Apple faces trial for allegedly 'locking in' iPod owners with iTunes Music Store DRM

The ruling handed down by U.S. District Court Judge Yvonne Gonzales Rogers last week is the latest development in a case dating back to 2004, which accuses Apple of creating a monopoly through iTunes Music Store DRM, reports ArsTechnica.

Plaintiffs are seeking $350 million in damages, part of which will go to a class comprised of customers who purchased iPod classic, iPod shuffle, iPod touch and iPod nano models between Sept. 12, 2006 and March 31, 2009.

According to plaintiffs, Apple allegedly stifled competition in the digital music space by implementing FairPlay DRM protocols that supposedly "locked" iPod users in to the iTunes ecosystem. By making songs purchased through competing services unplayable on iPods at the time, Apple is said to have dissuaded users from switching over to other platforms, specifically those built by RealNetworks.

The case revolves around RealNetworks' "Harmony" technology, a workaround for FairPlay DRM that allowed customers to buy songs through the Real's music store and play them back on iPod. Apple responded by releasing a software update that, among other enhancements, disabled Harmony content.

Following the change, RealNetworks tweaked Harmony to again make songs purchased outside of iTunes compatible with iPod, but Apple again broke the workaround in a 2006 iTunes 7.0 software update. Plaintiffs are basing their case on this second instance of disabling Harmony, saying version 7.0 pushed users to rely on iTunes as their only online music store, resulting in so-called "switching costs." This allegedly incurred discouraged users from switching to iPod competitors when upgrading hardware, as they would have to repurchase the same music, convert tracks to a non-DRM format using iTunes 7.0's built-in CD burning technique, or let go of the protected music altogether.

According to plaintiffs' expert witness testimony from Stanford University economics professor Roger Noll, 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 attempted to exclude Noll's testimony, but Judge Gonzales Rogers rejected the motion in her ruling, saying "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."

For its part, Apple argues RealNetworks' less than three percent share of the 2006 digital music market was "insignificant" and "makes it 'implausible' that Harmony could have the effect ascribed to it by plaintiffs." Further, RealNetworks itself admitted to investors in 2005 that Harmony put the company at risk of legal action from Apple.

A trial has been set for Nov. 17, though Apple has the option to settle before that date arrives.