Apple 2007 Annual Report Download - page 29

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16700 et seq.) and a claim for false advertising. The Company filed a demurrer to the amended complaint, which the Court sustained in its
entirety on November 10, 2005. The Court granted plaintiffs leave to amend and they filed an amended complaint on December 29, 2005.
Plaintiffs' amended complaint added three plaintiffs and alleged many of the same factual claims as the previous complaints, such as alleged
selling of used equipment as new, alleged failure to honor warranties and service contracts for the consumer plaintiffs, and alleged fraud related
to the opening of the Apple retail stores. Plaintiffs continued to assert causes of action for unfair competition (§17200), violations of the CLRA,
breach of contract, misappropriation of trade secrets, violations of the Cartwright Act, and alleged new causes of action for fraud, conversion,
and breach of the implied covenant of good faith and fair dealing. The Company filed a demurrer to the amended complaint on January 31, 2006,
which the Court sustained on March 3, 2006 on sixteen of seventeen causes of action. Plaintiffs filed an amended complaint adding one new
plaintiff. The Company filed a demurrer, which was granted in part on September 9, 2006. Plaintiffs filed a further amended complaint on
September 21, 2006. On October 2, 2006, the Company filed an answer denying all allegations and asserting numerous affirmative defenses.
European Commission Investigation
The European Commission is investigating certain matters relating to the iTunes Stores in Europe. The European Commission had previously
notified the Company that it was investigating claims made by Which?, a United Kingdom ("U.K.") consumer association, that the Company is
violating EU competition law by charging more for online music in the U.K. than in Eurozone countries and preventing U.K. consumers from
purchasing online music from the iTunes Stores for Eurozone countries. The Which? claims were originally lodged with the U.K. Office of Fair
Trading, which subsequently referred them to the European Commission.
On March 30, 2007, the European Commission issued Statements of Objections to the major record labels, Apple Inc. and iTunes S.à.r.l. In the
Statements of Objections, the Commission challenges provisions in the agreements pursuant to which each major record company authorizes
iTunes S.à.r.l. to distribute digital music downloads through the iTunes Store. The Commission contends that, because of these provisions,
residents of the European Economic Area are only permitted to buy music from the iTunes Store for the country that issued the customer's credit
card. The Commission contends that these provisions are territorial sales restrictions which violate Article 81 of the European Community
Treaty. The Commission seeks fines and behavioral relief. The Company filed its responses to the Statements of Objections on June 20, 2007. A
hearing on the Statements of Objections took place in Brussels, Belgium on September 19, 2007.
Gordon v. Apple Computer, Inc.
Plaintiff filed this purported class action on August 31, 2006 in the United States District Court for the Northern District of California, San Jose
Division, on behalf of a purported nationwide class of consumers who purchased 65W Power Adapters for iBooks and Powerbooks between
November 2002 and the present. The complaint alleges various problems with the 65W Adapter, including fraying, sparking, and premature
failure. Plaintiffs allege violations of California Business & Professions Code §17200 (unfair competition), the Consumer Legal Remedies Act,
the Song-Beverly Consumer Warranty Act and breach of warranties. The complaint seeks damages and equitable relief. The Company filed an
answer on October 20, 2006 denying the material allegations and asserting numerous affirmative defenses.
Harvey v. Apple Inc.
Plaintiff filed this action on August 6, 2007 in the United States District Court for the Eastern District of Texas, Marshall Division, alleging
infringement by the Company of U.S. Patent No. 6,753,671 entitled "Recharger for use with a portable electronic device and which includes a
proximally located light emitting
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