Jury decides Apple isn't guilty in $1bn iTunes DRM case

Apple has escaped a potential $1bn damages bill after a jury decided an iTunes update that kept rivals' music off its iPod was a genuine product improvement.

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Image: CNET
A jury in the US has decided that Apple's iTunes 7.0 update was designed to improve functionality rather than simply keeping rivals' music files off customers' iPods.

A nearly 10-year-old antitrust case came to a relatively swift end on Tuesday after a jury in California decided that iTunes 7.0, which Apple released in 2006, did bring in genuine improvements to the music-playing software.

The case was brought against Apple in 2005 but the trial to determine whether the update harmed consumers by blocking files from rival music stores playing on Apple's music player, the iPod, began just two weeks ago.

While the update brought video, album art, and other features to iTunes, it also disabled the iPod if it detected the presence of files that had reverse-engineered Apple's DRM software FairPlay. iPod owners wanting to get their music players working again were forced to restore the device to its factory settings, a process that deleted music from other stores.

The class action suit sought to cover eight million iPod owners who'd bought a device between September 2006 and March 2009 and could have, if Apple lost, left it with a damages bill of between $350m and $1bn.

Apple's iTunes 7.0 update addressed a product developed in 2004 by RealNetworks called Harmony that reverse-engineered Apple's FairPlay to allow customers to put music purchased outside of iTunes onto their iPods. Apple described releasing Harmony as the "tactics of a hacker" in 2004 when RealNetworks began marketing its own music store.

Apple iTunes chief Eddy Cue in a testimony earlier this month said the iTunes DRM updates were part of Apple's response to being endlessly "hacked," which jeopardised Apple's contracts with record labels. This claim was backed up by the late Steve Jobs, whose deposition in the trial was based on video taken before his death.

The plaintiffs' lawyers argued that Apple had a "duty to deal" with rivals and violated antitrust laws by preventing them from using its technology. It could for example have licensed FairPlay to third parties.

Judge Yvonne Gonzalez Rogers of the US District Court in Northern California, however, told jurors prior to Monday's closing arguments: "A company has no general legal duty to assist its competitors, including by making products interoperable, licensing to competitors, or sharing information to competitors."

And as CNET notes, under the Sherman Antitrust Act, a genuine product improvement cannot be considered anticompetitive, even if it harms a competitor's product.

The other claim pursued by the plaintiffs was that Apple had a monopoly at the time and had maintained that through anti-competitive actions, ultimately propping up the price of the iPod.

The plaintiffs are expected to appeal Tuesday's decision.

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