Home » Apple, Big Publishing, DOJ » Will the Supreme Court Take Apple’s E-Book Appeal?

Will the Supreme Court Take Apple’s E-Book Appeal?

19 September 2015

From Andrew Albanese at Publishers Weekly

As expected, Apple attorneys this week confirmed that they will be seeking a Supreme Court review of Judge Denise Cote’s 2013 verdict finding them liable for a conspiracy to fix e-books prices. The question now is: will the Supreme Court take the case?

“I think, and have always said, that the Supreme Court taking the case is very unlikely,” says Christopher Sagers, law professor at Cleveland State University, and a close follower of the case. Sagers reiterated what he told PW this summer after an appeals court affirmed Cote’s ruling: “It’s a fact case, and I can’t imagine what the circuit split will be,” he said.

. . .

Apple has brought on some major firepower to help with its appeal, hiring Seth Waxman, the 41st Solicitor General of the United States, and a familiar figure before the Supreme Court.

. . .

In June of this year, a three-judge panel of the U.S. Court of Appeals for the Second Circuit strongly affirmed Cote’s “per se” handling of the case, calling the decision “amply supported and well reasoned.” But, in a headline-grabbing dissent, one member of the appeals panel, Judge Dennis Jacobs, sided with Apple.

. . .

If the Supreme Court ultimately rejects Apple’s petition for cert, its liability finding would be considered final under a 2014 settlement with 33 states and a consumer class, triggering $400 million in consumer rebates.

Link to the rest at Publishers Weekly

Posted by Vacation Substitute Blogger Bridget McKenna, who predicts we <i>will</i> see the last of Apple appeals if the Galactic High Court refuses to hear the case.

Apple, Big Publishing, DOJ

41 Comments to “Will the Supreme Court Take Apple’s E-Book Appeal?”

  1. So what would they argue? That it’s unconstitutional to make them stop price-fixing and forming a conspiracy to do so?

    • If anyone is seriously interested in understanding Apple’s legal position, as opposed to just assuming Apple is wrong, the best place to start is by reading Judge Dennis Jacobs dissent in the circuit court ruling. He argues that Apple had made exactly the correct choice for entering the ebook market, and virtually anything else it did would have been more likely to trip up anti-trust laws:

      http://eveshungry.blogspot.com/2015/07/dissent-in-apple-ebook-case-points-to.html

      In my opinion, Apple is in the right. But on a practical level, the current Supreme Court is very pro-business and the last time they ruled on the issue of what qualifies as a per se violation, it was in a direction that favored Apple’s case. Given the important stakes involved, Apple would have been foolish not to have taken this all the way.

      (By the way, the circuit court didn’t “strongly” find against Apple. One out of three judges dissented, and the other two couldn’t agree on whether Apple would have lost based on “rule of reason.” So all three had different takes on the case.)

      • Thanks for that info and link.

        Edited to add:
        I’ve now read most of the argument at the link. I kept creating my own arguments against those in the link, I deserve an honorary law degree.

        One thing I think is overlooked re Amazon’s position in the ebook market is the fact they’ve produced a family of excellent ereaders and have used their Kindle Store to provide content for those ereader customers. One tool to keep the ereader customers happy was to give them price breaks on bestsellers and another was to make it basically effortless for them to download their purchases. Apple had no dedicated ereaders to sell; only content. It’s not Amazon’s fault that customers preferred to use the Kindle Store versus iTunes. To offer an inferior shopping experience and then call Amazon a monopoly because they sell the lion’s share of ebooks leaves out the whole reason why Amazon owns most of the market: they serve that segment better on both the hardware side of the business and the digital side of the business. Yes, Amazon is a success, but that’s because of their superiority in the ereader/ebook market — and the recognition of that superiority on the part of their customers. It’s not illegal.

        • Apple had no dedicated eReaders to sell; only content.

          I doubt it matters much if one reads on a dedicated device. Apple had iPads and iPhones. They do the same thing as any dedicated reader. So, I’d say they had both content and devices.

          • Different animals compared to Amazon’s Kindles. They’re backlit and there’s a segment of the market that wants nothing to do with that. The Kindles that are lighted are lighted from the top. Much easier on the eyes. For some of us the Kindle is the only way to go, despite the growing use of tablets and phones for reading. I think there’ll always be a market for the top-lighted dedicated ereaders that do nothing but display books. At least I hope so in the event my Kindles die sometime in the future.

            • There will always be a segment that prefers that. But the similarities in usage of the devices greatly overshadow the differences.

              The issue wasn’t confined to the segment that prefers backlit.

              • Sony, Kobo, Nook, etc put out dedicated ereaders, but Amazon did it better in the opinions of a lot of people. That was my point in my long post. They did the hardware better, and made shopping and digital delivery easier. Together those factors earned them first place when it came to ebook sales. Then there’s the Kindle app for those who want ease of shopping but prefer non-dedicated readers. Amazon’s recipe for success in this market has always had more and better ingredients than the competition’s.

      • Taking my life in my hands here: this is exactly like when one basketball team ‘wins’ over another with a score of 101 to 100. And there is much ridiculous cheering.

        IT COULD have gone the other way.

        The number of 5/4 decisions by the Supreme Court scares the heck out of me – it is NOT a win when there is so much significant dissent. It is purely an accident of who got appointed to the court by whom – and what their politics and loyalties happen to be.

      • Judge Denis Jacobs’ dissent relies on a very bizarre definition of competition. What Apple negotiated with the publishers is the removal of retail competition. Retailers were replaced with “agents”, no retailer price competiton, discounts, rewards or loyalty discounts allowed. This was just another distribution channel for the publishers and not additional competition that would benefit the consumer. Judge Cote and the other two judges all recognized this.

        The antitrust laws are intended for consumer protection. There is obviously a “pro business” contingent that would like to see them weakened and removed. Apple’s appeal is based on that contingent. The problem is that it’s short termed thinking. If the consumers don’t see justice they will react with their own vigilante justice. The publishers managed to collude and negotiate agency again but it’s pretty clear that it’s at the expense of their market share.

        • There is obviously a “pro business” contingent that would like to see them weakened and removed.

          This group harkens back to the Progressive Era when the Progressives held that consumers should be willing to pay more to ensure the health of the suppliers. Limited production, regulated by the government, would ensure higher prices and keep suppliers healthy.

          But we have had 100 years experience since then, and we know one supplier can fail,and another will step up in his place. Anti-trust has mostly pivoted to protect consumers rather than suppliers. (Yes, there are some supplier protections, but nothing like we saw 100 years ago.)

          The Progressives thought they were smarter than most, and reasoned to their position that suppliers needed protection. They were wrong, but we have to acknowledge they didn’t have the 100 years of experience we do.

          But today, events are repeating. We see folks who think they are smarter than most reasoning to the same conclusions the Progressives did. However, today they do have the 100 years of experience. They just don’t know the history or economics.

        • From an economic perspective, Jacobs dissent contains a very odd statement.

          Apple was a major potential competitor in a market dominated by a 90 percent monopoly, and was justifiably unwilling to enter a market on terms that would assure a loss on sales or exact a toll on its reputation.

          If it was Apple’s choice to enter the market, then it wasn’t a monopoly.

      • thanks MB. Facts to ponder. So refreshing.

  2. It amazes me sometimes, the lengths Apple often goes to not having to admit they screwed up. (I thought nothing would overshadow their ‘You’re holding it wrong!’ meme on their phone design — my bet on how that flaw made it all the way to the customer is all the testing was done by guys/gals wearing protective gloves to not mark up the prototypes, as bare hand contact on the antenna seems to have been their ‘problem’ …)

    • Early users have become beta-testers who will compete for the “privilege” instead of being paid for a job. And pay a premium.

      Take care

      • Which is why it’s called ‘the bleeding edge of technology’ — far too often you get cut/burned by it.

        I was there for a while — until I got tired of bleeding. Now a days I stay a couple revisions back and let the youngsters find the flaws/faults before I give it a real look-see …

      • That could also apply to Amazon’s introduction of the Echo.

        • Except early adopters of Echo (and the Fire TV stick) were rewarded with a significantly lower price and the pleasant surprise of getting way more features than they bargained for.

          As one of the first-day buyers of the stick (at $19) I was not only surprised at the video quality of the darn thing, but its hackability (in the classic hobbyist sense) that allows it to load Kodi and replicate most of the functionality of the much more expensive WD TV Live (which I adore). More, it is getting the October update to the new Fire OS that adds the Alexa voice service from the Echo. For free.

          Considering how painfree being a “gamma tester” for Amazon has been, I might do it again the next time they forge into yet another market.

          • Huh. I got a stick for $19 and it never worked. I could browse through Amazon videos, for instance, but none of them would play on my tv. I ended up throwing it in a box. At least being out $19 didn’t hurt much.

            • How odd.
              You had to have Prime to get it for $19 so there’s lots of videos that should play.
              You had it connected straight HDMI on the TV? No adapters or anything? (You might be having an HDMI handshake issue.)

              Try setting it up again and letting the firmware update.
              Maybe try the Hulu or Netflix app.

  3. Of course, to a certain extent it doesn’t make a whole lot of difference if the Supreme Court takes it or not. Even if it rejects the case, the publishers have still gotten the price control they wanted legally this time, via negotiations with Amazon. All that will happen if Apple loses the last round is that it will have to dispense some pocket change to the masses.

    Of course, when you get right down to it, this whole case effectively amounts to a battle by proxy between two giant corporations who both do everything in their power to lock their hardware customers into their particular platform’s ecosystem, so it’s not like there’s really a “good guy” and a “bad guy” here apart from that one of them likes to sell customers stuff cheaply and the other likes to make them pay through the nose.

    • “Of course, when you get right down to it, this whole case effectively amounts to a battle by proxy between two giant corporations who both do everything in their power to lock their hardware customers into their particular platform’s ecosystem …”

      I’d have to disagree with that part as one seems to be able to read kindle ebooks on almost anything — there’s an app for that — so that ‘lock-in’ bit seems a bit one-sided as well …

      I will though completely agree on the bit:

      “one of them likes to sell customers stuff cheaply and the other likes to make them pay through the nose.”

      So there was several ‘bad guys’ that tried to twist the arm of a ‘good guy’. All but one has admitted being in the wrong and moved on — but one remains …

      “… the publishers have still gotten the price control they wanted legally this time …”

      That they did, and we’re seeing the benefits of it for those publishers — and the writers in their pens …

      YMMV

      • And yet, Amazon won’t let you load Android applications on Fire tablets from anywhere except their own store, for all that they’re running a reskinned version of Android themselves and it’s been proven that plain-vanilla Android applications will work on their tablets if you go to the rigamarole of sideloading them from another Android device’s backup. This cuts out a lot of popular Android games and applications.

        And then there’s the way that everything Amazon sells tries to make you buy more stuff from Amazon, which is probably why the Fire phone failed so badly.

        Oh, they’re certainly within their rights to do that, just like Apple is within their rights to prevent you from loading any iOS apps from sources outside the iTunes Store. It’s just a little obnoxious, is all, the way it is when any company tries to enforce its own ecosystem above all others.

        • Ah, I was referring to the ebooks which is what they’re in trouble for …

          I hadn’t run into the Android/Fire issue as I still run an older kindle that I actually prefer to sideload as I see no reason for it to call up the mothership and blab about what I’m reading and when. (and still on a pay-as-you-go dumb-phone — $150 for two years beats most anything else — and the fact it’s up over 7000 minutes proves I don’t ‘use’ a phone often enough to need a smart one …)

        • I’m not so sure the Fire Phone failed badly or even at all. It took about a year and a month or so, but Amazon did recently sell the last phone they still had. I think it was the initial pricing and AT&T-exclusivity that were the failures. The phone itself is so good, I bought a second one.

        • Hmmm, I have a Fire tablet and I have loaded apps from other app stores. The only roadblock I have is the Google Play store.

          • And even that isn’t much of a roadblock.
            There’s always the APK downloader website from Evozi.

            Amazon hardware is intended to sell Amazon content but they don’t get in your way if you don’t choose to go with them for ebooks, music, video, or apps.

        • Actually, Amazon lets you sideload apps from anywhere on their Android hardware. Including the streamers. You can install alternate appstores on the tablets and competing streaming apps of the FireTVs.
          All it takes is a couple of clicks in the settings menus.

          Try sideloading apps on iOS hardware without jail-breaking…

    • “…everything in their power to lock their hardware customers into their particular platform’s ecosystem…”

      You’re especially speaking about Apple, of course. God, I hate it when uninformed (or deliberately misleading and Apple bashing) people continue to spew out this crap!

      The EPUB format that has long been the standard to use on Apple’s iBooks is also what is used by Kobo and numerous other retailers around the world. Though if you want your books to have more bells and whistles (they’re called “enhanced e-books”), you can, of course, format them using Apple’s proprietary iBooks Author software and, yes, they will then be readable only on iBooks. But Apple does not require you to do so. iBooks Author is optional. Anyone call still place a standard EPUB book (completely hand coded, if you like, as I have done) at the iBooks store and have it accepted and sold there.

      Get it right or keep quiet.

    • Of course, when you get right down to it, this whole case effectively amounts to a battle by proxy between two giant corporations who both do everything in their power to lock their hardware customers into their particular platform’s ecosystem

      Ecosystem? I doubt it. In Amazon’s case, that means using a Kindle app that runs on just about every smart device in the world. That’s not much of a lock.

  4. So out of this great labor of sound and fury, nothing significant was born. BPHs got their agency pricing, which looks like their primary goal going in, and we’re left with Apple’s soon-to-be-stillborn lawsuit.

    Meh. Got books to write.

    • Actually, two very significant things came out of this:

      1- interoperable epub was dealt a deathblow.
      2- the soil was tilled for the mainstreaming of Indie ebooks

      Without the Manhattan Mafia shooting themselves in the foot and pocketbook, Indies wouldn’t be going toe-to-toe with the BPHs this soon.

      Them getting Agency this go around just proves they didn’t learn from the disaster (for them) that was the conspiracy.

      • Actually, what I would have loved to see would have been if the pig5 wanted to use agency — then they had to use it on ALL their products …

        Could you imagine the uproar from the bookstores if they had to try to sell books without marking them down? 😉

  5. The Apple argument: We’re Apple, so we should be above the law.

  6. OK, I’ll go out on a limb here and say “No.”

    I’m sure PG and other lawyers here on TPV can provide better legal opinions than I, but I was under the impression that SCOTUS appeals were accepted by the Supremes — and they vote on acceptance or not — if there were issues of law and precedent involved or if two states are duking it out in court.

    I don’t quite see this here. The Sherman Act has been law for over a century, and there’s oodles of case law about it. Apple broke the law, was found guilty, and sentenced. What’s to appeal about? Cruel and unusual punishment? Hahahaha… 🙂

    • It’s hard to know what they’ll take and what they won’t, but it’s more like they’ll take a case if:
      1. The lower courts are split on a point of law and need the supreme court needs to clarify.
      2. The lower court is wrong and things need to be fixed.
      3. One or more of the justices have an interest in the case.

      Also any big problems at the federal level, diplomacy, impeachments, elections, that sort of thing. They are the only ones that can really deal with those.

      EDIT: If they take this case it’s likely they are looking to overturn it.

      • Actally, there is one reason why they might take it: vertical price maintenance by itself (without the horizontal component that the conspiracy added to Agency, making it illegal in this case) used to be illegal until recently. Having seen the anticompetitive uses to which Agency has been applied, the Court might choose to reverse themselves and outlaw Agency altogether.

        In other words: Apple had better beware what they wish for.
        They might get it and choke on it.

        • You mean Cote’s court? If so, is that even legally possible?

          Has anything more come out about how the watchdog positioned at Apple is doing re getting cooperation? Last I read, Cote wasn’t happy with the hurdles put in his way. I can’t remember how long he was supposed to on duty there.

          • No, the Supreme Court,
            They might choose to decide that price maintenance should return to being illegal under all conditions.
            Which would bye-bye retail Agency.

            As for the compliance monitor, he’ll stay until Cote is satisfied they are complying with the ruling or until the cows come home, whichever comes first.
            I’m betting on the cows.

  7. James, your limb seems rather sound from where I sit.

  8. Apple’s determined to keep appealing up the chain until they find a judge old enough to hate the future. Several of the Supremes qualify, but it doesn’t appear there’s really any grounds that justify SCOTUS getting involved.

    The Big 5 have gotten their agency pricing even despite their settlements and Apple’s conviction, and we’re seeing how well it’s working out for them. Apple’s blown a lot of money on lawyers when they could’ve funneled that into improving their services. Not that they’re hurting for cash, of course, but still …

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