updated 12:50 am EDT, Thu October 16, 2008
Apple sued for monopoly
Another lawsuit has been stacked onto Apple's list of current legal battles, with another filing in Arkansas from a Taiwanese media player manufacturer, Luxpro, that accuses the company of monopolizing the player market, according to documents posted on Justia. The suit alleges that Apple controls 80 percent of the music downloads through iTunes, selling songs that can only be played on its own product, while at the same time closing the iPod platform from playing music purchased from other online sources.
Luxor claims the actions illegally and intentionally leave consumers with "no choice but to purchase music from iTunes." The suit further states that Apple has "sought to monopolize the worldwide MP3 player market and crush legitimate, smaller competitors." The plaintiff references market share numbers from the US that show a 90 percent hold on the hard drive player market and 70 percent of the general market.
The filing goes into great detail about the success Luxpro achieved before a struggle with Apple. The problems allegedly started after the release of the "Super Shuffle" player in 2005, the same year that Apple released its iPod shuffle. Luxpro claims that Apple did not hold a trademark for the name at the time, but it nonetheless agreed to change the name of the device to the Luxpro Super Tangent.
Apple contacted the company in April of 2005 and demanded that the company stop marketing, producing, and selling all of its MP3 players. After a refusal to cease operations, Apple sued the company in Taiwanese court, successfully putting a stop to the sales, manufacturing, and advertising through a preliminary injunction.
Although the suit was eventually won by Luxpro, the current monopoly filing claims that it caused permanent damage to the company, and Apple's repeated attempts afterward to sue the Taiwan-based manufacturer made the situation worse. The iPod manufacturer even sent threatening letters to Luxpro's business partners demanding they drop Luxpro's products from their shelves, which successfully lead to dropped contracts.
The false statements, intimidation of retailers, and repeated lawsuits are provided as evidence that Apple engaged in illegal activities that caused harm to Luxpro's image and profits.
The company hired Patton Roberts, PLLC, a law firm that specializes in complex commercial litigation and class action suits, according to its website. The legal experts are not unfamiliar with battles against big companies, having successfully settled a suit against Microsoft from a cell phone manufacturer that accused the software giant of misappropriating its trade secrets. Another suit against an accounting company, accused of overcharging clients for air expenses, ended with a $108 million settlement.
Apple is under fire from several directions with accusations of monopoly. Another similar suit, filed in January, surrounds the iPod platform and DRM restrictions. Psystar, a company that was producing Mac clones that ran the Mac OS X operating system, was sued by Apple but responded with a monopoly countersuit.
Even the iPhone is not immune from litigation, with several court battles from users that claim false advertisement, poor performance, intentional SIM card incompatibility, and a platform closed to any software modification. Due to a five year exclusive distribution agreement with AT&T, customers will have to re-sign with the carrier even after their two year contracts finish if they want to still use their devices.