Plaintiffs Gain Ground in iPhone Lawsuit Against Apple and AT&T

Apple and AT&T have been hit with more iPhone lawsuits than you can count on one hand. One of the suits, filed in Northern California and presided over by Judge James Ware, is proving a problem for the duo, who have made several unsucessful dismissal attempts.

Judge Ware declared, in his 32-page decision, that both AT&T and Apple were liable for violating rules in the state of California that are designed to preserve fair competition, and that Apple alone was responsible for abuse, computer trespass and fraud by violating federal and California law. However, it did not state full acceptance of the original plaintiffs complaint; it dismissed other claims in jurisdictions outside of the state of California. Overall thoughm the Judge was very harsh in his words to Apple and AT&T.

This lawsuit was originally filed in 2007 after the release of the iPhone 2G by Paul Holman and Lucy Rivello and listed in the original complaint:

• AT&Ts unfair exclusive to the iPhone until 2012
• Hidden costs of ownership
• Locked phone not usable on other carrier networks
• No access to third party software on the iPhone
• Engineering of iPhone 1.1.1 update and other updates to break modified iPhones

Some of the highlights:

• AT&T cannot force plaintiffs to use arbitration instead of a full civil trial, because the AT&T service contract forcing arbitration was unconscionable under state laws in California, New York, and Washington. Note that arbitration is over 90% of the time in favor of the business vs. the consumer to the point many are seeking to have arbitration shutdown or severely reconfigured.
• The lawsuit can proceed against Apple under antitrust law regarding voice and data services for restricting iPhone owners ability to use their iPhones on competing non-AT&T networks (i.e. T-Mobile)
• The lawsuit can proceed against Apple under antitrust laws regarding iPhone applications due to Apple’s restrictions on iPhone owners ability to use third-party iPhone applications that are not approved first by Apple.
• The lawsuit can proceed against Apple for damaging unlocked iPhones with new versions of iPhone OS software 1.1.1 or higher under the common law, as well as the Computer Fraud Abuse Act and the California Penal Code.

This case could, however unlikely, have some ripple effects felt throughout the cellular phone industry in the United States. It could change the way Apple and AT&T sell and market the iPhone. We would probably see some serious changes in contract terms, device unlocking for use on other mobile carriers, a more open iTunes App Store, etc.

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