apple (Nokia Corporation v. Apple Inc.. 09-791-GMS) case also reveals that the notion
of trade secrets and patent protection can easily spill out to other companies
as well. In this scenario Nokia involved
in fact discovery while preparing for their suit ran into significant
challenges in obtaining essential documentation from a third party that held
drawings and writings that significantly impacted the validity and success of
their case. Nokia in fact announced
after settlement of the case against Apple that it may very well consider
future law suits with similar claims. On
May 17, 2011 argued in the Delaware courts that Nokia was requesting protected
company information that did not fall into the scope of Nokia’s lawsuit. Further, Apple claimed to have offered a
compromise if Nokia narrowed the scope of the subpoena at which point Apple
would supply the requested information. Non-parties
Motion to Quash Nokia Subpoena and for a Protection Order, Civil Actions No.
1-09-cv-00791-GMs, heard by the United States District Court District of
Columbia)
And so, the individuals laying out
their business plans and measuring their financial forecasts watch with great
concern. The artists seeking out
distribution channels on hand-held devices watches with equal concern asking
themselves where do the go for base channels and how much will these channels
cost? Will future patent squabbles
result in them not being able to deliver their own intellectual property to market?
The other case I focused on is the
Department of Justice’s recent allegations regarding Apple and large publishing
houses attempting—according to the charges—to raise and fix the price of e-book
while mounting an attack on Amazon’s $9.99 E-books. The controversy lies around the legal validity
of what is called the Agency Model. In
this Model, large and small companies operate in unison sharing trade secrets
(the notion of IP seems to enter into this concern at this point) and what
impact it will have on the bottom line cost to the customer. It also has a disturbing impact on the
emerging artist who wants to market his or her own IP via the Internet in the
most economical fashion it can. Thus a
concern that seems so rooted in the patent end of the business does in fact
translate into very real issues involving the artist’s ability to effectively
manager his or her own business on the internet. And since sales via Internet and—specifically
hand-held devices—this is a genuine and real concern that all emerging talent
should be watching carefully.
Finally, I am concerned about the
government offices involved in patent and copyrighting that seem to be unable
to put together an objective criteria that reflects the tremendous growth of
technology. I would suggest that some
coherent and substantive efforts into restructuring their guidelines and
requirement are seriously in need at this juncture. I would suggest that this writing in some
small way validates these observations, commentaries, and concerns.
I hope you enjoy the read and
welcome your comments.
Nokia vs. Apple Timeline
Nokia Corporation v.
Apple Inc.. 09-791-GMS
Oct 22 2009, 2:18pm
EDT
Description and overview.
Nokia filed a lawsuit against Apple
entitled Complaint For Patent infringement and Declaratory Judgment. The court document goes on to say that the
“Plaintiff Corporation (“Nokia”), on personal knowledge as to it’s own acts,
and on information and belief as to all others [. . .] [knowingly] infringed on
Nokia’s patents.
As stated in the 2009 Court
document, Nokia claimed that Apple infringed on patents U.S. Patent Nos.
5,802,465 ("the '465 patent"), 5,862,178 ("the '178
patent"), 5,946,651 ("the '651 patent"), 6,359,904 ("the
'904 patent"), 6,694,135 ("the '135 patent"), 6,775,548
("the '548 patent"), 6,882,727 ("the '727 patent"),
7,009,940 ("the '940 patent"), 7,092,672 ("the '672
patent"), and 7,403,621 ("the '621 patent").
In response Apple alleges that
Nokia infringed U.S. Patent Nos. 5,634,074 ("the '074 patent"), 5,555,369
("the '369 patent"), 6,239,795 B1 ("the '795 patent"),
5,315,703 ("the '703 patent"), 6,189,034 B1 ("the '034
patent"), 7,469,381 B2 ("the '381 patent"), 5,455,854 ("the
'854 patent"), 7,383,453 B2 ("the '453 patent") and 5,848,105
("the '105 patent").
Source: NOKIA Corporation, Plaintiffs, v. APPLE INC. See references.
Nokia claims that it offered Apple
license for the patents and a fair market price and was refused. Nokia sought remedy to the situation in the
District Courts of Delaware.
In December of 2009, Apple
countersued Nokia claiming that it had infringed on Apple patents.
Nokia then responded with a
countersuit filed with the International Trade Commission. Nokia made the audacious claim that virtually
all of Apple’s products and technology had violated “least one of seven Nokia
technology patents.” (Foresman 2012)
The matter has turned into a
protracted argument that was settled in June of 2011 in favor of Nokia. It should be noted that Nokia and Apple
settled the dispute prior to a trial scheduled for 2012.
Nokia is to receive an undisclosed
one-time settlement in addition to 1% of sales of all Apple iPhones using the
patents. While this is good news for
Nokia, the consensus on Wall Street seems to be that this hardly puts Nokia out
of its financial woes. Its stocks have
steadily decreased and are now some 25% lower the historical value.
‘Nokia is likely looking to
obtain a patent royalty of 1 percent to 2 percent ($6-12) on every iPhone sold
in compensation for its IPs concerning GSM, 3G and WiFi technologies on mobile
devices,’ Munster further explained. However, a $12 royalty per iPhone is
highly unlikely, he said, and even if the suit is decided in Nokia's favor, it
shouldn't have serious material impact on Apple's performance.’[1]
Source: (Foresman 2012)
Nokia has stated that this
settlement will make for a positive quarterly report. Further, there is speculation that Nokia,
flushed with its victory, is looking into suing other iPhone companies for
similar sorts of legal action. I’ve
discussed the controversies and my professional concerns in the introductory
passages.
Apple and “Conspirators” face the DOJ
Department of Justice (DOJ) vs. Apple and Co-defendants
Case Number 12-cv-08261
Note: All court
papers can be accessed at this site with the exception of Apple’s response to claim
that is referred to in resources.
Any material in quotes unless otherwise indicated in citing
follows this methodology.
The DOJ alleges that Apple along
with co-conspirators (Hatchette Book Group, Inc., HarperCollins Publishers,
Verlagsgruppe, Holtzbrinck GMBH, The Penguin Group (USA) and Simon &
Shuster, Inc.) conspired to raise and fix the prices of e-books by applying an
agency model that would cause considerable damage to Amazon e-books.
The agency model effectively made a
contractual agreement between the defendants to eliminate Amazon’s ability to
sell the e-books at its discounted $9.99 per unit price. The defendants informed Amazon that they
would no longer provide them with the licenses to sell their publications
unless the ‘joined in’ the agency model.
Further, the defendants ‘pressured’ other outlets both hard copy and
on-line to adhere to the above mentioned model.
The defendants agreed to raising the price approximately 30% to 40%
making the average price anywhere from $12.99 to $14.99 and as high as $16.99
depending on the circumstances.
At the time Apple was about to
release their iPads along with its e-book on-line outlet. Apple would receive a 30% fee from all
companies who signed on with the agency concept. In the documentation it is suggested that
Apple not only looked for the substantial profit but also actively sought out
ways to destroy what they and others perceived to be Amazon’s considerable
market share. Apple also argued that
selling eBooks at $9.99 did not generate a fair return on investment ant that
Amazon was preventing them from effectively competing in the e-book market.
The DOJ maintains that the activity
smacked of price fixing and conspiracy that violated the first section of the
Sherman Act.
While apple prepared a response on
the charges to the court and still maintains that the charges are without
merit, several of the defendants have elected to settle the matter with the
DOJ.
The U.S. Department of Justice and
Attorney Gen. Eric Holder just announced (via
CNN) a settlement with three publishers—Hachette, HarperCollins, and
Simon & Schuster— following this morning’s report
that it would launch an antitrust suit against Apple, Macmillan, and Penguin,
which refused to settle. The settlement is said to give publishers the “freedom
to reduce the prices of their e-book titles,” allowing Amazon to return to its
previous wholesale model.” (Kahn 2012)
Kahn writes that
The settlement is said to give
publishers the ‘freedom to reduce the prices of their e-book titles,” allowing
Amazon to return to its previous wholesale model.’ (Kahn 2012)
McMillan CEO Sargeant has remained
steadfast in the company’s innocence and claims that the ‘agency model’ is the
way of the future. This seems to be the
way Apple is approaching this matter. In
a sense, these entities are turning this case into a matter of practical
business strategy and a system of review by the DOJ that is out of touch with
the present market conditions.
‘Let me start by saying that
Macmillan did not act illegally. Macmillan did not collude,’ Sargent writes.
He acknowledges that the costs of fighting the DOJ’s suit — ‘in time,
distraction, and expense” — are “truly daunting,” but “we have decided to fight
this in court.’ (Owen 2012)
This matter is significant to me because I am presently
authoring a book that—as part of its marketing and product distribution
strategy—heavily factors in on-line sale in e-book fashion through such outlets
as Apple on-line bookstore, Amazon, and others similar to these operations of
various sizes and market share.
I notice that Apple seems to have
taken a similar position to this matter that they took in their case with
Nokia. They claim that Amazon is in fact
potentially holding an unfair advantage—a monopoly of sorts—in the growing
e-book market because of its $9.99 price tag.
Further, they maintain that Amazon is eroding the hard cover sales of
books in multiple venues. Therefore,
their move from a market driven price and marketing strategy to an agency seems
to suggest a fair response to the present situation.
However, the DOJ claims that this
is merely price fixing and that the consumer and smaller retailers are footing
the bill. Further the DOJ claims that
the defendants were sharing company secrets thereby removing the notion of
active and dynamic competition.
The DOJ states:
When a company takes a
pro-competitive action by introducing a new product, lowering its prices, or
even adopting a new business model that helps it sell more product at better
prices, it typically does not want its competitors to copy its action, but
prefers to maintain a first-mover or competitive advantage. In contrast, when companies jointly take
collusive action, such as instituting a coordinated price increase, they typically
want the rest of their competitors to join them in that action. Because collusive actions are not
pro-competitive or consumer friendly, any competitor that does not go along
with the conspirators can take more consumer friendly actions and see its
market share rise at the expense of the conspirators. Here, the Defendants acted consistently with
a collusive arrangement, and inconsistently with a pro- competitive
arrangement, as they sought to pressure another publisher (whose market share
was growing at the Publisher Defendants' expense after the Apple Agency
Contracts became effective) to join them.
( United States
v.
Apple, Inc., Hachette Book Group, Inc., HarperCollins
Publishers L.L.C., Verlagsgruppe Georg Von Holtzbrinck GmbH, Holtzbrinck Publishers,
LLC d/b/a Macmillan, The Penguin Group, A Division of Pearson PLC, Penguin
Group (USA), Inc., and Simon & Schuster, Inc.
On a side note I cannot help but wonder why the DOJ has not
targeted the Oil back up resources
In my opinion Apple and those
remaining true their position have already lost what they initially aimed to
accomplish. Their plan relied heavily on
a group effort that would adjust the overall competitive and product strategy
that would 1) raise their return on investment and 2) negate Amazon’s strong
market position and competitive edge. Is
it now a matter of principle or genuine concern to level out the competitive
playing field? Should the consumer be
getting the worst end of the deal by elevated pricing and possibly a limited access
to new material? The question seems to
come down to this. Is this ‘agency
model’ really a dressed up version of price fixing that eliminates competition
under the Sherman Act? Or is it possibly
time to reconsider the overall impact of IP and Internet commerce that would
fuel changes in the Sherman Act. I make no claims to understand all of the
legal complexities of this matter.
However, as a consumer, author, and publishing entity I certainly have
multiple questions.
In regard to the Nokia case and all
the attending and related court matters I see yet another situation where todays
entertainment industry must grapple with an exponentially growing technology in
regard to patent and copyright law.
Resources:
Apple Inc.’s Answer To Consolidated, Amended
Class Action Complaint. Scribd. Retrieved from http://www.scribd.com/doc/95290793/Apple-Response-to-Class-Action.
By Laura Hazard Owen Apr.
11, 2012. Paid Content. Retrieved from http://paidcontent.org/2012/04/11/macmillan-ceo-sargent-why-we-wont-settle-against-doj/.
Apple Inc.’s
Answer To Consolidated. Amended Class
Action Complaint case 1:11-Md-02293-Dlc
Document 165. Retrieved from ????
Foresman,
Chris. Nokia hurls new salvo in spat with Apple, complains to ITC. Retrieved from http://arstechnica.com/apple/2009/12/nokia-hurls-new-salvo-in-spat-with-apple-complains-to-itc/. (June 1, 2012)
Kahn,
Jordan. DOJ
explains settlement with three publishers, Macmillan CEO explains why. April 11, 2012. Retrieved from 9TO5Mac Apple
Intelligence. http://9to5mac.com/2012/04/11/doj-explains-settlement-with-three-publishers-macmillan-ceo-explains-why-he-wont/.
Nokia Corporation
v. Apple Inc.. 09-791-GMS. amlawdaily.
Retrieved from http://amlawdaily.typepad.com/applenokiastip.pdf.
Nokia Corporation, Plaintiffs, v. Apple Inc. Defendants., C.A. No.
09-791-GMS, United States District Court For The District Of Delaware, 2011
U.S. Dist. Retrieved from LEXIS 58773.
Nonparties Motion
to Quash Nokia Subpoena and for a Protection Order. Retrieved from http://law.justia.com/cases/federal/district-courts/district-of-columbia/dcdce/1:2011mc00295/148263/1/
Owen, Laura
Hazard. Macmillan CEO Sargent: Why we
won’t settle against DOJ. paidContent. Retrieved from http://paidcontent.org/2012/04/11/macmillan-ceo-sargent-why-we-wont-settle-against-doj/.
United States
v.
Apple, Inc., Hachette Book Group, Inc.,
HarperCollins Publishers L.L.C., Verlagsgruppe Georg Von Holtzbrinck GmbH,
Holtzbrinck Publishers, LLC d/b/a Macmillan, The Penguin Group, A Division of
Pearson PLC, Penguin Group (USA), Inc., and Simon & Schuster, Inc. Retrieved from http://www.justice.gov/atr/cases/applebooks.html.
.
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