Apple 2006 Annual Report Download - page 40

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European Commission Investigation
The European Commission has notified the Company it is investigating certain matters relating to the iTunes Store in the European Union
(“EU”). The European Commission is investigating claims made by Which?, a United Kingdom (UK) consumer association, that the Company
is violating EU competition law by charging more for online music in the UK than in Eurozone countries and preventing UK consumers from
purchasing online music from the iTunes Store for Eurozone countries. The Which? claims were originally lodged with the UK Office of Fair
Trading, which subsequently referred them to the European Commission. The European Commission is investigating the charges under
Articles 81 and 82 of the European Commission Treaty.
Euro Tec Enterprises, Inc. et al. v. Apple Computer, Inc. et al.
This is a purported class action copyright infringement case filed on May 16, 2006 in the United States District Court for the Central District of
California by certain independent music publishers against the Company and several other defendants for allegedly failing to secure a
compulsory license for copyrighted musical compositions being sold as downloads. Plaintiffs’ complaint seeks an injunction, damages and
other relief. The Company filed an answer on July 28, 2006 denying all material allegations and asserting numerous affirmative defenses. The
case is in discovery and is set for trial on November 13, 2007 if no class is certified or on June 10, 2008 if a class is certified. Plaintiffs filed an
amended complaint on October 23, 2006 and the Company filed an amended answer on November 28, 2006 denying all material allegations
and asserting numerous affirmative defenses.
Gillis et al. v. Apple Computer, Inc.
Plaintiffs filed this purported class action on December 23, 2005 in San Diego County Superior Court alleging the Company has
misrepresented the hard drive capacity of two Powerbook G4 computers: the 12-inch, 1.5GHz computer with 512MB of memory and a 100GB
hard drive; and the 15-inch, 1.67GHz computer with 1GB of memory and a 100GB hard drive. Plaintiffs alleged that the Company’s standard
disclosure on its packaging regarding hard drive size was not present on the packaging for these two models. The complaint alleged violations
of the California Business & Professions Code §17200 (unfair competition), California Business & Professions Code §17500 (false
advertising), the Consumer Legal Remedies Act, and causes of action for deceit and negligent misrepresentation. Plaintiffs sought restitution
and other relief. On February 28, 2006, the Company filed a demurrer and a motion to strike. The Company withdrew the demurrer and motion
to strike per stipulation. The Company has reached a Court-approved settlement with the Plaintiffs in this action and the matter is concluded.
The settlement of this matter did not have a material effect on the Company’s financial position or results of operations.
Goldberg, et al. v. Apple Computer, Inc., et al.
Plaintiffs filed this purported class action on September 22, 2003 in Los Angeles County Superior Court against the Company and other
members of the computer industry on behalf of an alleged nationwide class of purchasers of certain computer hard drives. The case alleged
violations of California Business & Professions Code §17200 (unfair competition), the Consumer Legal Remedies Act and false advertising
related to the size of the drives. Plaintiffs alleged that calculation of hard drive size using the decimal method misrepresents the actual size of
the drive. The complaint sought restitution and other relief. Plaintiffs filed an amended complaint on March 30, 2004 and the Company filed an
answer on September 23, 2004, denying all allegations and asserting numerous affirmative defenses. Defendants filed a motion to strike
portions of the complaint based on sales by resellers and filed a motion for judgment on the pleadings based upon Proposition 64. The Court
granted both motions at a hearing on April 6, 2005. Plaintiffs thereafter filed an amended complaint on May 6, 2005. The Defendants filed a
demurrer on June 6, 2005, which the Court granted in part and denied in part. Plaintiffs filed an amended complaint and the Company filed an
answer on December 15, 2005 denying all allegations and asserting numerous assertive defenses. The Company reached a Court-approved
settlement with the Plaintiffs in this action
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