Apple sued over deal locking iPhone to AT&T network

Plaintiffs claim the company violated the Sherman Act and Digital Millennium Copyright Act by not obtaining customers' permission to have their iPhones locked to AT&T's network.

Steven Musil Night Editor / News
Steven Musil is the night news editor at CNET News. He's been hooked on tech since learning BASIC in the late '70s. When not cleaning up after his daughter and son, Steven can be found pedaling around the San Francisco Bay Area. Before joining CNET in 2000, Steven spent 10 years at various Bay Area newspapers.
Expertise I have more than 30 years' experience in journalism in the heart of the Silicon Valley.
Steven Musil
2 min read

A pair of iPhone owners are suing Apple to get their handsets unlocked.

Zach Ward and Thomas Buchar filed a putative class action lawsuit in U.S. District Court in Northern California on Friday alleging that the tech giant violated antitrust laws by locking iPhone buyers into voice and data contracts with AT&T Mobility. The plaintiffs claim that Apple violated the Sherman Act's prohibition on monopolization by not obtaining consumers' contractual consent to have their iPhones locked when the tech giant entered into a five-year exclusivity agreement with the wireless carrier in 2007.

To enforce the terms of its agreement, Apple installed software locks on the iPhone that prevented buyers from taking their devices to a competing wireless carrier, the lawsuit claims. That activity violates the Digital Millennium Copyright Act, which includes an exception that allows handset owners to modify their phones for use on the wireless network of their choice, the plaintiffs said.

"Through these actions, Apple has unlawfully stifled competition, reduced output and consumer choice, and artificially increased prices in the aftermarkets for iPhone voice and data services," plaintiffs said in their lawsuit (see below).

In addition to monetary damages, the lawsuit seeks an order restraining Apple from programming iPhones in such a way that would prevent consumers from unlocking their SIM cards. The plaintiffs also want Apple to provide SIM unlock codes to iPhone owners on request, as well as an order preventing Apple from selling iPhones without adequately disclosing that the handsets are locked and obtaining consumers' contractual consent for that arrangement.

Consumer frustration over handset software locks installed by wireless operators is nothing new, but previous lawsuits against wireless carriers over the issue have failed thanks to a U.S. Supreme Court ruling in 2011 that found consumers no longer have the right to file class action lawsuits against wireless carriers. In AT&T vs. Concepcion (PDF), the court ruled that a clause in the carrier's customer contract limiting consumers to arbitration instead of class action met the basic standards of fairness.

However, this lawsuit takes a different tack, pursuing the handset maker rather than the wireless carrier. Whether Apple has a similar clause in its customer contract wasn't immediately clear.

CNET has contacted Apple for comment and will update this report when we learn more.

Ward et al v. Apple Inc.