No. 15- IN THE Supreme Court of the United States APPLE INC., Petitioner, v. UNITED STATES OF AMERICA, et al., Respondents. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT PETITION FOR A WRIT OF CERTIORARI THEODORE J. BOUTROUS, JR. SETH P. WAXMAN GIBSON, DUNN Counsel of Record & CRUTCHER LLP WILMER CUTLER PICKERING 333 South Grand Ave. HALE AND DORR LLP Los Angeles, CA 91030 1875 Pennsylvania Ave., NW Washington, DC 20006 A. DOUGLAS MELAMED (202) 663-6000 STANFORD LAW SCHOOL [email protected] 559 Nathan Abbott Way Stanford, CA 94305 ADDITIONAL COUNSEL LISTED ON INSIDE COVER DANIEL G. SWANSON PAUL R.Q. WOLFSON BLAINE H. EVANSON LEON B. GREENFIELD GIBSON, DUNN PERRY A. LANGE & CRUTCHER LLP ARI J. SAVITZKY* 333 South Grand Ave. WILMER CUTLER PICKERING Los Angeles, CA 91030 HALE AND DORR LLP 1875 Pennsylvania Ave., NW CYNTHIA E. RICHMAN Washington, DC 20006 GIBSON, DUNN & CRUTCHER LLP MARK C. FLEMING 1050 Connecticut Ave., NW WILMER CUTLER PICKERING Washington, DC 20036 HALE AND DORR LLP 60 State Street Boston, MA 02109 QUESTION PRESENTED In 2010 Apple launched the revolutionary iPad, and with it, the iBookstore, an innovative retail platform; together, they disrupted Amazon’s dominant position in the e-books market. Apple entered with a new agency business model, concluding vertical arrangements with e-book publishers that included commonplace provi- sions that are often procompetitive and unquestionably served Apple’s legitimate business objectives in offer- ing consumers a new e-books platform. Yet a divided court of appeals panel condemned Apple’s conduct as per se unlawful under Section 1 of the Sherman Act be- cause its vertical activities supposedly facilitated hori- zontal collusion among the publishers, who wished to be free from Amazon’s dominance. The panel majority de- clined to follow this Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), which instructed that such vertical conduct must be analyzed under the rule of reason, and also re- jected another circuit’s decision that properly followed Leegin. The question presented is: Whether vertical conduct by a disruptive mar- ket entrant, aimed at securing suppliers for a new retail platform, should be condemned as per se illegal under Section 1 of the Sherman Act, rather than analyzed under the rule of reason, because such vertical activity also had the alleged effect of facilitating horizontal col- lusion among the suppliers. (i) PARTIES TO THE PROCEEDING Petitioner is Apple Inc., a defendant-appellant in the court of appeals. Respondents, and plaintiffs-appellees in the court of appeals, are the United States of America; the State of Texas; the State of Connecticut; the Commonwealth of Puerto Rico; the State of Utah; the State of Alabama; the State of Alaska; the State of South Dakota; the State of North Dakota; the District of Columbia; the State of Indiana; the State of Arizona; the State of Tennessee; the State of Nebraska; the State of Michi- gan; the State of Colorado; the State of Vermont; the Commonwealth of Massachusetts; the State of Illinois; the State of West Virginia; the State of New Mexico; the State of Iowa; the Commonwealth of Virginia; the State of Kansas; the State of Maryland; the State of New York; the State of Idaho; the State of Missouri; the State of Arkansas; the State of Ohio; the State of Louisiana; the Commonwealth of Pennsylvania; the State of Wisconsin; and the State of Delaware. Defendants-appellants in the court of appeals, who are not petitioners here, are Simon & Schuster, Inc.; Simon & Schuster Digital Sales, Inc.; Verlagsgruppe Georg Von Holtzbrinck GmbH; and Holtzbrinck Pub- lishers, LLC, DBA Macmillan. Defendants in the dis- trict court, who are not petitioners here, are Hachette Book Group, Inc.; HarperCollins Publishers L.L.C.; and The Penguin Group, a Division of Pearson PLC, Pen- guin Group (USA), Inc. (ii) CORPORATE DISCLOSURE STATEMENT Petitioner Apple Inc. has no parent corporation. To the best of Apple’s knowledge and belief, and based on public filings with the Securities and Exchange Com- mission, as of October 26, 2015, no publicly held corpo- ration owns 10% or more of Apple’s stock. (iii) TABLE OF CONTENTS Page QUESTION PRESENTED ............................................... i PARTIES TO THE PROCEEDING .............................. ii CORPORATE DISCLOSURE STATEMENT ............ iii TABLE OF AUTHORITIES .........................................vii INTRODUCTION .............................................................. 1 OPINIONS BELOW .......................................................... 4 JURISDICTION ................................................................. 4 STATUTES INVOLVED ................................................. 4 STATEMENT ..................................................................... 4 A. The E-Books Market Before Apple’s Entry ....................................................................... 5 B. Apple Develops The iBookstore And Enters The Market ............................................... 6 C. Proceedings Below .............................................. 10 REASONS FOR GRANTING THE PETITION ...........13 I. THE DECISION OF THE COURT OF APPEALS CONFLICTS WITH DECISIONS OF THIS COURT AND CREATES A CIRCUIT SPLIT ................. 13 A. Application Of The Per Se Rule To Apple’s Vertical Conduct Conflicts With This Court’s Decision In Leegin And Creates A Circuit Split .............................. 14 B. Application Of The Per Se Rule To The Novel Circumstances Of This Case Also Conflicts With This Court’s Precedents ........... 18 (v) vi TABLE OF CONTENTS—Continued Page C. The Second Circuit’s Reasons For Ap- plying The Per Se Rule Are Flawed And Inconsistent With This Court’s Antitrust Jurisprudence .................................... 20 II. THE QUESTION PRESENTED IS EXCEED- INGLY IMPORTANT TO THE NATIONAL ECONOMY ..................................................................... 28 CONCLUSION ................................................................. 35 APPENDIX A: Opinion of the United States Court of Appeals for the Second Circuit, June 30, 2015, as amended July 2, 2015 ........................................................................... 1a APPENDIX B: Opinion of the United States District Court for the Southern District of New York, July 10, 2013 ..................... 121a vii TABLE OF AUTHORITIES CASES Page(s) Barry Wright Corp. v. ITT Grinnell Corp., 724 F.2d 227 (1st Cir. 1983) ....................................... 25 Broadcast Music, Inc. v. Columbia Broad- casting System, Inc., 441 U.S. 1 (1979) ............. 20, 25 Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993) .......................... 25 Business Electronics Corp. v. Sharp Elec- tronics Corp., 485 U.S. 717 (1988) ................... passim California Dental Ass’n v. FTC, 526 U.S. 756 (1999) ............................................................... 20, 26 Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977) ..................................... passim Denny’s Marina, Inc. v. Renfro Produc- tions, Inc., 8 F.3d 1217 (7th Cir. 1993) ..................... 27 FCC v. Fox Television Stations, Inc., 132 S. Ct. 2307 (2012) ........................................................ 30 In re Insurance Brokerage Antitrust Liti- gation, 618 F.3d 300 (3d Cir. 2010) ........................... 18 In re Musical Instruments & Equipment Antitrust Litigation, 798 F. 3d 1186 (9th Cir. 2015) ................................................................ 18, 28 In re Online Travel (OTC) Co. Hotel Booking Antitrust Litigation, 997 F. Supp. 2d 526 (N.D. Tex. 2014) .................................. 32 In re Southeastern Milk Antitrust Litiga- tion, 739 F.3d 262 (6th Cir. 2014) ............................. 23 viii TABLE OF AUTHORITIES—Continued Page(s) In re Sulfuric Acid Antitrust Litigation, 703 F.3d 1004 (7th Cir. 2012) .................. 19, 20, 32, 33 Interstate Circuit v. United States, 306 U.S. 208 (1939) ............................................................ 33 Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (1959) ......................................... 14, 26, 28 Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007) ...................... passim Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) ............................................................................ 32 Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752 (1984) ......................................... 24, 25, 30 Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284 (1985) ............................................................ 25 Pacific Bell Telephone Co. v. Linkline Communications, Inc., 555 U.S. 438 (2009) ............................................................................ 30 Somers v. Apple, Inc., 729 F.3d 953 (9th Cir. 2013) ...................................................................... 25 State Oil Co. v. Khan, 522 U.S. 3 (1997) ................ passim Toledo Mack Sales & Service, Inc. v. Mack Trucks, Inc., 530 F.3d 204 (3d Cir. 2008) ....................................................... 3, 13, 17, 18, 23 Town of Concord v. Boston Edison Co., 915 F.2d 17 (1st Cir. 1990) ................................................ 30 ix TABLE OF AUTHORITIES—Continued Page(s) Toys “R” Us, Inc. v. FTC 221 F.3d 928 (7th Cir. 2000) ...................................................