Breaking Down the Department of Justice Case Against Apple and the Agency Five

Wired‘s Tim Carmody breaks down the case and what’s at stake in the Department of Justice e-book price fixing investigation into Apple and the so-called Agency Five — the big-six minus Random House (Bigger Than Agency, Bigger Than E-Books: The Case Against Apple and Publishers):

“Plenty of business practices raise prices that aren’t antitrust violations,” says Donald Knebel, an IP and antitrust attorney affiliated with the Center for Intellectual Property Research. “Agency pricing is perfectly legal. But something isn’t an agency relationship just because you call it that.”

Knebel says there are three major points of law at stake in both the class-action suit and the Justice Department investigation against Apple and the five publishers:

1. Whether and how the agency model applies to virtual goods;

2. Whether Apple and publishers engaged in a “hub-and-spoke” conspiracy or simply “conscious parallelism”;

3. The status of the “most-favored nation” clause, common to many legal contracts today, which Apple used to ensure that books could not be sold elsewhere at a lower price than in the iBooks store.

Read the rest, including a discussion of each point and the possible ramifications of a ruling one way or the other at Wired.com.

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