Rare Book Monthly

Articles - December - 2014 Issue

Court Accepts Tentative Settlement in Apple's E-Book Price-Fixing Case

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U.S. District Court Judge Denise Cote has accepted a strange settlement in the Apple e-book price fixing case, though it was obvious she didn't much like it. Evidently, the winning party in her court, the purchasers of e-books a few years back, had to convince her the settlement was actually in their best interest.

 

The case arose out of a Justice Department claim that Apple and five book publishers had conspired to raise the price of e-books. Amazon was charging too little to suit their taste (see this article concerning a related agreement recently reached between Amazon and publisher Hachette). The government argued Apple orchestrated a conspiracy with the publishers, Apple argued all they had done was legitimately negotiate deals individually with each publisher. Unless Apple CEO Tim Cook is a good bluffer, he does not believe Apple did anything wrong. Judge Cote believes otherwise. It was not even close in her mind, and if she had had a physical book to throw at Apple's executives, she undoubtedly would have done so. She thought it was a blatant case of price fixing.

 

Apple appealed her decision to the next higher level of courts, the U.S. Appeals Court. That appeal is still under consideration. However, with the final decision still up in the air, Apple and those allegedly harmed, the e-book buyers who were said to have overpaid, reached a settlement. How is that possible if the case is still proceeding in the courts? The answer is that it is a tentative settlement. The terms of the settlement vary greatly depending on the outcome of the appeal. It provides that if the Appeals Court upholds Judge Cote's verdict, Apple must pay $450 million - $400 million to the e-book buyers, $50 million to their lawyers. If the Appeals Court neither upholds nor overturns Judge Cote's decision, for example, they send it back for retrial, Apple must pay only $70 million - $50 million to the e-book buyers, $20 million to their lawyers. Finally, if the Appeals Court overturns Judge Cote's verdict, Apple doesn't have to pay anyone a dime (except, of course, their own lawyers, who have undoubtedly collected many millions of dollars by now).

 

Judge Cote expressed reservations about the settlement, even while accepting it. She found it unusual, and the $70 million settlement if a retrial is ordered likely means no retrial would even be held, and the amount of damages is relatively small. The publishers earlier agreed to give e-book buyers $166 million without ever going to trial. In fairness to them, the financial risk of a loss at trial is greater than they may be able to afford. They agreed to pay a lot because a loss at trial might break them. In Apple's case, the settlement is pocket change for a company with $150 billion in the bank. Judge Cote said that she understood why the book buyers consented considering the time the case has taken and Apple's willingness to pursue the case, though it appears to us she believes Apple should be paying more.

 

The $450 million settlement would provide the average e-book buyer hurt by the pricing with a little over $17. Those who bought more than the average number of e-books would get more, those with fewer less. If the case is remanded for retrial, the average will be only $2. What is the cost to Apple's owners, its shareholders? There are 5.865 billion shares of Apple stock outstanding, so that comes to about 7 ½ cents per share. Apple's share price recently rose above $115 for the first time a few days ago, so that amount is well under one-tenth of one percent. The price of their stock regularly goes up or down more than that amount on a single trade. In other words, whatever the Appeals Court decides is essentially meaningless to Apple. To Apple, however, this is a matter of principle. They believe they did no wrong, and they have used their financial clout to prove their point. We will see.

 

The Appeals Court is now scheduled to hear Apple's appeal on December 15.

Rare Book Monthly

  • <b>Swann Auction Galleries:</b> Ian Fleming, <i>Goldfinger,</i> first edition, inscribed to Sir Henry Cotton, MBE, London, 1959. Sold for $25,000.
    <b>Swann Auction Galleries:</b> Joseph Brant, Mohawk Chief, ALS, writing after pledging support to King George III against American rebels, 1776. Sold for a record $35,000.
    <b>Swann Auction Galleries:</b> Sonia Delaunay, <i>Ses Peintures</i> . . ., 20 pochoir plates, Paris, 1925. Sold for a record $13,750.
    <b>Swann Auction Galleries:</b> Diana, Princess of Wales, 6 autograph letters signed to British <i>Vogue</i> editor, 1989-92. Sold for $10,400.
    <b>Swann Auction Galleries:</b> Alexander Hamilton, ALS, as Secretary of the Treasury covering costs of the new U.S. Mint, 1793. Sold for $12,500.
    <b>Swann Auction Galleries:</b> Benjamin Graham & David L. Dodd, <i>Security Analysis,</i> first edition, inscribed by Graham to a Wall Street trader, NY, 1934. Sold for $20,000.
    <b>Swann Auction Galleries:</b> George Barbier & François-Louis Schmied, <i>Personnages de Comédie,</i> Paris, 1922. Sold for $9,375.
    <b>Swann Auction Galleries:</b> Alphonse Mucha, <i>Ilsée, Princesse de Tripoli,</i> Paris, 1897. Sold for a record $13,000.
    <b>Swann Auction Galleries:</b> Ralph Waldo Emerson, <i>The Dial,</i> first edition of the reconstituted issue, Emerson’s copy with inscriptions, Cincinnati, 1860. Sold for a record $3,250.
  • <b>Mayfair Book Auctions, July 17:</b><br>Lot 14. [CRIMEAN WAR] HAMLEY. <i>The Story of the Campaign of Sebastopol.</i> 1855. £150 to £200
    <b>Mayfair Book Auctions, July 17:</b><br>Lot 17. JONGH & D'ALMEIDA. <i>L’armee Russe...</i> c.1898. Colour plates and many illustrations. £500 to £600
    <b>Mayfair Book Auctions, July 17:</b><br>Lot 18. [RUSSIA] LE PRINCE. <i>Oeuvres. 1782.</i> Rare folio format with 80 etchings and 74 aquatints. £4000 to £6000
    <b>Mayfair Book Auctions, July 17:</b><br>Lot 21. [RUSSIA] MORNAY. Set of 8 hand-coloured aquatints of carriages, sleighs and occupants. c.1825. £1200 to £1800
    <b>Mayfair Book Auctions, July 17:</b><br>Lot 33. BOWDICH. <i>Excursions in Madeira and Porto Santo.</i> 1825. A fine copy. £800 to £1200
    <b>Mayfair Book Auctions, July 17:</b><br>Lot 37. QUIN. <i>An Historical Atlas.</i> 1836. 2nd edn, 21 hand-coloured maps revealing civilisation. £800 to £1200
    <b>Mayfair Book Auctions, July 17:</b><br>Lot 39. LE BRUN. <i>Voyages [...] par la Moscovie, en Perse...</i> 1718. 300+ engravings, panorama. £4500 to £5500
    <b>Mayfair Book Auctions, July 17:</b><br>Lot 48. BRIERLY. <i>The English and French fleets in the Baltic.</i> 1855. Colour lithographs. £7000 to £9000
    <b>Mayfair Book Auctions, July 17:</b><br>Lot 60. DELLA VALLE. <i>Reise Beschreibung... in Turckey, Egypten, Palestina[...].</i> 1674. £1500 to £2000
    <b>Mayfair Book Auctions, July 17:</b><br>Lot 77. MURRAY, Mrs. Watercolour Album of Heaths. c.1860. 55 original watercolours. £750 to £1000
    <b>Mayfair Book Auctions, July 17:</b><br>Lot 91. ADDISON. <i>Works...</i> 1721. 4 vols, large paper copy, English red morocco. £2500 to £3500
    <b>Mayfair Book Auctions, July 17:</b><br>Lot 96. HOLBEIN. Imitations of original drawings. 1792-1800. Exceptional copy. £4000 to £6000
  • <b>Bonhams, Jun 13 results:</b> Darwin, Charles. <i>On the Origin of Species.</i> Presentation Copy. Sold for $500,075.
    <b>Bonhams, Jun 13 results:</b> Darwin, Charles. Autograph Letter Signed, 3 pp, negotiating the 2nd American edition with Appleton. Sold for $21,325.
    <b>Bonhams, Jun 13 results:</b> Hemingway, Ernest. Autograph Letter Signed, 8 pp, Paris, 1924, to his father discussing Bullfighting, Stories, and his new baby. Sold for $25,075.
    <b>Bonhams, Jun 13 results:</b> Shakespeare, William. <i>Corialanus.</i> London, 1623. 1st printing [Extracted from the First Folio]. Sold for $50,075.
    <b>Bonhams, Jun 13 results:</b> Swift, Jonathan. <i>Gulliver's Travels.</i> London, 1726. 1st edition, Teerink's A edition, fine, large copy. Sold for $21,325.
    <b>Bonhams, Jun 13 results:</b> Fitzroy, Robert. Autograph Letter Signed to agent Thomas Stilwell, informing him of the progress of H.M.S. Beagle. Sold for $17,575.
    <center><b>Bonhams<br> Property from the Collection of Nicole and William R. Keck II</b>
    <b>Bonhams, Jun 13 results:</b> Shakespeare, William. <i>Sonnets.</i> 1901. 2 volumes. Printed on vellum and illuminated by Ross Turner, bound by Trautz-Bauzonnet. Sold for $13,825.
    <b>Bonhams, Jun 13 results:</b> Beardsley, Aubrey. <i>The Birth, Life, and Acts of King Arthur.</i> 1893-94. 2 volumes. Contemporary painted vellum gilt by Chivers. Sold for $5,325.
    <b>Bonhams, Jun 13 results:</b> Assisi, St. Francis. <i>The Canticle of Brother Sun.</i> Illuminated on vellum, for the Grolier Society. Sold for $7,575.
    <b>Bonhams, Jun 13 results:</b> Rackham, Arthur. <i>Peter Pan in Kensington Gardens.</i> 1/500 copies signed by Rackham. Sold for $4,825.
    <b>Bonhams, Jun 13 results:</b> Proust, Marcel. <i>Du coté de chez Swann.</i> 1st edition, 1st issue. Inscribed by Proust. Sold for $8,825.

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