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iPhone Litigation: A Siri-ous Affair?

Apple's intelligent personal assistant Siri is creating quite a frenzy lately, but perhaps not in the way Apple envisioned when unleashing it on the smartphone market last October. Siri has incited the passions of a few hard-to-please iPhone customers, one of whom took his case to a California federal court in March.

Fazio's Allegations . . . Siri-ously?

On March 6, Frank M. Fazio, a New York resident, filed a class action complaint against Apple in the U.S. District Court for the Northern District of California. Mr. Fazio apparently isn't happy with the performance of his personal technical assistant, Siri, the voice-activated intelligent assistant featured in Apple's iPhone 4S.

Taken from the March 6 complaint, Fazio specifically asserts as follows:

"For example, in many of Apple's television advertisements, individuals are shown using Siri to make appointments, find restaurants, and even learn the guitar chords to classic rock songs or how to tie a tie. In the commercials, all of these tasks are done with ease with the assistance of the iPhone 4S's Siri feature, a represented functionality contrary to the actual operating results and performance of Siri."

In the original complaint, Fazio claims Siri doesn't "perform" as advertised, and that Apple conveyed misleading and deceptive messages regarding Siri's functionality. Fazio also claims he was "exposed" to Apple's representations regarding Siri when he purchased his iPhone 4S at a Brooklyn Best Buy store and paid the $299 purchase price.

Fazio seems intent on throwing the consumer class action book at Apple. In his original complaint, he cites a legal laundry list of allegations against Apple, including violation of California's Consumers Legal Remedies Act and Unfair Competition Law, breach of express warranty, intentional misrepresentation, and negligent misrepresentation.

Fazio claims original federal jurisdiction of the class action under 28 U.S.C.section 1332, alleging that the matter in controversy exceeds $5,000,000 and there are at least 100 members in the potential class.

More People Follow Suit

Other plaintiffs have now decided to jump on the bandwagon. Plaintiffs seem to be becoming bolder in bringing actions against our generation's biggest technological trendsetters. With a company as successful as Apple, a pressing question comes to mind: Are these lawsuits valid or are they frivolous attempts to extract money out of the leaders in innovation?

For example, David Jones from Los Angeles County filed a similar class action against Apple on March 27 in the U.S. District Court for the Central District of California. Mr. Jones makes similar legal claims against Apple, and specifically requests both treble and punitive damages in his relief.

On April 10, Fazio amended his original complaint in accordance with a court order. In the now consolidated class action complaint, Fazio is joined by three other plaintiffs and additional claims have been made--including alleged violations of the California False and Misleading Advertising Law, the Magnuson-Moss Warranty Act, breach of implied warranty of merchantability, and unjust enrichment--for a total of nine allegations.

Fazio alleges that Apple has sold some 33 million iPhone 4Ss during its fiscal 2012 first quarter alone. Viewed by many as the largest corporation in the world, it seems everyone wants a bite of the Apple (pun intended). Recent reports show that Apple's shares have risen by nearly 50% this year, and the company is now valued at some $565 billion.

A Place Called Beta

One of plaintiffs' claims in the consolidated class action alleges Apple knew Siri had "shortcomings" prior to its distribution. Plaintiffs claim Apple "buried" the disclosure in its website, which states, "Siri is currently in beta and we'll continue to improve it over time."

Which brings up interesting legal questions: What exactly is beta? What is a reasonable time for a new feature to be in beta, or a reasonable level of functionality a feature or product must meet before it is no longer in beta? When is it acceptable to market a feature or product in beta, and what kind of disclosure is legally sufficient?

Some courts have touched on the question of defining beta, although not extensively. For example, in a trademark infringement action decided March of last year, in addressing defendant's assertion that its application was in a "beta" version, the U.S. District Court for the District of Massachusetts stated (in a footnote no less), "It is unclear what "beta" means with respect to any limitations on [plaintiff's] application but the use of the term itself is unhelpful."

In another trademark infringement action decided in October of last year, the U.S. District Court for the Eastern District of Missouri also addressed the definition of beta, and determined (again in a footnote):

"According to 'beta' can refer to (1) the 2d letter of the Greek alphabet, (2) a beta particle, (3) a measure of the risk potential of a stock or an investment portfolio, or (4) a nearly complete prototype of a product (as software). The Court assumes that [plaintiff's] website refers to the ultimate meaning."

Clearly, and perhaps to the legal detriment of plaintiffs, Apple made a beta disclosure. But were Apple's disclosures enough? Only time and the federal court system will tell.

Innovation Under Attack?

Apple has made pioneering technology affordable and on-the-go for a large segment of the global market. In a little over a decade, Apple has produced three products--the iPod, iPhone, and iPad--that have virtually revolutionized a way of life.

Thanks to robust demand for the latest innovation, coupled with talented innovators' ability to develop new features at lightning speed, arguably all technology remains in beta. After all, companies like Apple that drive global innovation are continually seeking ways to improve their products and features and stay ahead of the market.

For now, all eyes are on Siri.

Your turn to weigh in: Do suits such as this discourage innovation, delay introduction of the latest technology into the marketplace, and drive up costs of new products and cutting-edge technology for consumers? Or do they call companies on the carpet regarding issues such as feature usability and marketing?

This article was originally published in BullsEye, an expert witness and litigation news blog published by IMS ExpertServices.

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