Apple Hit with Class Action Over Sale of Licensed Digital Content It Does Not Own

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A proposed class action alleges it is misleading for Apple to “sell” to consumers certain movies, TV shows and music through the iTunes store given the company can and will pull the media from the buyer’s possession should its licensing agreement for the digital content expire. 

The 21-page lawsuit contends that because Apple does not own the movies, TV shows and music it does not produce itself – and merely sells the content through iTunes and related apps by way of licensing agreements with creators – the tech giant can never truly pass the title of ownership to the consumer. This means that when a licensing agreement is terminated for whatever reason, Apple must pull the paid-for digital content from the “purchased folder” on a consumer’s device, the case says. 

“In other words, unlike a Best Buy or Target store that obtains title from a Digital Content’s owner, which it then passes on to a purchaser for value, Defendant’s licensing arrangements prevent it from ever doing so.” 

According to the complaint, Apple has thus misled iTunes customers into believing that it is “selling” them digital content, even though it is merely “providing them with a license” to use the movies, TV shows and music for their own enjoyment. The lawsuit contends Apple “likely misrepresents” iTunes digital content transactions as bona fide sales so it can charge the amounts it does for movies, TV shows, and music and has sold more digital content than it otherwise would have had it fully disclosed the nature of the “purchases.” 

The case argues that a reasonable consumer understands the terms “buy” and “purchased” to mean they’ve acquired possession of something, as “buy” covers a transaction and “purchased” stipulates that the transaction has been completed. Once something is “purchased,” the lawsuit says, a seller should not be able to revoke a buyer’s access to the item. 

“In other words, just like Best Buy or Target cannot come into a person’s home to repossess a movie or show DVD (or music CD) that such person purchased from it, Defendant should not be able to remove Digital Content from its customers’ Purchased folders.”

Unfortunately for some consumers, however, the “ugly truth” of Apple’s sale of digital content via iTunes is that the company does not own all of the movies, TV shows and music it purports to sell, the complaint stresses. In fact, the lawsuit says, a portion of the digital content Apple sells is owned by others who license it to Apple, an arrangement that makes the company a sublicensor for the property.

Compounding matters is that Apple, according to the suit, charges as much, if not more, for digital content it licenses versus entities who actually sell movies, TV shows and music to buyers forever. As an example, the case says that while Apple is “selling” the Sonic the Hedgehog movie on iTunes for $14.99, Target is selling the same movie, “which a consumer truly owns and can keep forever,” for $9.99. 

By representing the “purchase” of digital content via iTunes as true ownership over the content, Apple has taken advantage of “cognitive shortcuts” made at the point of sale and the price of the digital content, which the suit says is akin to an outright purchase versus a mere rental. 

“Though some consumers may get lucky and never lose access to any of their paid-for media, others may one day find that their Digital Content is now gone forever,” the lawsuit laments. “Regardless, all consumers have overpaid for the Digital Content because they are not in fact owners of the Digital Content as represented by Defendant, despite having paid the amount of consideration typically tendered to ‘Buy’ the product.” 

The lawsuit looks to represent all persons who bought digital content—movies, TV shows or music—from Apple within New York during the applicable statute of limitations period and through the date of class certification and trial. 

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