Decade-Old iTunes Lawsuit is Going to Trial

Courtesy of
Courtesy of

Remember those dark, pre-Spotify ages when people were trying to decide between RealPlayer and iTunes? As prehistoric as it may sound, this fossil of a feud has now been dug up and dusted off. RealNetworks, the company behind the RealPlayer software, has just been granted a jury trial in a lawsuit against iTunes from back in 2004. The suit revolved around an anti-piracy measure Apple implemented on iTunes and the iPod after RealNetworks debuted their competing music player.

According to the plaintiffs, Apple utilized several iTunes updates to intentionally prohibit users from playing music that was purchased from competing stores. RealNetworks is suing Apple for $351,631,153 in damages, which they have broken down as “$148,947,126 for resellers, $194,655,141 for direct purchasers, and $8,028,886 for additional iPod sales from the additional transactions.”

The buzzword in the case is DRM, which stands for Digital Rights Management. In short, DRM envelops all of the technologies put in place to prevent users from copying, viewing, printing, or altering the content in question. In the ruling handed down by U.S. District Court Judge Yvonne Gonzales Rogers last week, Apple is accused of creating a monopoly through the DRM they implemented in the iTunes Music Store.

RealNetworks specifically outlines a series of thwarted attempts to engage their Harmony feature, which was intended to be a workaround for FairPlay DRM. Basically, Harmony allowed customers to purchase content through Real’s music store and play it on Apple devices. However, Apple repeatedly fought back with a series of updates to workaround their workaround. The suit has now been opened 10 years later and will move into the trial phase next month.

RealNetworks is backing their case with expert witness testimony from Roger Noll, a Stanford University Economics Professor. Noll explains that Apple’s tactic “raised the cost of switching from iPods to competing portable digital media players by eliminating the ability of consumers to collect a library of downloads that could be played on all players.” Apple made an effort to exclude Noll’s testimony, but Judge Gonzales Rogers rejected their motion in her ruling. “Noll’s opinions alone supplies a triable issue of fact regarding the fact and amount of antitrust damages, as well as the definition of the relevant market,” she stated.

Apple defends that since RealNetwork’s share of the 2006 digital music market was less than 3 percent, their claims are “insignificant.” They stated that it “makes it implausible that Harmony could have the effect ascribed to it by plaintiffs.” They have also noted that RealNetworks even admitted to investors in 2005 that their Harmony technology could put them at risk of legal action from Apple. The trial has been set for November 17th, although Apple can elect to settle prior to that date.