Apple is battling a request for a deposition given by late Apple co-founder Steve Jobs. The deposition relates to the relationship Apple has with Universal Music Group (UMG). Apple says the deposition reveals trade secrets and could cause damage to the company.
A class action lawsuit between Universal Music Group and musicians, including Rob Zombie and the estate of Rick James, alleges that UMG has underpaid royalties on digital downloads and ringtones. The artists want such downloads to be treated as “licenses” rather than “sales” — and hence subject to higher royalty rates.
The plaintiffs have submitted a discovery request for the 2010 deposition given by Jobs as part of an earlier case against Aftermath Records. Aftermath, a division of UMG, was sued by F.B.T. Productions, producers of many of Eminem’s songs.
The issue in that court battle was over how digital music should be treated, should it be a sale, or a license? The designation was important, as sales and licenses are paid differently under recording contracts, many of the contract were written before digital downloads became popular.
The 9th Circuit Court of Appeals, reversing a lower court ruling, sided with the plaintiff, saying “a contract between the parties should be read as treating digital music as ‘licenses’ rather than ‘sales’.”
UMG says the appeals court ruling applies only to that particular case and contract.
When Jobs gave his deposition, the judge made many people, including employees of UMG, leave the courtroom. The courtroom was once more closed when the deposition was read to the jury.
Apple contends that at this point, the deposition is not needed. It is is claiming that the release of documents that may include discussions between it and record labels would prove materially damaging to its business (iTunes).
Release of such information, while it would give musicians some idea of how negotiations are carried on, could also give Apple’s competitors insight into where Apple stands with its iTunes Music Store and record labels.