Apple Inc

The proceeding concerned a dispute between Apple Inc and the Australian Competition and Consumer Commission (ACCC). The ACCC alleged that Apple engaged in misleading or deceptive conduct in contravention of the Australian Consumer Law (ACL) by representing to consumers that they needed to purchase a new Apple device to restore their iPhone if it became unresponsive or entered "error mode". The matter came before Justice Nicholas Smith of the Federal Court of Australia.

The central legal issue before the Court was whether Apple's conduct in its communications with consumers regarding iPhone restoration constituted misleading or deceptive conduct under section 18 of the ACL. Specifically, the Court was required to determine if the representations made by Apple implied that the only way to resolve an unresponsive iPhone was to purchase a new device, thereby failing to disclose that a free software restore option was available.

Justice Nicholas Smith found that Apple had engaged in misleading or deceptive conduct. His Honour reasoned that the information provided to consumers by Apple's customer service representatives, when taken as a whole, created an impression that a new device was the only solution to an unresponsive iPhone. The Court considered that the failure to mention the readily available and free software restore option was a material omission that led consumers to believe they had no alternative but to purchase a new device, when this was not the case. The legal principle applied was that conduct is misleading or deceptive if it has the capacity to lead a significant number of consumers into error.

The Court ordered that Apple pay a pecuniary penalty of $9 million and be restrained from engaging in similar conduct for a period of three years. Apple was also ordered to pay the ACCC's costs.