Will Apple Pay For This iPod Mistake?

The long-drawn case between Apple (NASDAQ:AAPL) and three iPod users is close to reaching a potential conclusion after almost seven years of debate. The class-action suit accuses Apple of having violated federal and state laws by issuing software updates that prevented iPod devices from playing songs not purchased on the iTunes store. The lawsuit also claims that the software updates caused iPod prices to be higher than they otherwise would have been.

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The complicated issue began in 2004 when RealNetworks released a software application that allowed songs purchased from its music store to be transferred onto the iPod. Apple accused RealNetworks of behaving like a “hacker” and issued a software update that disabled the application, called Harmony.

An iPod user reacted in early 2005 by filing a class-action lawsuit against Apple, alleging the company’s actions violated antitrust laws and California’s unfair competition law.

After seven years of litigation, two settlement conferences were held earlier this month but no agreement could be reached, but the court is now taking steps for the two sides to file their final motions.

Everyone who bought an iPod classic, iPod shuffle, iPod touch, and iPod nano model between September 12, 2006, and March 31, 2009, is included in the class action, and those customers who don’t want to receive any benefits have been asked to send an exclusion request to the court. Users who choose to remain a part of the suit will give up all rights to sue Apple separately about the same legal claims and will be bound by the outcome of the case.

Since the suit was first filed, Apple has negotiated with music labels for a more open iTunes Music Store, and songs sold there are now provided without digital rights management software that restricts how files can be used.

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