[opendtv] News: iTunes user sues Apple over FairPlay DRM

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Mon, 10 Jan 2005 08:31:59 -0500

http://www.macworld.com/news/2005/01/06/slattery/index.php

January 06, 2005 5:55 pm ET

MacCentral
iTunes user sues Apple over FairPlay DRM

By Peter Cohen pcohen@xxxxxxxxxxxxxx

Thomas William Slattery has filed a class action suit against Apple 
Computer Inc. in U.S. District Court for the Northern District of 
California, alleging Apple is guilt of violating federal antitrust 
laws and California's unfair competition law by requiring users who 
buy music from the iTunes Music Store to use an iPod if they plan to 
take their music on the road with them. Slattery's suit cuts to the 
heart of an ongoing issue related to Digital Rights Management (DRM) 
technology present in commercial downloaded music.

Songs sold through the iTunes Music Store are protected using a DRM 
technology called FairPlay. Exclusive to the iTunes Music Store, 
FairPlay enables individually downloaded songs to be played back on 
up to five Macs or PCs, burnt to an unlimited number of CDs and 
downloaded to an unlimited number of iPods connected to authorized 
computers. The DRM technology is lauded by some as a model for the 
industry, but it has its detractors.

Apple's "unlawful bundling and tying arrangement" of the iPod and 
iTunes Music Store violates federal and state laws "by suppressing 
competition, denying consumer choice, and forcing consumers to pay 
supra-competitive prices for their digital portable music players," 
says Slattery's complaint, a copy of which MacCentral has received.

The suit indicates that Slattery -- defined as "typical of the claims 
of this class" -- owns an iPod and has purchased files from the 
iTunes Music Store.

Playing fair, and FairPlay

One point of contention voiced by critics -- and by the lawyers 
filing Slattery's suit -- is that Apple hasn't licensed FairPlay to 
other portable music player makers and music stores: Only iPods can 
play songs downloaded from the iTunes Music Store, they say.

Apple competitor Real tried to work around the problem with Harmony, 
a technology that makes songs purchased through Real's own music 
store look to the iPod like an iTunes Music Store song. Harmony was 
introduced by Real over the summer and almost instantly decried by 
Apple as "the tactics and ethics of a hacker". Apple later closed 
that loop with a software update to the iPod preventing it from using 
Harmony songs.

By comparison, Apple competitor Microsoft Corp.'s Windows Media 
Player 10 technology is broadly supported by digital music players 
and used by some music stores. Microsoft has also begun a testing and 
branding program called "PlaysForSure," which lets consumers know 
their music players can play songs encrypted with Microsoft DRM.

This combined effort hasn't greatly improved the marketshare for 
these products and services, however: Apple continues to reign 
supreme. Apple has the best-selling MP3 player and the best-selling 
music store.

Monopolizing the situation

After years as the underdog with dwindling market share for its 
Macintosh computer, Apple's become the big dog in the online music 
business. But with the iPod now the best-selling MP3 player on the 
market and the iTunes Music Store similarly at the top of the heap of 
online music stores, some have begun to wonder if Apple is guilty of 
being a monopoly and abusing its power. And that is one important 
point of Slattery's class action suit.

"Within the relevant market for online legal sales of digital music 
files, Defendant Apple, through its iTunes online music store, 
possesses and has possessed through the Class Period monopoly market 
power sufficient to exclude competition," reads the complaint, which 
cites Apple's own estimate of having 80 percent share of the legal 
music download market as evidence that Apple has a monopoly.

The suit was filed on behalf of Slattery by three separate firms -- 
the Los Angeles, Calif. firm of Braun Law Group P.C., The Katriel Law 
Firm, P.C. of Washington, DC and Murray, Frank & Sailer LLP of New 
York, New York. The suit asks for certification as a class action, 
and the award of "compensatory and statutory money damages, including 
trebled damages and punitive damages where appropriate." The suit 
also asks the court to enjoin Apple from continuing its conduct.
 
 
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