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iPhone Antitrust and Computer Fraud Claims Upheld
LawWatcher writes "On October 1, 2008, a federal judge in California upheld a class action claiming that Apple and AT&T Mobility's five-year exclusive voice and data service provider agreement for the iPhone violates the anti-monopoly provisions of the antitrust laws. The court also ruled that Apple may have violated federal and California criminal computer fraud and abuse statutes by releasing version 1.1.1 of its iPhone operating software when Apple knew that doing so would damage or destroy some iPhones that had been 'unlocked' to enable use of a carrier other than AT&T."
What gives is that they're talking about Apple's contract with AT&T, not your contract with AT&T. The reason you can't buy an iPhone and use it with T-Mobile in the US (unless you hack it) is because of Apple's exclusive contract, which currently runs for five years.
If you mod me Overrated, you are admitting that you have no penis.
They seriously need to be taken down a notch legally so they don't lawyer up at every opportunity.
Everybody has a right to an attorney. Even a corporation.
(And even an unlawful enemy combatant, but that's another topic for another time.)
Oh, say does that Star-Spangled Banner entwine / The myrtle of Venus with Bacchus's vine?
Nothing has been "Upheld", all that has happened is that the court denied Apple's 12b6 motions for dismissal. (Failing to state a claim upon which relief can be granted.)
This case is still pre-trial. Discovery has not happened yet. Apple can still file for summary Judgment.
If the complaint survives Apple's inevitable motion for summary judgment, then the case will go to trial. Then there will be appeals.
D. None of the above.
People who bought the iPhone and are allegedly stuck with AT&T for five years as a result, despite having agreed to a two-year contract.
The exclusivity agreement, according to the complaint, prevents any iPhone customer from going anywhere else once their contract is up. The problem is that (a) no one's contract has expired, so there is no evidence for or against Apple and AT&T as to what happens at that time, (b) there are already tools to unlock the iPhone and use the device on other networks, which, after the AT&T contract and the product warranty expires, Apple could not care less about for end users, and (c) the "legal action" discussed does not extend to people unlocking their handsets for the purpose of lawfully connecting them to another provider's network.
This, furthermore, is not a finding of fact or law. It is not an opinion. It is simply a rejection of a dismissal motion. It by no means suggests the final outcome, nor does it endorse any of the allegations made by the plaintiffs. It is entirely possible that this suit will be dismissed further along in the discovery process, dismissed during trial, or that Apple/AT&T will win at trial. It will likely provide nothing of value to consumers either way, with the possible exception of an announcement of an "official" unlocking tool for customers whose initial contracts have expired.
It is important to note that such a tool being offered upon completion of your term commitment would entirely moot this case.
The Warranty Act is related to the product tieing, and bricking of unlocked phones. Essentially (and amongst other things) the MM Warranty Act says that it's illegal for a vendor to sell a product and require a tieing of services. From the FTC's web site:
"Tie-In Sales" Provisions Generally, tie-in sales provisions are not allowed. Such a provision would require a purchaser of the warranted product to buy an item or service from a particular company to use with the warranted product in order to be eligible to receive a remedy under the warranty. The following are examples of prohibited tie-in sales provisions. In order to keep your new Plenum Brand Vacuum Cleaner warranty in effect, you must use genuine Plenum Brand Filter Bags. Failure to have scheduled maintenance performed, at your expense, by the Great American Maintenance Company, Inc., voids this warranty.
They are arguing that tieing to AT&T, and then firmware releases bricking phones that have been unlocked to another carrier is an illegal/tortious act on the part of Apple. They allege Apple has told customers that downloading of unapproved software (but software that should be legal to install, under the MM act, imo) will void their warranty. Furthermore they have a vested financial interest in "approved" software from the Apple store, and obviously refuse to allow unlocking software to be included in that store. They refuse to provide customers who have lawfully canceled their AT&T contracts with unlocking codes so they may use their device with another carrier (again, covered by MM act). The list of allegations goes on. Full text of 15 USC Chapter 50, which is the section of the statute they have sued under (although I believe Title 16 - Commercial Practices, Chapter I - Federal Trade Commission, Subchapter G - Rules, Regulations, Statements and Interpretations under the Magnuson-Moss Warranty Act, Part 700 Section 102 also deals with warranty denials, text here).
They are alleging illegality on the part of Apple in that they monopolized the market for iphone applications, and also apple+AT&T for voice and data service monopolization. And of course the alleged illegality I spoke of above (services ties, denying consumers the ability to break these ties, pushing software updates that intentionally break the phones of users who have circumvented product ties, and then denying warranty coverage for these affected users)
I hope that was somewhat helpful.
I am Jack's complete lack of surprise.
Because it breaks the idea of subsidies.I am not sure how these things are like in the USA, but here in the UK, when you buy a phone it is likely to be SIM Locked to the network as the cost of the phone is subsidised to the monthly contract.
I am on T-Mobile (UK) myself.
T-Mobile, Vodafone, Orange and 3, typically do that. They also typically customise the phone in such a way, to usually make it easier to use on their network. The customisations can be subtle in the case of T-Mobile (excluding the N95/VOIP fiasco), where the phone is not vastly modified, to outright butchery in Vodaphone/Orange, and 3.
Nevertheless, once a phone is out of the subsidy period, it is YOUR phone, and legally you should be able to unlock it to all networks. In the case of T-Mobile (and I suspect the others) they will on request (and possibly for a small admin fee) provide you with the sim unlock code, to unlock the phone. I have heard that in many cases, they even gave the code, even before the subsidy term was over.
T-Mobile promised the same deal for the upcoming G1 Android phone, in that it CAN be unlocked once the sub period is over.
I personally buy my upgrades via Carphone Warehouse, as they source it idependantly, so phones are unlocked, and unbranded to T-Mobile, so I get the best of both worlds, a subsidised UNLOCKED phone.
O2, intrestingly do NOT usually simlock their phones, unless its a specific O2 made phone. O2 is the UK's Exclusive network for the iPhone, and the iPhone is the first GENERAL phone O2 provides which IS simlocked.
The point being is that, after the 2 year contract period with AT&T (or O2 in the UK) you STILL will not be able to unlock the iPhone, and use it with other networks, so in effect you still ARE locked into AT&T/O2. It is YOUR GSM phone, that has no TECHINCAL reason why it should not work on any other network, other than plain nastyness by Apple/AT&T/O2.
This may not be totally legal in the UK (and same in the USA), especially as it is sold as a GSM phone. If Apple/O2/AT&T allows to unlock after 2 years, then they are ok, but something tells me that will not be the case.
Note: this may be also why the Pay As You Go version was pulled from O2, as technically you own the phone straight away.
Have a nice day!
Wrong; the judge has only denied the motion to dismiss the case. Whether there was any violation of law remains to be determined.