Apple pulled no punches in the 65-page brief it filed Tuesday, asking a higher court to overturn the controversial results of last year’s e-book antitrust trial and placing blame for the outcome squarely on the shoulders of the judge who heard the case.
In Apple’s view, U.S. District Judge Denise Cote was not only wrong about the law when she ruled that the company orchestrated a conspiracy with publishers to fix the price of e-books, she was wrong about the facts as well.
The key issue of law is the same one that was raised at trial: That the antitrust rules that restrain the actions of direct competitors are not the same as those governing the actions of a vertical player — as Apple was in its dealings with the publishers.
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“Apple’s entry into the conspiracy had to start somewhere,” Judge Cote wrote in her July 2013 decision, “and the evidence is that it started at those initial [Dec. 2009] meetings in New York City with the Publishers” when the company “made a conscious commitment” to join a pre-existing conspiracy to violate the Sherman Antitrust Act.
“This finding forms the bedrock of the court’s entire decision and is demonstrably wrong,” Apple told the U.S. Court of Appeals, Second Circuit. “The undisputed record reflects that Apple had no prior dealings in the publishing industry and that everything it knew it had gleaned from public sources—like reports in The New York Times and The Wall Street Journal—none of which reported on a conspiracy.”
Apple knew before those initial meetings that the publishers were frustrated with Amazon, which at the time controlled nearly 90% of the e-book market. They hated that Amazon was selling their most popular titles for $9.99 — below cost — and were afraid of getting squeezed out of what little profit they still had. The judge herself recognized that Amazon’s dominant position “strengthened [Apple’s] hand in proposing [a] new business model to the Publishers.”
“Apple seized the moment and brilliantly played its hand,” she wrote.
Steve Jobs later called this an “aikido move,” referring to a Japanese martial arts maneuver that uses the power of a stronger opponent against itself.
Link to the rest at Fortune
PG hasn’t read Apple’s brief, but, based on various reports, thinks this sounds like a moon shot.
A general rule of appellate law is that, absent unusual circumstances, the appeals court will accept the trial court’s decisions with respect to the facts of a case. 99% of appeals are based upon the idea that the judge got the law wrong, not the facts.
Cases like this generate a massive amount of paperwork and PG hasn’t read it all. He did, however, read the judge’s opinion and found it to be exceptionally detailed and compelling. In all the right ways, Judge Cote did a good job at making her opinion difficult for Apple to appeal.
Additionally, Judge Cote is a senior judge, which means she is semi-retired but is available for assignment to some cases. She has a great deal of experience being a judge and, unless she has a history of flaky decisions (which PG hasn’t read anything about), the 2nd Circuit Court of Appeals will be familiar with her past work, thus giving her opinion a bit more credibility than it would have if it were written by a new Federal District judge.
The judge’s decision made Apple and the publishers’ actions sound like the most garden-variety of price-fixing cases. It appears Apple’s counsel is going to great lengths to attempt to distinguish it from the dozens of other antitrust cases where business executives have acted like fools trying to manipulate prices.