Latham Beats Antitrust Claims over Apple App Sales

, The Litigation Daily


Julia Love writes for The Recorder, an American Lawyer affiliate.

SAN FRANCISCO — A federal judge has tossed an antitrust class action accusing Apple Inc. of illegally driving up the price of applications sold for use on its signature iPhone.

Represented by Wolf Haldenstein Adler Freeman & Herz, a would-be class of consumers claimed that Apple corners the market for iPhone apps and thus enjoys monopoly pricing. Apple charges developers a 30 percent fee for the apps they sell, forcing consumers to fork over much more than they would in a free market, the plaintiffs alleged.

In an 11-page order issued Monday, U.S. District Judge Yvonne Gonzalez Rogers of the Northern District of California granted Apple's motion to dismiss In re Apple iPhone Antitrust Litigation, 11-6714. She concluded that consumers do not have standing to challenge Apple's 30 percent fee because the cost is passed on to them by developers.

"As such, any injury to plaintiffs is an indirect effect resulting from the software developers' own costs," Gonzalez Rogers wrote.

Per antitrust laws, plaintiffs must show that they are direct purchasers to challenge Apple's practices. Plaintiffs argued that they fit that description because Apple sells the apps directly to consumers. But Latham & Watkins partners Christopher Yates, Daniel Wall and Sadik Huseny argued that the 30 percent fee is nothing more than a distribution cost imposed on consumers, which renders them indirect purchasers.

Gonzalez Rogers sided with Apple on that point and also found that the plaintiffs failed to allege a conspiracy. She added that the lack of evidence supplied by plaintiffs meant she could not conclude that Apple's surcharge had driven up the price of the apps without speculating about developers' pricing structures.

"The court cannot assume, as plaintiffs do, that developers charging 99 cents for an app would necessarily have charged 70 percent, or 69 cents, if not for the agreement with Apple to pay them 30 percent of the purchase price," she wrote.

What's being said

Comments are not moderated. To report offensive comments, click here.

Preparing comment abuse report for Article# 1202630331223

Thank you!

This article's comments will be reviewed.