FORTUNE — The first rule of law, goes the old lawyers joke, is that if the facts are against you, you argue the law. The second rule is that if the law is against you, you argue the facts.
The government has set out to prove, through a series of e-mail exchanges and telephone logs, that Apple served as the “ringmaster” of a conspiracy to raise the price of e-books — a “per se” violation of the Sherman antitrust act.
Apple, drawing on more than a century of case law, hopes to show that what Apple did is the kind of activity the Sherman Act was designed to encourage and that subsequent Supreme Court decisions have explicitly protected.
If nothing else, you had to admire the legwork the government put into its case. Its investigators seemed to have vacuumed up every e-mail, every telephone call, every text message exchanged between Apple and the five so-called publisher defendants — 834 exhibits in all. The DOJ logged over 100 phone calls between the publishers in a six-week period and displayed them in a bar graph (right) — strong evidence, it said, that the competitors (who have since settled) were engaged in a “horizontal agreement” to fix e-book prices.
To tie Apple to that alleged conspiracy, the government followed every move of Eddy Cue, Apple’s point man in the negotiations, and trotted out the by now familiar Steve Jobs quote from Walter Isaacson’s biography:
While the government was assembling these facts, Apple’s attorneys were hitting the law books. Among the points lead counsel Orin Snyder made in his opening argument:
- The agency model and the so-called most-favored nation clause Jobs was describing are widely used in business and have never been found illegal.
- The Supreme Court has ruled that distributors have legitimate, pro-competitive reasons to discuss prices with manufacturers. (See excerpt, right.)
- The Court is increasingly hostile to antitrust claims against parties with “vertical” relationships like Apple’s to the publishers.
- The Toys “R” Us case that the government cites when it calls Apple the “ringmaster” bears no relation to this one. Toys “R” Us was the dominant distributor and bullied toy manufacturers into boycotting its competitors. Apple was starting from scratch and gave the publishers something they wanted.
- Although the government claims Apple is guilty of a “per se” (on the face of it) violation of the antitrust act, its evidence fails every test of the per se rules.
- “No case in the history of the antitrust laws,” Synder concluded, “has imposed liability on a new entrant facing a dominant player with a 90% market share.” Especially when its entry seemed to have pro-competitive effects (see Apple’s slide, above).
Given the nature of Apple’s defense, it’s not hard to see why Snyder objected so strenuously Monday to District Court Judge Denise Cote tentative conclusion, offered in open court two weeks ago, that seemed to stack the deck against his client:
Judge Cote interrupted Snyder to defend her remarks. But given that Apple is arguing the law, not the facts, her final words on the subject offered little comfort: