Apple's motion to dismiss a lawsuit seeking $1.2 billion in damages because the iPhone was locked to AT&T’s wireless network has been dismissed by Judge James Ware of the United States District Court for the Northern District of California.

The judge ruled that Apple and AT&T violated the Sherman Antitrust Act by offering customers an agreement that would lock them inside AT&T for five years (three years past the advertised two-year agreement). The judge also denied Apple’s motion to dismiss the computer trespass claim.

The suit was filed on behalf of Paul Holman in the State of Washington and Lucy Rivello in California. It alleges that Apple's iPhone 1.1.1 software update had been specifically released to disable unlocked devices. According to the suit, “Applying the update would 'brick' any phone that was unlocked or unauthorized by Apple and AT&T,” reports Macworld. However, Apple took into consideration and warned “unlocked” users that the update could render the iPhone inoperable when future updates would be applied, and it did so days before the update was released.

The suit contained a section charging Apple under the Magnuson-Moss Warranty as well. According to the same source, Act. Magnuson-Moss has warrantors disclosing warranty terms “clearly and conspicuously [...] in a single document in simple and readily understood language.” The court denied Apple's motion to dismiss this as well, and ruled that even though Apple warned iPhone owners of the risks involved by applying software update 1.1.1, “such a later disclaimer runs afoul of the single document rule.”

Apple’s motion to dismiss the computer trespass claim was also denied. While Apple upholds that the trespass claim only applies when there is an uninvited intrusion into a user’s computer, the court ruled that, even with Apple's warning, plaintiff's claims “could not be conclusively dismissed.”

Apple was, nevertheless, granted one motion to dismiss a charge, namely that of unfair and deceptive trade practices.

Lastly, Judge James Ware refused AT&T’s “motions to compel arbitration, a motion to dismiss and a motion to stay discovery,” the same report reads.

Other reports reveal that Apple may be “forced” to open up the iPhone for more third-party applications, something it doesn't feel too strongly against. AT&T, on the other hand, would have little to gain from this.