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Apple Opposes DoJ’s eBook Settlement Proposal

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Source: eBooks on new iPad | Apple

In a legal memo filed last Wednesday, Apple opposed the settlement proposal made by the U.S. Department of Justice. The proposal is said to dismantle the company’s current eBook business structure with three major publishing houses.

The Search for a Due Process

In response to DoJ’s memorandum with regard to a proposed settlement, the Cupertino-based company filed a query to the New York district court handling the case on giving a decision without any further hearings.

The government pointed out that a quick final judgment would be best for consumers and settling parties, which would no longer need to pay for fees for ongoing litigation. Apple opposes, on the other hand, stating that proposed judgment would “terminate and rewrite Apple’s bargained-for contracts” prior to evidence, witness testimonials, and disputed fact be resolved on trial.

The company added that the court’s decision would be final and irreversible, noting that it can’t simply reinstate terminated contracts in case it will win a court trial in the future. As stated on the iPhone maker’s memo:

Apple has not settled with the Government; it denies the allegations against it and is actively defending this case. Apple has never participated in, encouraged, or sought to benefit from collusion. It has no objection to the Proposed Judgment’s bar on collusion. But the Government proposes to go much further. […] Nullifying a non-defendant’s negotiated contract rights by another’s settlement is fundamentally unfair, unlawful, and unprecedented. The Government does not cite a single case in which such relief was granted without a trial or merits determination.

Apple’s eBook Pricing Issue

The reason behind this unsettled legal talk is Apple’s so-called agency model. This business model allows publishers to set a price for their eBooks, although there were allegations that the company forbids the publishers to sell their copies to other reseller at a lower price.

On the other hand, DoJ pointed out that the iPhone maker’s business model is used to falsely inflate the price of eBooks, which could hurt the customers. There were also claims that the company is using the business model to force Amazon to adopt it.

Thus, DoJ seeks to hand down a favorable judgment without fair trial. However, the government’s proposed settlement would unlawfully penalize the company, and it would grant more relief than a negative post-trial decision would yield. Hence, Apple suggests the court to defer judgment until after the case goes on trial in June of next year.

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