Apple's sixteenth affirmative defense
We're not the first to spot this — credit goes to Brian X. Chen at Wired's Gadget Lab — but a site that endeavors to present news from outside Steve Jobs' reality distortion field couldn't let Apple's unusual legal argument in Gillis, et al. v. Apple, Inc. et al. pass without comment.
The case was originally filed last August in a California Superior Court by William Gillis, a 70-year-old San Diego resident who claims that Apple (AAPL) and AT&T (T) "misrepresented to the public the speed, strength and performance of the 3G network when using either of Apple's 3G iPhones."
At the time, Apple was running TV and print ads that described the iPhone 3G as "Twice as fast. Half the price." (The tag line now includes a footnote that reads, in part, "Actual speeds vary by site conditions.")
Gillis, who had purchased a black iPhone 3G, claims that the phone did not deliver the speeds promised in Apple's ads. He says that he – and a whole class of fellow iPhone users – were regularly bounced from fast 3G networks to the slower EDGE networks because the infrastructure of AT&T's 3G network was "insufficient" to handle the crush of users – something he claims Apple and AT&T failed to disclose. In fact, Apple continued to promote its 3G iPhones as "twice as fast" even though, Gillis claims, they often weren't.
Apple, in a response filed on Sept. 5, denied each and every allegation made by "Plaintiff" (i.e. Gillis) and then went on to mount 32 affirmative defenses, some stronger than others. The ones that caught our eye were the fifth and sixteenth:
Fifth Affirmative Defense
5. Any statements made by Apple were truthful and accurate and were not misleading or deceptive or likely to mislead or deceive Plaintiff or the purported class, and could not have been reasonably understood by Plaintiff or any member of the purported class in a manner that was misleading or deceptive or likely to mislead or deceive.
Sixteenth Affirmative Defense
16. Plaintiff's claims, and those of the purported class, are barred by the fact that the alleged deceptive statements were such that no reasonable person in Plaintiff's position could have reasonably relied on or misunderstood Apple's statements as claims of fact.
Or, as Chen puts it, "our ads don't lie, and you're a fool if you believe them." (link)
Apple's sixteenth defense, explains Barry Adler, professor of law at New York University, is based on the legal concept of "puffing," a defense well established in case law by the famous Leonard v. Pepsi precedent.
In general, Adler explains, ads can be excused from precise accuracy if what they say can be considered "in jest."
In the Pepsi case, a Seattle man named John Leonard took literally an offer in a Pepsi TV ad offering a T-shirt for 75 "Pepsi Points," a leather jacket for 1,450 and (drumroll) a Harrier Jet for 7,000,000. When Mr. Leonard tried to buy the jet for 15 Pepsi Points and a check for $700,008.50 to cover the rest, Pepsi refused to sell him a jet. Leonard sued. The judge in the case ruled that no reasonable person would think that the offer to sell a $23 million aircraft for Pepsi Points was anything but a joke.
So was "Twice as fast" a jest?
"In the eye of this beholder, no," says Adler. "It's not particularly funny, and it seems to me there's no other reason to say it except to make a product claim."
An American jury might disagree.
But not the British Advertising Standards Agency. The ASA has already made clear – by banning two different iPhone ads – that it takes a dim view of puffing, huffing and hyperbole in Apple's advertising copy. See This iPhone ad was banned in Britain.
Gillis v. Apple has been moved to a U.S. District Court in the Southern District of California. No trial date has been set.
The court documents are available as a pdf here.
Apple legal clears its desk
Are Apple's lawyers getting ready to go on vacation? For the second time in as many days, the company has agreed to settle a lingering class action suit.
On Thursday, it was a pair of complaints out of Canada that 1st, 2nd and 3rd generation iPods were delivering something like three hours of music, not eight hours as advertised. Although one case was granted class action status and the other wasn't, Apple (AAPL) agreed to settle both, according to the Montreal Gazette, offering $44 store credit to any Canadian who purchased one of the affected iPods before June 24, 2004. As many as 80,000 could be eligible. Hearings are set for May 26 in Montreal and June 20 in Toronto.
Then on Friday, according to the LA Times, Apple agreed to pay some 2.3 million Mac owners refunds of $25 to $79 to resolve claims that some of its power supplies were prone to fray and spark and self-destruct. Customers who bought replacement adaptors for PowerBooks and iBooks could be eligible for the refunds, according to documents filed in federal court in San Jose. A final court hearing is scheduled for Sept. 8.
Still pending, notes the Gazette, is the case filed against Apple Canada last fall by law student David Bitton who was surprised to discover that his 8GB iPod Nano held only 7.45GB. According to his lawyer, Bitton is asking for the full $220 purchase price, but will settle for 7.5%, plus court costs.
Apple lawsuit shutters rumor website
Nearly three years after Apple (AAPL) sued Think Secret — a rumor-gathering blog launched by a teenager that had become a thorn in Steve Jobs' side — the site has ceased publication as part of a settlement with the company.
The news was announced in a Think Secret press release issued Wednesday:
Apple and Think Secret have settled their lawsuit, reaching an agreement that results in a positive solution for both sides. As part of the confidential settlement, no sources were revealed and Think Secret will no longer be published. Nick Ciarelli, Think Secret's publisher, said "I'm pleased to have reached this amicable settlement, and will now be able to move forward with my college studies and broader journalistic pursuits." (link)
The case drew national attention because it raised important questions about press freedom, trade secrets and how First Amendment protections extend to blogs. It was triggered by a pair of Think Secret items that described the $499 Mac Mini and the iLife '05 software suite — two weeks before Jobs was to unveil them at Macworld.
Both posts have been removed from Think Secret's site, but at least one of them is still available on the Internet Archive here. It began:
EXCLUSIVE: Apple to drop sub-$500 Mac bomb at Expo
December 28, 2004 - With iPod-savvy Windows users clearly in its sights, Apple is expected to announce a bare bones, G4-based iMac without a display at Macworld Expo on January 11 that will retail for $499, highly reliable sources have confirmed to Think Secret.
Apple sued the site a week later, charging that it had illegally solicited Apple employees to violate confidentiality agreements. "Defendants' knowing misappropriation and disclosure of Apple's trade secrets constitutes a violation of California law and has caused irreparable harm to Apple," the suit alleged.
What the suit didn't mention was that "Nick dePlume," Think Secret's editor, was an undergraduate at Harvard. In fact, Nicholas Ciarelli was 13 when he launched the website from his parents' home in upstate New York and did much of his best reporting on Apple while he was still in high school.
The specter of Steve Jobs, a billionaire computer executive, seeking damages from a teenage Apple fan for stealing the thunder from a Macworld keynote address caught the eye of the national press, including the New York Times and the Washington Post. The Electronic Frontier Foundation helped arrange legal representation and Ciarelli was soon firing back at the company. As Think Secret reported:
"Apple's lawsuit is a affront to the First Amendment, and an attempt to use Apple's economic power to intimidate small journalists," [it] wrote in court filings seeking dismissal of the suit. "If a publication such as the New York Times had published such information, it would be called good journalism; Apple never would have considered a lawsuit." (link)
Apple's lawyers complained in particular about a box on Think Secret's front page headlined "Got Dirt?" that invited Apple insiders to submit anonymous tips. They claimed the solicitation was a violation of The Uniform Trade Secrets Act, adopted in one form or another by California and 44 other states.
Such statutes forbid you from acquiring or publishing without authorization information you know or have a reasonable basis to know is a trade secret. They are usually invoked when the secret that is revealed gives a competitor an advantage. In this case the primary effect was to spoil the surprise of a piece of classic Steve Jobs event marketing.
The First Amendment is often cited in defense of trade secret violations, but it hasn't always fared well in the courts.
Apple will sometimes give the press a preview of major product announcements, but it is usually done under nondisclosure agreements and only with handpicked outlets with a national reach. A few weeks before it released the iPhone, for example, it issued review units to the New York Times, the Wall Street Journal, Newsweek, and USA Today.
It's unlikely that Apple was able to collect much in the way of damages from Think Secret — which didn't have a lot of assets to begin with. Nor did the company succeed in prying the names of the blog's sources out of Ciarelli. But the suit sent a warning shot across the bow of dozens of similar rumor sites — and it did manage to shut down one of the originals.
Ciarelli, who became an editor at the Harvard Crimson and is scheduled to graduate this spring, may be forgiven if he wants to move on with his life. Cult of Mac has already offered him a job contributing to Wired News, but he probably has bigger things in mind.
Cease & Desist: AppleInsider's OS X Leopard Preview Pulled Offline
With only two weeks to go before the release of OS X Leopard, the fifth major revision of Apple's (AAPL) flagship Macintosh operating system, AppleInsider today published the sixth entry in its comprehensive Road to Leopard series — and at Apple's insistence pulled two earlier posts offline.
Written by Prince McLean, the nom de plume of a systems programmer who clearly knows his stuff, the series not only describes with text and screen shots the key innovations coming in Leopard, but it takes pains to place them in the history of graphical user interfaces as they evolved from Xerox Parc, through Lisa and the first Macs, Systems 8 and 9, Next and the previous versions of OS X. The Commodore Amiga even makes a cameo appearance.
The series is so good that Apple's legal staff has stepped in, demanding through cease-and-desist orders that parts of the first two entries be removed. AppleInsider has taken them temporarily offline while they are being redacted.
[UPDATE: The first two posts are back up in heavily redacted form.]
If you're interested in what's in store for you when Leopard finally arrives, you might want to archive the other posts before key sections disappear. Here are the links:
