Apple Will Argue Operating Terms This Month, Money Damages in the Spring

Apple has until May 2014 to prepare for a jury trial to determine monetary damages for its role in orchestrating an ebook price-fixing conspiracy. But it’s due back in court at the end of August to discuss what restrictions will be placed on how it operates its ebook business for the next five years.

The May trial relates to a suit brought by the attorneys general of 33 states, who are seeking compensation on behalf of consumers who, the states contend, paid higher prices for ebooks as a result of Apple’s actions.

In the meantime, Judge Denise Cote, who found Apple guilty of price-fixing after a trial in June,  has set an Aug. 27 hearing to consider what steps the court will order to prevent a repeat of Apple’s collusive activity. The Department of Justice and Apple have until Aug. 23 to submit proposals that, it is hoped, narrow the chasm of suggested remedies in their earlier filings.

As we reported Aug. 5, the DOJ wants the court to force Apple to throw out its existing contracts with the five publisher defendants in its ebook price-fixing case and essentially impose a five-year ban on agency model terms.

The proposal reads, “Apple shall not enter into or maintain any agreement with any E-book Publisher or supplier of any other form of content (e.g., music, other audio, movies, television shows, or apps where such agreement likely will increase, fix, or set the price at which other E-book Retailers or retailers of other forms of content can acquire or sell E-books or other forms of content.”

The DOJ also called for an external monitor to oversee the company’s operations for 10 years.

Apple fired back, calling the proposal “draconian” and “punitive,” and asking for more “reasonable” terms.

The five major publishers named as defendants in the case before settling, have also filed an objection to the DOJ’s proposal. They argue that the two-year ban on agency pricing set as part of its settlement agreements should stand. And they contend the DOJ’s proposal unfairly targets publishers.

According to the filing, “The provisions do not impose any limitation on Apple’s pricing behavior at all; rather under the guise of punishing Apple, they effectively punish the Settling Defendants by prohibiting agreements with Apple using an agency model.”

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