Hollywood Docket: U.S. v. Apple; Richard Linklater's Insurance; Kim Dotcom's Property

Richard Linklater

Before Midnight director Richard Linklater.

On Monday, the U.S. government takes allegations to trial that Apple conspired with book publishers in a price-fixing conspiracy in the e-book market.

The lawsuit was originally filed in April 2012 against Apple as well as CBS Corp's Simon & Schuster Inc., News Corp.'s HarperCollins Publishers Inc., Penguin, Lagardere SCA's Hachette Book Group, Pearson and Macmillan. The publishers have since settled claims while Apple has remained adamant that it has done nothing wrong.

At the center of the case is the claim that Apple acted as the "hub" in a hub-and-spoke conspiracy. Publishers were allegedly dismayed that Amazon was buying books wholesale and selling them at the cut-rate price point of $9.99. Apple then got involved and exploited a so-called "agency model," whereby publishers were able to set price floors with Apple taking a 30 percent commission of sales.

Early signs point to the government's edge in the case.

"I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books," said U.S. District Judge Denise Cote, at a pretrial hearing last month, "and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that."

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The government's case, however, has attracted criticism from some in the book industry who believe that it'll only help Amazon command dominant market share. Bob Kohn, the chairman and CEO of RoyaltyShare, even put his dissatisfaction in comic form.

Apple has the money to mount a vigorous defense and has openly been contemptuous of the charges.

“The e-book case to me is bizarre,” said Apple CEO Timothy Cook at a business conference last week. “We’ve done nothing wrong there, and so we’re taking a very principled position of this. We were asked to sign something that says we did do something, and we’re not going to sign something that says we did something we didn’t do. And so we’re going to fight.”

In other entertainment law news:

  • Before Midnight director Richard Linklater lost the corporate archive for his production company in a fire in 2011, and he won't be able to recover money from the loss from his insurers. The insurance company argued that the archives, which included production material on many of his films, was not listed on the policy as being in a certain location. A Texas judge rejected Linklater's claim of $239,000.
  • Merchant Ivory Productions has settled a copyright lawsuit against Janus Films. The plaintiff filed a lawsuit in August 2012 alleging the distributor of prestige titles under the Criterion label has kept marketing its films after its license to do so expired. On May 24, the lawsuit was dismissed. The parties haven't revealed the terms of the deal.
  • A Spanish appeals court has ruled that the works of British author G. K. Chesterton remain in copyright. The author died in 1936, and the court held that a 1987 law that conferred 80 years of protection after death governed his works. That means that older works get an extra decade than previously thought.
  • Megaupload founder Kim Dotcom has scored a legal success by getting a New Zealand court to rule the warrants issued against him were illegal and that he should regain seized property including hard drives taken as evidence. Whether or not the FBI will comply with the order isn't yet known.
  • Greenberg Traurig has announced that Steve Plinio has joined its Los Angeles office in the entertainment practice. Plinio, whose specialities include recording contracts, music publishing agreements and digital music, was previously a partner at King Holmes Paterno & Berliner.