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Apple sued over exclusive iPhone deal with AT&T

Two users are seeking for a court to order Apple to unlock their phones, which were tied to AT&T Mobility's network

By Jeremy Kirk
October 22, 2012 06:24 AM ET

IDG News Service - Apple's much-maligned iPhone exclusivity agreement with AT&T Mobility, started in 2007 but now ended, is once again the target of a class-action suit.

The lawsuit, filed Friday in U.S. District Court for the Northern District of California, seeks for Apple to be barred from selling "locked" devices, or those that only work on a certain operator's network, and pay monetary damages.

Apple violated the section 2 of the Sherman Antitrust Act of 1890 when it agreed to work only with AT&T Mobility for five years since consumers were not aware or asked if the contractual arrangement, where they could not switch providers, was acceptable, the lawsuit said.

The class-action suit, filed by Zack Ward of Los Angeles and Thomas Buchar of Chicago, addresses devices purchased between Oct. 19, 2008, and Feb. 3, 2011. Ward bought his iPhone in October 2009, and Buchar bought one around June 2009.

Some of the circumstances the lawsuit seeks to change are now irrelevant given changes by Apple and AT&T, although Apple could be made to pay damages for previous arrangements.

Apple's first three iPhone models -- the iPhone 2G, 3G and 4 -- could only operate on AT&T's network and required a special code in order to be "unlocked," or capable of operating with SIM card from a different operator.

The company later released a version of the iPhone 4 in February 2011 that worked on Verizon's network, which appeared to mark an early end to the five-year exclusivity contact, according to the lawsuit. In June 2011, Apple for the first time in the U.S. began selling unlocked iPhones interoperable with carriers with GSM networks.

AT&T, however, had refused except in special circumstances to unlock an iPhone even if a user's contract had ended, tying those users to the carrier even after their obligation had been fulfilled. In April, AT&T reversed its position and agreed to unlock out-of-contract iPhones.

Apple's latest iPhone 5 and the iPhone 4S are available through the three main U.S. operators: AT&T, Sprint and Verizon.

Apple was first sued in October 2007 over its exclusivity agreement with AT&T, which eventually became a class-action suit.

Apple officials could not immediately be reached for comment.

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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