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Summary:

A trial in July will determine how much Apple will pay in punishment for fixing ebook prices. A lead lawyer says the tab could be over $800 million.

An appeals court this week refused to halt a trial that could require Apple to pay hundreds of millions of dollars over price-fixing, even as the company continues to deny any wrong-doing and seeks an appeal.

In a succinct order, the U.S. Court of Appeals for the Second Circuit said a trial can go forward on July 14 that will determine how much Apple should pay for brokering a conspiracy with book publishers to fix the price of ebooks.

In April, class action lawyer Steve Berman said, “Consumers could see a judgment of between $750 to $850 million,” as punishment related to Justice Denise Cote’s conclusion last year that Apple organized the scheme.

The five publishers who participated in the conspiracy have already settled, resulting in consumers receiving emails telling them of credits paid to their Kindle and Barnes &  Nobel accounts. This week’s appeals court ruling means that those consumers are likely to receive emails notifying them of the July trial.

Apple is still appealing Cote’s ruling from last year, and argued that the damages process should be put on ice until that is resolved. The company has also filed multiple procedural challenges, but has been getting the worst of it at every turn.

While the Wall Street Journal has decried an apparent bias on the part of Cote, including her decision to appoint an unqualified friend to investigate Apple, the company faces an uphill battle on every front of the case.

Apple Denial of Stay

  1. David Emil Henderson Monday, June 2, 2014

    The problem of this case is judicial ignorance, and someone needs to explain how books are different from products that are mass-produced in a factory.

    In a factory, there may be a hundred workers or machines turning out a single product that must compete against very similar products from other factories. Collusion among the factories to raise prices is “price-fixing” and it is illegal.

    But imagine a factory of hundred workers, who each produces only his or her own product. One worker’s product may have greater market value than another’s. Hence, that product can be priced higher by the factory. That is fair, and it should be perfectly legal in the United States of America, where we believe every individual is entitled to charge according to his or her own worth.

    Apple’s plan recognized this and allowed the authors and publishers to set their own prices according to the value of the individual products. This is contrary to Amazon’s urge to set all prices for mass consumption regardless of the variations in value of the individual books. That is a far more egregious example of price fixing than what Apple had in mind.

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    1. Thanks for the comment, David. Interesting perspective. I agree that it feels odd to treat books — which are in fact millions of unique creations — as a bulk commodity for anti-trust purposes.

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  2. Jeff, This was practically an all true news article. Thank you. All was good until the link to your editorial piece. At least the linked WSJ piece is accurately labeled “opinion”.

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    1. Anne, thanks — I think :) — for the comment. At this point, I think my views on the case are pretty well-known, but I’m glad I can be of service keeping the news up to date..

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      1. Yes, I know your views so my earlier comment was snarkier than this article deserved. I’m sorry for that. While I can understand that some people think Amazon unfairly benefited from the suit and maybe the suit was just a waste of government resources, etc. I don’t understand why they seem to be blind to the fact that Apple and the publishers brought this all upon themselves by engaging in illegal behavior. As the lawyer in my house told me four years ago- They just waved a red flag at the DOJ and it’s not going to end well for them.

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        1. Anne, no apologies needed – it was pretty mild as far as snark goes, and I appreciate you taking the time to share it.

          I will concede that the original arrangement was fairly brazen, and the DOJ’s arrival was not a big surprise. Also, Apple’s ongoing and open defiance has (I suspect) egged on the DOJ. But the Department’s zeal in pursuing the case has been excessive — especially as the most likely outcome is more Kindle credits for consumers to spend at Amazon.

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  3. Sandy Thatcher Monday, June 2, 2014

    I agree with David that it is a shame that this case was given to a judge who so ill understands the publishing business. Her decision, if upheld, will wreak untold harm for many years to come–not just to publishers but to consumers as well, who will finally discover that Amazon really cares little about books but only about how to control a market to its own best advantage.

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