Judge Imposes Injunctive Relief in Apple Ebooks Case
The Department of Justice still has Apple Inc. on the hook for alleged price-fixing in the ebooks market, but Apple's lawyers at Gibson Dunn & Crutcher have chipped away at the government's proposed injunctive relief.
Manhattan U.S. District Judge Denise Cote on Thursday issued a permanent injunction that will force Apple to accept a court-appointed monitor to oversee its antitrust policies. Apple also won't be able to enforce "most favored nation" clauses in its agreements with book publishers, which guaranteed Apple the best price from publishers on wholesale ebooks. The government has argued that the MFN clauses had the effect of raising prices for everyone, as the Wall Street Journal explained .
Cote refused, however, to give the DOJ some of the requested remedies that Gibson Dunn had called "a draconian and punitive intrusion into Apple's business." It will not be able to dictate the terms on which Apple can sell ebooks through its App Store, as Ars Technica explained. Perhaps most crucially, Cote denied the government's request for an order barring Apple from entering into agreements with suppliers of music, movies, and TV shows that raised prices of that content.
The judge limited the injunction's duration to five years--half of what the DOJ initially sought--but reserved the right to add one-year extensions.
The civil case stems from Apple's foray into the ebook market, which had long been dominated by Amazon Inc. thanks to its cut-rate price of $9.99 per title. In 2010 Apple convinced the world's largest book publishers to switch to a new pricing model in which the publishers, rather than the retailers, set e-book prices. When prices rose, the DOJ and 33 state attorneys general sued Apple in April 2012 for conspiring to fix prices. The five book publishers named as co-defendants settled, but Apple defended itself during a three-week bench trial before Cote in June. Gibson Dunn partner Orin Snyder argued that his client had shattered Amazon's ebook monopoly. Cote found Apple liable in a 160-page decision issued July 10.
A damages trial is scheduled for May 2014.