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Apple, AT&T Sued Again Over iPhone Exclusivity

Complaints over Apple Inc.'s (AAPL) use restrictions and recent software update for the iPhone have erupted in two lawsuits alleging Apple and its carrier partner, AT&T Inc. (T), engaged in illegal monopolistic behavior.

Two separate lawsuits were filed Friday in San Jose — one in federal court and the other in state court and both seeking class-action status.

The federal case accuses the companies of unfair business practices and violations of antitrust, telecommunications and warranty laws. The state case raises some of the same allegations.

Apple spokeswoman Susan Lundgren and AT&T spokesman Mark Siegel both declined to comment on them Wednesday.

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The federal case was filed by the firms of Hoffman & Lazear in Oakland and Folkenflik & McGerity in New York on behalf of iPhone owners Paul Holman and Lucy Rivello. The state case was filed by Saratoga attorney Damian Fernandez on behalf of California resident Timothy Smith.

AT&T is the exclusive carrier in the U.S. for Apple's iPhone.

By not allowing consumers to modify their iPhones to work on other carrier networks, the two companies conspired from the beginning of their partnership to maintain a monopoly, the federal lawsuit alleges.

The companies are unlawfully restricting consumer choice by preventing users from "unlocking" their iPhones, and Apple intentionally disabled unofficial third-party programs or rendered unlocked phones useless with its software update, the lawsuit alleges.

Apple issued the update Sept. 27 after warning users that any ensuing damage to iPhones with unauthorized modifications was not covered by the product's warranty.

It is unclear how many iPhones were disabled or how many iPhone owners have modified their handsets.

Some hacker communities estimated that thousands of people have downloaded their "unlocking" programs, while AT&T's Siegel says the company has heard from "very few" customers that have done so.

The federal lawsuit stated it didn't know how large the affected class could be but pegged the number at 100 or more and anticipates "there will be millions."

Apple has sold more than 1 million iPhones since they hit the market June 29.