Jury Sides with Apple in iTunes Antitrust Class Action Trial

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After about three hours of deliberation, a jury handed down a verdict in favor of Apple Inc. in a trial over allegations the tech giant had created a monopoly in the digital music market.

On Tuesday, the eight jurors unanimously decided that Apple’s 2006 upgrade to its iTunes software was a genuine product improvement for iPods that were sold between 2006 and 2009 and did not violate antitrust laws.

“We created iPod and iTunes to give our customers the world’s best way to listen to music,” an Apple representative said in a statement. “Every time we’ve updated those products – and every Apple product over the years – we’ve done it to make the user experience even better.”

The trial for the Apple iTunes antitrust class action lawsuit kicked off on Dec. 2, with the plaintiffs arguing that the iTunes 7.0 update prevented digital music from competitors from being played on iPods. The plaintiffs argued that the upgrade gave Apple a competitive advantage and allowed the company to charge inflated prices for the devices. Further, because Apple customers could only play music downloaded from iTunes on their iPods, they were essentially “locked in” to Apple devices, the plaintiffs alleged.

According to Stanford University Professor Emeritus Roger Noll, the plaintiffs’ economics expert, Apple’s allegedly anticompetitive practices cost customers and resellers $351 million. He testified that consumers paid $16.32 and resellers paid $4.13 more per iPod more than they would have without Apple’s alleged monopoly.

Apple argued that the iTunes software upgrade was a genuine product improvement that was intended to protect the users’ experience when listening to digital music on their iPods. According to the tech company, iTunes 7.0 was released at the same time as the first video iPods. This software upgrade improved video resolution and allowed iPod users to view album covers, Apple’s attorneys said.

The tech giant denied that it exerted monopoly power and insisted that consumers were not harmed by the software upgrade.

Attorneys for the plaintiffs experienced some hiccups at trial when the judge ruled that two of the plaintiffs initially named in the iTunes antitrust class action lawsuit did not purchase iPods during the relevant Class Period and therefore lacked standing. Although the judge overseeing the trial appointed a new lead plaintiff, the new plaintiff was not given time to testify before the case was sent to the jury on Monday.

Although the plaintiffs estimated their damages at $351 million, Apple could have been liable for more than $1 billion in damages if the company had been found guilty of violating antitrust laws.

The plaintiffs are represented by Alexandra Senya Bernay, Bonny E. Sweeney, Carmen A. Medici and others at Robbins Geller Rudman & Dowd LLP.

The Apple iTunes Antitrust Class Action Lawsuit is In re: The Apple iPod iTunes Antitrust Litigation, Case No. 4:05-cv-00037, in the U.S. District Court for the Northern District of California.