It remains to be seen whether the Supreme Court will agree to review Apple’s e-book price-fixing case, but a slew of amicus briefs filed this month support Apple's appeal. In all, seven briefs were filed by the December 2 deadline, all of which support Apple’s contention that the court of appeals erred in upholding Judge Denise Cote’s 2013 verdict finding Apple had conspired with five publishers to fix e-book prices.
With slight variations, all of the briefs essentially argue Apple's point: that the court incorrectly found Apple liable for a “per se” case of price fixing, rather than applying the more stringent “rule of reason” analysis which, supporters claim, would have exonerated Apple. The majority of the briefs also stress that since Apple's deal with the publishers was a "novel" arrangement and there is no significant history to draw on in the e-book business, the per se standard is unreasonable.
As PW previously reported, the Authors Guild, Authors United (the group organized by Douglas Preston in 2014), the American Booksellers Association, and Barnes & Noble filed a joint amicus brief filed on December 2. In addition to supporting Apple’s claim that the wrong legal standard was applied, the Guild-led brief also highlighted what is characterized as a threat to free speech.
No publishers filed an amicus brief.
Also filing briefs:
BSA, the Software Alliance: a trade group advocating for the global software industry, with members including firms like Adobe, and IBM.
From the BSA brief:
"The Second Circuit’s application of the per se rule in this case is of particular concern to BSA members, because technology companies often enter into creative business arrangements in developing and launching new products. BSA members rely on the Supreme Court’s guidance that they will not be held to per se antitrust liability when engaging in novel arrangements in new technology markets, but rather will have an opportunity to explain the pro-competitive justifications for such conduct if challenged."
The Washington Legal Foundation, a group chartered to “preserve and defend America’s free-enterprise system."
From the WLF brief:
"By pointing to the [Most Favored Nation clauses] as the linchpin of Apple’s per se antitrust violation, the Second Circuit called into question the right of businesses to insist on favorable pricing terms. Given the recognition among economists that MFNs often have pro-competitive effects, the Second Circuit’s application of the per se rule to Apple’s MFNs is particularly problematic. While it may be possible in theory to draft an MFN that, on balance, proves anticompetitive, a conclusion that an MFN unreasonably restrains trade should be reached only after an MFN has been subjected to a full-fledged rule-of-reason analysis."
The App Association, a trade association representing smaller developers in the mobile space.
From the App Association brief:
"In sum, per se rules suit only well-trodden ground and familiar fact patterns, rather than cases where the factual, technical, and commercial landscapes are both unfamiliar and rapidly changing. As petitioner aptly explains—and, indeed, as the Government conceded during the proceedings in the Court of Appeals—such a body of experience is lacking here."
The International Center for Law & Economics, a "global think tank" devoted to supporting "the regulatory underpinnings that enable businesses to flourish."
From the ICLE brief:
"Per se condemnation is appropriate only when a practice lacks any plausible pro-competitive rationale. If there is no long track record of judicial experience establishing that a practice always or almost always lessens competition, then the practice should be subject to analysis under the rule of reason."
Economics Professors: Five scholars, including: Janusz A. Ordover (New York University); Bradford Cornell (California Institute of Technology); Thomas W. Hazlett (Clemson University); Greg E. Shaffer; (University of Rochester); and Robert D. Willig (Princeton University).
From the Economists’ brief:
“There is no general answer to whether an agency model leads to higher equilibrium pricing or in a broader sense is beneficial or harmful to competition. Amici believe agency structures are most often not anticompetitive, but sometimes may be. And here the economic issues are particularly complex because of Amazon’s pricing of e-books below their acquisition costs and the publishers’ well-known frustration with that. Apple would have rationally advanced proposals to address the publishers’ concerns in order to induce publishers to participate on its platform. The courts below did not grapple with any of this complexity. They accepted the government’s argument that one should apply antitrust law’s ‘per se’ rule to Apple’s proposals and agreements with e-book publishers. Amici submit this was an error. At the least, all should be able to agree that Apple’s contracting with the publishers does not fit the category of business conduct that economic analysis or judicial experience suggest is invariably clearly anticompetitive.”
Law Professors: Five scholars including: Amitai Aviram, (University of Illinois); Keith N. Hylton (Boston University); Thomas A. Lambert (University of Missouri) Fred S. McChesney (University of Miami); and Justin McCrary (University of California, Berkeley).
From the Law Professor’s brief:
“The e-books market was in its infancy when the agency agreements were executed, and it is unclear what affects these agreements would ultimately have had on the market. This uncertainty called for rule of reason analysis. Courts are ill-equipped to judge conduct in areas such as nascent industries where they lack considerable experience; when they make wholesale condemnations absent such experience, they potentially overlook and risk chilling legitimate, pro-competitive conduct.”
The DoJ now has until January 4, 2016, to file a brief, if it so chooses, opposing Apple's bid to have the case heard by the Supreme Court. Counter to Apple's (and its supporters') arguments, the lower courts have held that the case is in fact a straightforward case of price-fixing.
UPDATE: At press time, the briefs from the Economics Professors, and Law Professors were not available. PW has since acquired and read the briefs, and have updated the story to include them.
