7/10. The U.S. District Court (SDNY) released its Opinion and Order [160 pages in PDF] at the conclusion of the bench trial in U.S. v. Apple, finding that Apple conspired to raise e-book prices in violation of Section 1 of the Sherman Act.

The Court wrote that the U.S. and the state plaintiffs "have shown that the Publisher Defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy. Without Apple's orchestration of this conspiracy, it would not have succeeded as it did in the Spring of 2010."

The U.S. filed its complaint in April of 2012 against Apple and five e-book publishers -- Hachette, HarperCollins, and Simon & Schuster, Pearson/Penguin and Holtzbrinck/Macmillan. Texas and other states filed parallel complaint [redacted, 56 pages in PDF] the same day in the U.S. District Court (WDTex). The two actions were consolidated in the USDC/SDNY. Each of the five publishers settled with the DOJ before trial, leaving Apple the sole remaining defendant at trial in June.

The just released Opinion and Order finds that "Apple and the Publisher Defendants agreed to work together to eliminate retail price competition in the e-book market and raise the price of e-books above $9.99."

It continues that Apple "provided the Publisher Defendants with the vision, the format, the timetable, and the coordination that they needed to raise e-book prices. Apple decided to offer the Publisher Defendants the opportunity to move from a wholesale model -- where a publisher receives its designated wholesale price for each e-book and the retailer sets the retail price -- to an agency model, where a publisher sets the retail price and the retailer sells the e-book as its agent."

It also states that "The agreements also included a price parity provision, or Most-Favored-Nation clause ("MFN"), which not only protected Apple by guaranteeing it could match the lowest retail price listed on any competitor’s e-bookstore, but also imposed a severe financial penalty upon the Publisher Defendants if they did not force Amazon and other retailers similarly to change their business models and cede control over e-book pricing to the Publishers. As Apple made clear to the Publishers, "There is no one outside of us that can do this for you. If we miss this opportunity, it will likely never come again."

"Through the vehicle of the Apple agency agreements, the prices in the nascent e-book industry shifted upward, in some cases 50% or more for an individual title. Virtually overnight, Apple got an attractive, additional feature for its iPad and a guaranteed new revenue stream, and the Publisher Defendants removed Amazon’s ability to price their e-books at $9.99."

The U.S., represented by the Department of Justice's (DOJ) Antitrust Division, filed its complaint on April 11, 2012 alleging that Apple and the five publishers violated Section 1 of the Sherman Act, 15 U.S.C. § 1, by conspiring to increase the prices that consumers pay for e-books. See, stories titled "DOJ Sues Apple and Book Publishers Alleging E-Book Price Collusion", "Analysis of DOJ's Sherman Act Claim Against Apple and E-Book Publishers", and "Outside Reaction to DOJ E-Books Antitrust Action" in TLJ Daily E-Mail Alert No. 2,368, April 11, 2012.

Texas and other states filed a related complaint the same day. See, stories titled "States Sues Apple and E-Book Publishers" and "Commentary: Forum Selection in Antitrust Cases", also in TLJ Daily E-Mail Alert No. 2,368.

All of the publisher defendants settled prior to trial. See, TLJ stories regarding settlements with the publisher defendants:

• "Update on DOJ v. Apple eBooks Case" in TLJ Daily E-Mail Alert No. 2,437, August 25, 2012, and "District Court Approves Settlement in Apple E-Books Case" in TLJ Daily E-Mail Alert No. 2,442, September 6, 2012.
• "DOJ Settles With Penquin in E-Books Antitrust Action" in TLJ Daily E-Mail Alert No. 2,494, December 19, 2012.
• "DOJ Publishes Second Tunney Act Notice in Apple E-Books Antitrust Case" in TLJ Daily E-Mail Alert No. 2,500, December 31, 2012.
• "Holtzbrinck/Macmillan Settles with DOJ in Apple E-Books Antitrust Action" in TLJ Daily E-Mail Alert No. 2,522, February 8, 2013.

The District Court conducted a trial without a jury from June 3 through June 20, 2013. The District Court issued its ruling on July 10.

Bill Baer (at right), head of the DOJ's Antitrust Division, stated in a release that "This result is a victory for millions of consumers who choose to read books electronically. After carefully weighing the evidence, the court agreed with the Justice Department and 33 state attorneys general that executives at the highest levels of Apple orchestrated a conspiracy with five major publishers – Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster – to raise e-book prices.  Through today’s court decision and previous settlements with five major publishers, consumers are again benefitting from retail price competition and paying less for their e-books."

He added that the plaintiffs proved at trial that "Apple executives hoped to ensure that its e-book business would be free from retail price competition, causing consumers throughout the country to pay higher prices for many e-books. The evidence showed that the prices of the conspiring publishers’ e-books increased by an average of 18 percent as a result of the collusive effort led by Apple."

Apple stated that it will appeal.

If Apple does pursue an appeal, its best argument may be based upon the Supreme Court's 1984 opinion in Monsanto v. Spray-Rite, 465 U.S. 752. That is, it may argue that under Monsanto, the Court should not find that Apple conspired with the book publishers to raise prices, because Apple was pursuing an independent business objective -- selling iPads.

See also, stories titled "Scott Turow Criticizes DOJ E-Books Action", "Google's Larry Page Is Excited About Tablets", and "NAF Writer Condemns Amazon and DOJ E-Books Antitrust Action" in TLJ Daily E-Mail Alert No. 2,371, April 14, 2012.

New York is home to many book publishers. See, story titled "Sen. Schumer Urges DOJ to Drop Antitrust Action Against Apple and Book Publishers" in TLJ Daily E-Mail Alert No. 2,409, July 18, 2012.

See also, the DOJ's web page with hyperlinks to pleading and other documents in this action.

This case is U.S. v. Apple, et al., U.S. District Court for the Southern District of New York, D.C. 1:12-cv-02826-DLC, Judge Denise Cote presiding.

7/10. This just released District Court Opinion and Order in U.S. v. Apple contains findings of fact and conclusions of law regarding Apple's violation of law. It does not address damages. It states that "A trial on damages will follow." Nor does it contain any injunctive remedy.

Moreover, Apple faces a separate private class action based upon the same factual allegations.

The law firm of Hagens Berman filed its original complaint [44 pages in PDF] on August 9, 2011 in the U.S. District Court (NDCal) against the same defendants alleging violation of Section 1 of the Sherman Act.

This class action is now pending before the same District Court and Judge as the DOJ and states action. See also, Consolidated Amended Class Action Complaint [86 pages in PDF], filed January 20, 2012, in the U.S. District Court (SDNY). It also alleges violation of numerous state antitrust and consumer protection statutes, as well as unjust enrichment.

Steve Berman, lead counsel for the plaintiffs, stated in a release that "Judge Cote ruled definitively that Apple was guilty of conspiring to fix prices for e-books, and we believe this ruling is binding on the consumer case, meaning we do not need to again prove Apple’s culpability in the price-fixing scheme".

He continued that "Once we receive class certification, the only issue that will remain is for a jury to assess damages, which under federal law are trebled, or tripled."

That is, Hagens Berman may assert the District Court's ruling is binding as to both actions, and that Apple and the book publishers are barred from relitigating the Sherman Act claim in the class action, under the doctrine of res judicata.

This case is Anthony Petru and Marcus Mathis v. Apple, Inc., et al., U.S. District Court for the Southern District of New York, D.C. No. 11-MD-02293-DLC, Judge Denis Cote presiding.

Tech Law Journal publishes a free access web site and a subscription e-mail alert. The basic rate for a subscription to the TLJ Daily E-Mail Alert is $250 per year for a single recipient. There are discounts for subscribers with multiple recipients.

Free one month trial subscriptions are available. Also, free subscriptions are available for federal elected officials, and employees of the Congress, courts, and executive branch. The TLJ web site is free access. However, copies of the TLJ Daily E-Mail Alert are not published in the web site until two months after writing.

For information about subscriptions, see subscription information page.

Tech Law Journal now accepts credit card payments. See, TLJ credit card payments page.

TLJ is published by David Carney
Contact: 202-364-8882.
carney at techlawjournal dot com
3034 Newark St. NW, Washington DC, 20008.

Privacy Policy
Notices & Disclaimers
Copyright 1998-2013 David Carney. All rights reserved.

The House will meet at 10:00 AM for morning hour, and at 12:00 NOON for legislative business. The schedule for the week includes consideration of HR 761 [LOC | WW], the "National Strategic and Critical Minerals Production Act of 2013", a bill which pertains to U.S. extraction of rare earth materials. See, Rep. Cantor's schedule.

Day one of a two day event hosted by the Minority Media and Telecommunications Council (MMTC) titled "Annual Access to Capital and Telecom Policy Conference" and "Maximizing Innovation, Inclusion, and Entrepreneurship in a Digital Economy". See, notice. Location: Embassy Suites Convention Center Hotel.

10:00 AM. The House Judiciary Committee's (HCC) Subcommittee on Regulatory Reform, Commercial and Antitrust Law will hold a hearing on HR 2122 [LOC | WW], the "Regulatory Accountability Act of 2013". The witnesses will be __. See, notice. Location: Room 2141, Rayburn Building.

10:00 AM. The House Homeland Security Committee's (HHSC) Subcommittee on Emergency Preparedness, Response, and Communications will hold a hearing titled "Emergency MGMT 2.0: How Social Media & New Tech are Transforming Preparedness, Response, & Recovery: Part 2". The witnesses will be Shayne Adamski (Department of Homeland Security), Suzanne DeFrancis (American Red Cross), Albert Ashwood (Oklahoma Department of Emergency Management), and Greg Kierce (Jersey City Office of Emergency Management and Homeland Security). See, notice. Location: Room 311, Cannon Building.

10:00 AM. The House Intelligence Committee (HIC) will hold a closed hearing titled "Ongoing Intelligence Activities". See, notice. Location: Room HVC-304, Capitol Visitor Center.

10:00 AM. The Senate Judiciary Committee (SJC) will hold a hearing on the nomination of James Comey to be Director of the Federal Bureau of Investigation (FBI). Live and archived webcast. See, notice. Location: Room 226, Dirksen Building.

10:00 AM - 1:00 PM. The Federal Communications Commission's (FCC) Open Internet Advisory Committee (OIAC) will meet. See, FCC Public Notice. Location: FCC, Commission Meeting Room, 445 12th St., SW.

10:15 AM. The House Commerce Committee's (HCC) Subcommittee on Oversight and Investigations will hold a hearing titled "Cyber Espionage and the Theft of U.S. Intellectual Property and Technology". The witnesses will be former Sen. Slade Gorton (R-WA), Larry Wortzel (U.S.- China Economic and Security Review Commission), James Lewis (Center for Strategic and International Studies), and Susan Offutt (Government Accountability Office). Webcast. See, notice. Location: Room 2123, Rayburn Building.

12:00 NOON - 1:00 PM. The Heritage Foundation (HF) will host a panel discussion titled "A Passion for Secrecy: Government Overclassification as a Threat to Freedom and Accountability". The speakers will be Thomas Joscelyn (Foundation for Defense of Democracies), Charles Stimson (HF), and Helle Dale (HF). Free. Open to the public. Webcast. See, notice. Location: HF, 214 Massachusetts Ave.,  NE.

1:00 - 5:00 PM. The The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) will host an event titled "Multistakeholder Meeting To Develop Consumer Data Privacy Code of Conduct Concerning Mobile Application Transparency". See, notice in the Federal Register, Vol. 78, No. 113, June 12, 2013, at Pages 35260-35261. Location: American Institute of Architects, 1735 New York Ave., NW.

2:30 PM. The Senate Intelligence Committee (SIC) will hold a closed hearing on undisclosed matters. See, notice. Location: Room 219, Hart Building.

3:00 PM. The House Rules Committee (HRC) will meet to adopt a rule for consideration of HR 761 [LOC | WW], the "National Strategic and Critical Minerals Production Act of 2013", a bill which pertains to U.S. extraction of rare earth materials.

7:30 PM. The Cyber, Space & Intelligence Association (CSIA) will Department of Homeland Security (DHS) will host an event. The speakers will include Suzanne Spaulding, acting Under Secretary in charge of the DHS's National Protection and Programs Directorate (NPPD). She will address cyber security. Location: Tortilla Coast on Capitol Hill, 400 1st St., SE.

The House will meet at 10:00 AM for morning hour, and at 12:00 NOON for legislative business. The schedule for the week includes consideration of HR 761 [LOC | WW], the "National Strategic and Critical Minerals Production Act of 2013", a bill which pertains to U.S. extraction of rare earth materials. See, Rep. Cantor's schedule.

Day two of a two day event hosted by the Minority Media and Telecommunications Council (MMTC) titled "Annual Access to Capital and Telecom Policy Conference" and "Maximizing Innovation, Inclusion, and Entrepreneurship in a Digital Economy". See, notice. Location: Embassy Suites Convention Center Hotel.

Day one of a three day conference titled "Multiple Award Government and Industry Conference 2013", or "MAGIC 2013". See, conference web site and agenda. Location: Hilton Alexandria Mark Center, 5000 Seminary Rd., Alexandria, VA.

9:30 - 11:30 AM. The Information Technology & Innovation Foundation (ITIF) will host an event titled "Using Cloud Computing to Build (Better and Cheaper) Next-Generation Government Services". The speakers will be Sen. Tom Carper (D-DE), Rep. Gerry Connolly (D-VA), Terry Halvorsen (Department of the Navy), Frank Baitman (Department of Health and Human Services), Joseph Klimavicz (National Oceanic and Atmospheric Administration), J.C. Boggs (King & Spalding), Kyle Keller (EMC), David Robinson (SAP), Matt Wood (Amazon Web Services), and Robert Atkinson (ITIF).. Free. Open to the public. See, notice. Location: Room SVC-209-08, Capitol Visitor Center.

10:00 AM. The Senate Judiciary Committee (SJC) will hold a hearing on the nominations of Patricia Ann Millett (to be a Judge of the U.S. Court of Appeals (DCCir)), Gregory Woods (USDC/SDNY), Elizabeth Wolford (USDC/WDNY), Debra Brown (USDC/NDMiss). Live and archived webcast. See, notice. Location: Room 226, Dirksen Building.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Cooper Notification v. Twitter, App. Ct. No. 2012-1615. Panel D. Location: Courtroom 201, 717 Madison Place, NW.

11:00 AM. The House Appropriations Committee's (HAC) Subcommittee on Commerce, Justice, Science and Related Agencies will meet to mark up the FY 2014 Appropriations Bill. See, notice. Location: Room H-140, Capitol Building.

TIME? The Federal Communications Commission (FCC) will hold an event titled "workshop" regarding phone billing rates in prisons. The FCC adopted a Notice of Proposed Rulemaking (NPRM) on this matter on December 24, 2012, which it released on December 28. It is FCC 12-167 in WC Docket No. 12-375. See, FCC Public Notice (DA 13-1375). Location: FCC, Commission Meeting Room, TW-C305, 445 12th St., SW.

12:00 NOON - 1:00 PM. The Heritage Foundation (HF) will host a discussion of the book titled "The Dragon Extends Its Reach: Chinese Military Power Goes Global". The speakers will be Larry Wortzel (author) and Walter Lohman (HF). Free. Open to the public. Webcast. See, notice. Location: HF, 214 Massachusetts Ave.,  NE.

12:00 NOON. Deadline to submit written comments to the President's Council of Advisors on Science and Technology (PCAST) in advance of its July 18 meeting. See, notice in the Federal Register, Vol. 78, No. 114, June 13, 2013, Pages 35617-35618.

The House will meet at 9:00 AM for legislative business. The schedule for the week includes consideration of HR 761 [LOC | WW], the "National Strategic and Critical Minerals Production Act of 2013", a bill which pertains to U.S. extraction of rare earth materials. See, Rep. Cantor's schedule.

Day two of a three day conference titled "Multiple Award Government and Industry Conference 2013", or "MAGIC 2013". On July 11 at 3:15 PM Mike McConnnell (Booz Hamilton, and former Director of National Intelligence) will give a speech titled "The Challenges of Cyber Security Strategy". At 3:45 PM there will be a panel discussion entitled "Securing Security: The Future of Cyber Acquisition". The speakers will include John Streufert (DHS's NPPD's Office of Cybersecurity and Communications". See, conference web site and agenda. Location: Hilton Alexandria Mark Center, 5000 Seminary Rd., Alexandria, VA.

9:00 AM. The House Intelligence Committee (HIC) will hold a closed hearing titled "Ongoing Intelligence Activities". See, notice. Location: Room HVC-304, Capitol Visitor Center.

9:00 AM - 4:30 PM. The Federal Communications Commission's (FCC) Office of Communications Business Opportunities (OCBO) will host an event titled "Access to Capital Conference and Workshop". See, notice. Location: FCC, Commission Meeting Room, 445 12th St., SW.

10:00 AM. The House Judiciary Committee's (HCC) Subcommittee on Regulatory Reform, Commercial and Antitrust Law will hold a hearing on HR __, a bill titled the "Responsibly And Professionally Invigorating Development Act of 2013". See, notice. See also, HR 4377 [LOC | WW], the predecessor bill in the 112th Congress, and story titled "House Judiciary Committee Approves RAPID Act" in TLJ Daily E-Mail Alert No. 2,393, June 8, 2012. Location: Room 2141, Rayburn Building.

10:30 AM. The House Commerce Committee's (HCC) Subcommittee on Communications and Technology will hold a hearing titled "Improving FCC Process". The witnesses will be Stuart Benjamin (Duke University School of Law), Larry Downes, Robert McDowell (Hudson Institute), Randolph May (Free State Foundation), Richard Pierce (George Washington University Law School), Brad Ramsay (National Association of Regulatory Utility Commissioners). Webcast. See, notice. Location: Room 2123, Rayburn Building.

TIME CHANGE. 4:00 PM. The Senate Judiciary Committee (SJC) will hold an executive business meeting. The agenda includes consideration of Todd Hughes to be a Judge of the U.S. Court of Appeals (FedCir). It also includes consideration of Colin Bruce (USDC/CDIll), Sara Lee Ellis (USDC/NDIll), Andrea Wood (USDC/NDIll), and Madeline Haikala (USDC/NDAlab). The agenda also includes consideration of Todd Jones (to be Director of the Bureau of Alcohol, Tobacco, Firearms and Explosives) and Stuart Delery (to be Assistant Attorney General in charge of the DOJ's Civil Division). See, notice. Location: Room 226, Dirksen Building.

12:00 NOON - 1:00 PM. The Heritage Foundation (HF) will host two panel discussions titled "Scholars & Scribes Review the Rulings: The Supreme Court's 2012-2013 Term". The speakers on the first panel will be Stephanos Bibas (University of Pennsylvania Law School), Charles Cooper (Cooper & Kirk), Tom Goldstein (Goldstein & Russell), and John Malcolm (HF). The speakers on the second panel will be Jess Bravin (Wall Street Journal), Adam Liptak (New York Times), and James Swanson (HF). Free. Open to the public. Webcast. See, notice. Location: HF, 214 Massachusetts Ave., NE.

2:30 PM. The Senate Intelligence Committee (SIC) will hold a closed hearing on undisclosed matters. See, notice. Location: Room 219, Hart Building.

Rep. Cantor's schedule states that no votes are expected in the House.

Day three of a three day conference titled "Multiple Award Government and Industry Conference 2013", or "MAGIC 2013". See, conference web site and agenda. Location: Hilton Alexandria Mark Center, 5000 Seminary Rd., Alexandria, VA.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Second Notice of Proposed Rulemaking (2ndNPRM) regarding its "2000 Biennial Regulatory Review Separate Affiliate Requirements of Section 64.1903 of the Commission's Rules". The FCC adopted this NPRM on May 10, 2013 as part of its larger item [127 pages in PDF] that granted forbearance from numerous unnecessary regulatory requirements on phone companies. The FCC released this item on May 17. It is FCC 13-69 in CC Docket No. 00-175. See, notice in the Federal Register, Vol. 78, No. 113, June 12, 2013, at Pages 35191-35195.

6:00 - 8:00 PM. The New America Foundation (NAF) will host an event titled "meetup". The speakers will be Sacha Meinrath (NAF) and Thomas Gideon (NAF). The NAF notice states that this event is "designed to connect software creators and activists who are interested in censorship, surveillance, and open technology". Free. Open to the public. Location: NAF, Suite 400, 1899 L St., NW.

Deadline to submit comments to the Federal Trade Commission (FTC) regarding its staff report on the Mail or Telephone Order Merchandise Rule. See, notice in the Federal Register, Vol. 78, No. 86, May 3, 2013, at Pages 25908-25909.

Deadline to submit reply comments to the Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB) in response to its May 16 Public Notice (PN) regarding promoting the availability of voice and broadband capable networks in rural areas served by rate of return carriers. This PN is DA 13-1112 in WC Docket No. 10-90. See, notice in the Federal Register, Vol. 78, No. 109, June 6, 2013, at Pages 34016-34020.

Deadline to submit comments to the Privacy and Civil Liberties Oversight Board (PCLOB) in response to its notice of proposed rulemaking (NPRM) that proposes rules that implement the Freedom of Information Act (FOIA), Privacy Act of 1974, and the Government in the Sunshine Act. See, notice in the Federal Register, Vol. 78, No. 94, May 15, 2013, at Pages 28532-28540, that recites these proposed rules.

Federal Communications Commission (FCC) Auction 95 is scheduled to begin. This is the auction of licenses in the lower and upper paging bands. This is AU Docket No. 13-12. See, notice in the Federal Register, Vol. 78, No. 80, April 25, 2013, Pages 24404-24420.

8:00 - 10:00 AM. Broadband Census News LLC will host a panel discussion titled "Over the Top: Broadband Video Challenges Cable & Broadcast Programming". The speakers will be John Bergmayer (Public Knowledge), Daren Miller (Centurylink), and __. Breakfast will be served. This event is open to the public. The price to attend is $47.12. See, notice and registration page. This event is also sponsored by Comcast, Google, ICF Intl., NCTA TIA, and US Telecom. Location: Clyde's of Gallery Place, 707 7th St., NW.

12:00 NOON - 1:00 PM. The American Enterprise Institute (AEI) will host a speech by FCC Commissioner Ajit Pai titled "Connecting the American Classroom: A Student Centered E-Rate Program". Jeffrey Eisenach (AEI) will moderate. Lunch will be served at 11:45 AM. See, notice. Location: AEI, 12th floor, 1150 17th St., NW.

2:00 - 3:30 PM. The Brookings Institution (BI) will host a panel discussion titled "Mobile Technology’s Role in Natural Disasters and Public Safety Preparedness and Response". The speakers will be Darrell West (Center for Technology Innovation), Richard Price PulsePoint Foundation), James Barnett (Venable), Suzy DeFrancis (American Red Cross), and Anita Stewart (Sesame Workshop). See, notice. Location: BI, 1775 Massachusetts Ave., NW.

4:00 - 5:00 PM. The New America Foundation (NAF) will host a panel discussion titled "Reclaiming the Airwaves: The Largest Expansion of Community Radio, Coming This Fall". The speakers will be Katherine Grincewich (U.S. Conference of Catholic Bishops), Julia Wierski (Prometheus Radio Project), and Liz Humes (Wordy Birds). Free. Open to the public. See, notice. Location: NAF, Suite 400, 1899 L St., NW.

5:00 - 7:00 PM. The New America Foundation (NAF) will host a public performance of the documentary movie titled "Corporate FM". The speakers will be Kevin McKinney (Director) and Mark Lloyd (NAF). Free. Open to the public. See, notice. Location: NAF, Suite 400, 1899 L St., NW.