updated 04:15 pm EDT, Wed October 10, 2007
Apple, AT&T iPhone suit
Apple and AT&T are facing a class-action lawsuit seeking damages of no less than $600 million concerning the terms by which iPhone owners must abide after purchasing the handset, according to AppleInsider. Washington state resident Paul Holman and California resident Lucy Rivello claim that Apple and AT&T illegally agreed to prevent owners of the cellular device from using programs or services that do not generate revenues for the two firms. The Plaintiffs are seeking "no less than $200 million" in damages on some counts, and demand "no less than $600 million" in other requests. Apple and AT&T are charged either jointly or separately with six formal counts that include alleged violations of California Business and Profession's Code, The Cartwright Act, The Sherman Act, The Federal Trade Commission Act, The Communications Act of 1934, and The Telecommunications Act of 1996 alongside rules and policies set by the FCC.
The Plaintiffs -- based on "information and belief" -- claim that both Apple and AT&T agreed to go beyond their current unlawful tactics of locking customers into their services and software by moving to render inoperable the lawfully unlocked iPhones of consumers hoping to use non-Apple/AT&T SIM cards, or who installed third-party software. The formal complaint says that the update was also designed to cause damage to the iPhone when detecting any non-Apple/AT&T products, according to the report.
Citing Apple's September 24th public warning to owners of unlocked iPhones, the complaint says none of the harmful changes were technically necessary in the recent iPhone software update, and claims that the changes were designed solely "to advance Apple's unlawful purposes and conduct."
Apple and AT&T are also charged with illegally trying to hinder competition from third-party developers looking to write and sell applications designed for the iPhone. Both companies imposed an unjustifiable AT&T service termination fee -- given that the smartphone is unsubsidized -- and made false claims to customers about third-party software as well as unlocking techniques that void the iPhone's warranty.
"To protect its unlawful market position and the anticipated unlawful profits Apple and AT&T expected to earn, Apple repeatedly announced that any attempt to unlock the iPhone SIM or to install Third Party Apps would void the Apple warranty," the complaint reads. "This assertion was false as a matter of federal law, and was known by Apple to be false when made. The Federal Magnuson-Moss Warranty Act prohibits conditioning the iPhone warranty on the use of Apple products only, or on the use of AT&T service only, [...], which is effectively what Apple's warranty approach unlawfully does."
The suit also accuses Apple of instructing retail employees to deny service to customers who experienced adverse effects from its latest iPhone update, despite the fact that it was technically feasible to restore the device from the effects of the iPhone software update 1.1.1. The Plaintiffs also allege that Apple told its spokespeople to suggest that customers affected by the update halt their efforts to receive help and "buy a new iPhone."
An example of the alleged illegal policies cites Plaintiff Holman's travels for business purposes to a country not covered by AT&T's "worldwide" plan. Where Holman had previously unlocked his phones to accept other SIM cards to use a local service provider overseas, the Plaintiff -- using the iPhone and restricted to AT&T's service agreement -- racked up a $381 bill in roaming charges for three days of data use, which he claims consisted primarily of downloading email messages.
Attorney's for both Plaintiffs said they are seeking to expand the class-action suit to cover all individuals and entities who purchased an iPhone on or after the product's launch on June 29th of 2007. The attorneys say the current size of the Plaintiff Class is greater than 100, but that the exact number cannot be determined without discovery of accounting records from both Apple and AT&T.
Second class-action suit for Apple
The new complaint follows a prior suit which surfaced earlier this week naming the primary Plaintiff as Timothy Smith, a California resident. That suit also claims that Apple's iPhone violates The Cartwright Act because it "prohibits iPhone consumers from using and purchasing a cell phone service other than through AT&T." The suit also claims that unlocking a cellular phone is legal under both normal copyright law and the Digital Millennium Copyright Act.