Apple 2000 Annual Report Download - page 11

Information regarding critical business operations that are located near major earthquake faults is set forth in Part II, Item 7 of this Form 10-K
under the subheading "Other Factors" included under the heading "Factors That May Affect Future Results and Financial Condition," which
information is hereby incorporated by reference.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to certain legal proceedings and claims, including those described below, which have arisen in the ordinary course of
business and have not been fully adjudicated. The results of legal proceedings cannot be predicted with certainty; however, in the opinion of
management, the Company does not have a potential liability related to any current legal proceedings and claims that would have a material
adverse effect on its financial condition or results of operations.
FTC INQUIRY-PRADO V. APPLE COMPUTER, INC. (AND RELATED ACTIONS)
In October 1997, Apple began charging all U.S. non-education customers for live telephone technical support beyond 90 days after purchase of
Apple products. In late 1997, the Federal Trade Commission (FTC) commenced an investigation into customer complaints that Apple's change
in technical support practices was either unfair or contrary to earlier representations to certain customers. Four purported class action lawsuits
were filed against Apple related to this change. During the fourth quarter of 1999, the regional and national offices of the FTC approved a
settlement with the Company, and a settlement was approved by the Court in three of the class action suits. In November 1999, two appeals
were filed objecting to the settlement and the settlement is stayed pending resolution of the appeals.
MICROWARE SYSTEMS CORPORATION V. APPLE COMPUTER, INC.
Plaintiff, Microware Systems Corporation (Microware), filed this action against the Company on September 1, 1999, in the United States
District Court for the Southern District of Iowa. Microware alleged that the Company's current release of its Mac OS operating system, Mac
OS 9, infringed Microware's trademark for its real time operating system, OS-9. Microware asserted claims for trademark infringement, false
designation of origin, dilution and common law trademark infringement and unfair competition. On October 14, 1999, Microware filed a
motion for preliminary injunction seeking to enjoin the Company from using the designation "Mac OS 9" and to order the Company to cancel
and withdraw all packaging and advertisements that mention "Mac OS 9." The Company opposed the motion for preliminary injunction and
filed a motion for summary judgment against all of Microware's claims. The Court denied Microware's request for a preliminary injunction and
granted Apple's motion for summary judgment. Microware has filed an appeal which will be heard in January 2001.
STERNBERG V. APPLE COMPUTER, INC. AND GORDON ET AL. V. APPLE COMPUTER, INC.
Plaintiff Sternberg filed this action against the Company on March 17, 2000 in the Santa Clara County Superior Court. The case is a purported
nationwide consumer class action brought on behalf of certain purchasers of iMac DV and iMac DV SE computers. Plaintiff alleges that Apple
engaged in false advertising, unfair competition and breach of warranty, among other causes of action, by marketing and selling a DVD player
with iMac DV and iMac DV SE computers where the playback was unacceptable. A companion case, GORDON ET AL. V. APPLE
COMPUTER, INC. was filed by largely the same plaintiffs on June 14, 2000. This case is essentially the same as Sternberg but with respect to
a different computer model--the Power Macintosh G4. The Company has answered both complaints, denying all allegations and alleging
numerous affirmative defenses. The Company has responded to written discovery and has produced documents. The parties have agreed to
mediate the cases. The mediation is expected to occur at the end of January 2001.
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