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An iPhone Class Action in the Works An iPhone Class Action in the Works
By Jennifer LeClaire
October 1, 2007 12:42PM

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The argument in an Apple iPhone class-action lawsuit would be that an exclusive arrangement adds cost to the consumer and limits choice, which is a variant on an antitrust claim, according to Carole Handler, vice chair of the at Foley Lardner, a firm that specializes in new media, entertainment, and copyright law.
 

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Apple
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Lawsuit
Class Action


Forget the patent lawsuits. Consumer lawsuits are beginning to spring up against Apple amid the iPhone controversies -- and a class action suit might very well be the next step.

Last week a New York woman sued Apple for slashing the price of the iPhone just weeks after its much-hyped launch. Now, a member of Apple's iPhone discussion forum who goes by the name "Myndex" is mulling the possibilities of a class action lawsuit against the company for refusing to service unlocked phones.

Apple issued a software update last Thursday that puts iPhone hackers in their place. The update, which is rendering some iPhones inoperable, came after a slew of hackers unlocked the device so that it could be used with wireless carriers other than AT&T, which has a five-year exclusive deal to provide service to iPhone users.

Class-Action Suit Viable?

In an interview last week, Yankee Group wireless analyst John Jackson said he was unclear as to how the iPhone-unlocking could hurt Apple. But if Myndex is successful in drumming up enough support to file a class action suit, that hurt could become apparent in a hurry.

Class actions are always a possibility, whether or not meritorious, according to Carole Handler, vice chair of the Intellectual Property Litigation Practice at Foley Lardner, a firm that specializes in new media, entertainment, and copyright law. The argument in an Apple iPhone suit, she explained, would be that an exclusive arrangement adds cost to the consumer and limits choice -- a variant on an antitrust claim.

"Is it legal to crack the code? Probably not since it is IP-protected, but hackers might argue patent or copyright misuse as a justification," Handler said. "If hackers crack the code and then sue, they will likely be subject to a 'dirty hands' defense. It is better to have a plaintiff who is beyond reproach, and there is no reason why one cannot be found here."

Biting Back at Apple

One lawsuit already has been filed over the price. Apple cut the price of the iPhone from $599 to $399 in early September, drawing the ire of the people who stood in line for hours to be the first to purchase the handset. Apple CEO Steve Jobs posted a letter at the company's Web site to apologize and offer a $100 refund in the form of store credit to those who paid $599 for the iPhone. That wasn't good enough for some.

Dongmei Li accused Apple, Jobs, and AT&T of price discrimination, discrimination in offering rebates versus credits, underselling, unfair and deceptive practices, and other violations of federal law. The suit was filed September 24 in a New York Federal Court, the first known suit of its kind.

"Apple's discrimination in price between early and later purchasers substantially caused the early purchasers to be injured because early purchasers cannot resell their iPhones for the same profit as later purchasers," Li's lawsuit stated.

Apple officials were not immediately available for comment on the suit, which seeks $1 million in compensatory damages, plus punitive damages.
 

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