Apple Crushes Clone Maker [Psystar] in Court

Businessweek ^ | November 14 | Stephen Wildstrom

[Swordmaker]

Apple won a sweeping legal victory against Macintosh clone maker Psystar Corp. Nov. 13 when a federal judge in San Francisco ruled (PDF, courtesy of Groklaw) that Psystar had violated Apple’s copyright and the Digital Millennium Copyright Act. Judge William Alsup struck what may be a death blow for Psystar by granting Apple’s motion for summary judgment while denying Psystar’s counterclaims.

The only real surprise here was the swiftness and thoroughness of Apple’s victory. Judge Alsup basically ruled that the OS X End User License Agreement (EULA), which prohibits the installation of the software on non-Apple hardware, is legal and means exactly what it says. It is just the latest in a long string of ruling upholding EULAs, sometimes called shrinkwrap or click-wrap licenses.

Judge Alsup sidestepped Psystar's claim that it was protected by the first sale doctrine, which generally gives the buyer of a protected work the right to resell it without the permission of, or any payment to, the copyright holder. The judge said first sale only applies to legal copies and that the way in which Psystar had modified the software to let it run on clones meant that the copies did not meet this standard. The judge rejected out of hand Psystar's claims that it made legal use of Apple's trademarks and that Apple has misued it copyrights.

A hearing on remedies is scheduled for Dec. 14. The order does not cover several other claims by Apple, including breach of contract and trademark infringement, but the ruling suggest that Apple would be heavily favored to win should the remaining case ever come to trial. There is also similar litigation pending in Florida, where Psystar is based.

[Frantzie]

I don’t like MSFT but I also do not like Apple groupies who sound like Obama voters in their fawning admiration.

[Swordmaker]

I guess you people never really dealt with Apple. The company is loaded with libs.

And the number 3 corporate donor to the Obama campaign was Microsoft...

[Swordmaker]

Two brothers get a MAC OS to run on clones and the Apple users call them terrorists. Prattle on about runing the Mac experince. Get a life. A lot of Apple’s stuff is overpriced. I am no Microsoft fan either.

Please provide a source for that claim or admit you made it up. I think that the worst you will find Apple users calling them is crooks, thieves, and criminals.

[Frantzie]

Get a grip. Mac users sound like Obama voters. I do not like either Apple or MSFT. They are a necessary evil. Sure sound like Mac users are encouraging monopolistic business practices like those used by MSFT, Intel and IBM.

The groupiedom sounds like Star Trek or Star Wars fans. It is just a freaking computer.

[Swordmaker]

Get a grip.

You're the one that seems to be frothing at the mouth.

It is just a freaking computer.

You know, I've NEVER heard a Mac user say that. I've heard lots of Windows PC users say it, though. I wonder why? Could it be that we Mac users have had experience with both?

[gardengirl]

I was late into the game, being busy with high school and then family and work. Never really got my hands on a pc until the early 90’s. Had never even considered a Mac until my computer geek bro, in reply to my constant whining about windoze driving me crazy, told me I needed a Mac. He’s never had one, but the more I looked into it the more I was sold.

If i ever get the money, my hubby is getting one too! LOL

I do a lot of writing, and I have never had any prob with my Mac. Nothing lost b/c windoze decided it needed to update or smack my hand b/c I held my mouth the wrong way.

My Mac just works, and that is indeed high praise. It’s like having a car with power everything, one that knows what you want almost before you do. Compared to an old clunker that you don’t trust and is always breaking down randomly for no reason.

[RightOnTheLeftCoast]

"Good to know that it’s actually cheaper my way now, lol."

Might not be cheaper today, but it was a couple weeks ago. RAM prices change by the hour, it seems. RAM's as much a commodity as oil today.

But perhaps contrary to what you've heard, Apple's prices are actually quite reasonable, considering what you're getting. The RAM for the machine you're considering is top-end in terms of speed and physical density. And Apples' prices for it are definitely competitive. You might do better elsewhere, you might not. It's worth shopping around, as installation is super-easy. But you won't be leaving much on the table if you let them install it, and it'll be covered under the AppleCare warranty (which I highly recommend in any case).

Your heavy use of Photoshop suggests your RAM dollars will be well-spent in any case. In my case, I use virtual machines all the time, and that's RAM-aholic usage too. You'll never regret having too much RAM!

[Defiant]

What do you doubt? That the cases will ulimately be decided in Miami (where the antitrust case is proceeding) and DC (where the FTC and Congress are headquartered, together with the DC Circuit?). Why? There was never any doubt what the US District Court in SF would do in this case. It is not in a position to declare Apple's license unenforceable, it is simply the court that interprets the license. Legal issues like that are for the courts of appeal. The 9th Circuit is screwy, but they will go with Apple. It will probably not get reviewed by the Supremes. There isn't much in a license that is "sexy", although the DMCA part might get their attention.

The biggest danger to Apple right now is in the Miami courtroom. The FTC and Congress will probably not want to go after a bleeding heart liberal organization like Apple, no matter what they think. MS got hammered because, in the Clinton era, it was apolitical. They didn't give money to anyone. Clinton taught Bill Gates that he has to play the game, and now, bingo, Gates Foundation, giving billions to liberal causes. Attaboy Bill!

So, your beloved Apple is probably safe for now, but still has some issues that need to be resolved. Psystar was always likely to lose; they are making money off of Apple's software without its permission. They are not consumers, they are piggy-backers. I have no love for them, but I am glad that someone is looking into Apple's practices. Some of them deserve to get knocked down.

[RightOnTheLeftCoast]

"Punks? Guess you don’t recall Jobs first product was to steal phone service."

You have a point. Fortunately he grew up. There is no finer businessman alive today.

[RightOnTheLeftCoast]

"A lot of Apple’s stuff is overpriced."

I wish people like you would put things in perspective, with actual examples rather than endlessly-repeated sound-bites borrowed from the zeitgeist.

Example: I have two laptops I use everyday. A MacBook Pro, about 3.25 years old, and an IBM/Lenovo T60p, almost 3 years old. Both are top-end configurations. The T60p has a slightly newer, faster processor. Both originally came with 100GB hard disks and now sport identical 320GB drives (the IBM's OEM unit failed at 2 years; I replaced the Mac's so I could have more space.) The Apple's display is superior. The IBM's keyboard is superior. The Apple's overall performance is way superior. The Apple's backlighting on the keyboard is superior to the IBM's LED at the top of the screen. No matter how hard I'm pounding it, the Mac is never unstable. It never gives me a Blue Screen of Death-- I'm not even aware of what the Mac equivalent of a BSOD is, because I've never experienced it. It is always fluid and responsive. I've never lost work on the Mac; I sure wish I could say the same about the Windows machine. The IBM crashes regularly if I do something dastardly and abusive like, oh, using it for more than 36 hours between reboots. The Mac never needs rebooting. The Mac sleeps and awakens instantly; the IBM would do so maybe three or four times at a time when it was young, then would start acting fluky and need rebooting. Now it doesn't sleep or hibernate at all, and no one can tell me why. When I need a question answered about my Mac, I go to the local Apple Store and talk with someone who knows a lot and speaks English. When I need a question answered about my IBM, I pray that the 800 number connects me to their North Dakota call-bank rather than Bangalore, and that the wait will be less than 20 minutes and I'm not forced to deal with some script-reading troll who won't listen to me. The IBM needs a virus checker and a firewall; both sap performance. The Mac doesn't. The IBM needs to have its disk drive defragged every month or so or it runs like a slug. The Mac doesn't. I had to pay for a good backup solution for the IBM; it needs to run overnight because it brings the computer to its knees. The Mac's built-in Time Machine backup utility runs automatically in the background and I never even notice it. Bought a new HP network printer; the Mac recognized it and "just worked." The Windows machine needed to be fed a CD which loaded up the machine with crapware and needed two reboots. The Mac has the "Spaces" capability with multiple desktops (I'm using six right now); the IBM doesn't.

And the IBM/Lenovo laptop cost more. Not a lot more, but more than enough to say that your contention is bunk.

[altair]

"It is just a freaking computer."

You know, I've NEVER heard a Mac user say that. I've heard lots of Windows PC users say it, though. I wonder why?

I am a programmer. I've been a programmer for about a third of a century. I've done everything from Unix and Linux kernel programming to building web sites. I value the tools of my trade. A lot.

In the past I've owned (or used) computers that had systems that I completely built myself, there were several versions of Steve/Linux including a port of Turbolinux 7 to DEC/Compaq Alpha. My interest into doing another Linux distro has dropped to 0 since I've been on a MacBook Pro.

I'm not ashamed to say that someone finally did Unix right. Mrs. Altair loves her MacBook too, but that's somewhat different.

[Swordmaker]

What do you doubt? That the cases will ulimately be decided in Miami (where the antitrust case is proceeding) and DC (where the FTC and Congress are headquartered, together with the DC Circuit?). . . . The biggest danger to Apple right now is in the Miami courtroom. The FTC and Congress will probably not want to go after a bleeding heart liberal organization like Apple, no matter what they think.

Yes, I very much doubt it will be ultimately decided in Miami except for a dismissal with prejudice. It is decided already. Psystar lost.

And what "anti-trust case?" Just because Psystar has changed the product from "OS X.5 Leopard" to "OS X Snow Leopard" and the monopolized economic market from "personal computers that run OS X" to "personal computers that sell for more than $1000," the issue is no different than the one that was already ruled negatively on in the California case and thrown out. That makes it res judicata, "the issue has been decided." It is therefore settled law and the cases the judge relied on to make his ruling span several circuits. The judge ruled that it is not possible for Apple to be found to be an illegal monopoly in its own products. That will not be appealed.

The DC circuit court has nothing to do with it. And Congress has nothing to do with it either unless you are proposing that Congress will pass a law to change the current state of law in re defining monopolies?

Quite frankly, I doubt the Florida case will be "proceeding" anywhere. I think that Judge William Hoeveler will look very poorly on Psystar's forum shopping and repetitive arguments once Apple responds. As of now, the only "proceeding" that has occurred is that Psystar has filed a complaint, summons to Apple have been issued, and Psystar has amended their complaint. In their complaint, Psystar re-iterates the exact same claims they used in the just concluded case in Federal Court in California... that Apple is illegally tying OS X.6 to Apple hardware (ruled against), that Apple is operating an illegal monopoly this time by creatively defining a new market of over $1000 computers, that Apple is illegally copyright to extend its rights (ruled against), that because Apple is illegally using its copyrights to extend its rights, Psystar is within its rights to break Apples technological encryption protections (ruled against). Thus everything in their case, except the product they are infringing in exactly the same manner as the product in the California case—which is essentially different in name only and is therefore irrelevant to their illegal acts—is again, res judicata, already judged. When Apple files its response, including the summary judgements from the Ninth Circuit on the VERY SAME ISSUES, Judge Hoeveler will NOT be pleased that his and his court's time have been wasted.

Legal issues like that are for the courts of appeal.

And they have... Judge Alsup cited several full circuit court rulings on the validity of Software Licenses and their relationship to the Doctrine of First Sale in making his ruling. Just because a lot of people want to believe that EULAs and SLAs have not been properly tested by the courts does not mean that is accurate. In fact, in almost every case, EULAs and SLAs have been upheld and found to be valid if properly written to make it explicit that it is a license not a sale of the software.

. . . but still has some issues that need to be resolved.

Yep... and it doesn't look good for Psystar on those either.

I have no love for them, but I am glad that someone is looking into Apple's practices. Some of them deserve to get knocked down.

Which practices would you knock down?

[antiRepublicrat]

I am saddened, not because I have any love for Psystar, but because the balance of copyright was just affirmed to have shifted more towards the producers. Too bad such a crappy company was defending our rights rather poorly.

Section 109 provides immunity only when copies are "lawfully made." The copies at issue here were not lawfully manufactured with the authorization of the copyright owner.

This judge just blew away the doctrine of first sale. All any copyright holder has to do is say "It's a license" and all your first-sale rights go bye-bye. As you'll see below, master disks are fair use, but ignored by the judge.

In addition, when Psystar turns on its computers running Mac OS X, another copy of the software is made to the random access memory. Psystar has thus infringed Apple's reproduction right.

This is another lock-down bit of logic. If it's thought you make a copy when running the program, rather than it being an understood basic functional necessity, then they have more power over you. Not only did you buy the program, but you need their permission to run it, otherwise you're making an unauthorized copy. This is just dumb.

When I read a book I make a copy in my eyes, did you know that? It's transitive, but then so is a RAM copy of a program.

While the process [hard drive imaging] used for "efficiency" was not the problem, the Sheriff Department's unauthorized copying of the software beyond the number of licensed copies was problematic. Similarly, Psystar's use of Mac OS X has been in excess and has violated Apple's copyrights.

I thought every Psystar system came with an original OS X disk. The judge says it's in excess, but I see no evidence for excess to equal the cited case. Psystar's interpretation should stand, but the judge just completely ignored precedent.

Psystar infringed Apple's exclusive right to create derivative works of Mac OS X. It did this by replacing original files in Mac OS X with unauthorized software files.

Now there I have to agree. What Psystar sold was a modification of OS X, a derivative, and therefore not purely first sale.

But even Judge Patel acknowledged that "no court has thus far articulated the boundaries of 'unduly restrictive licensing' or when licensing or other conduct would violate the amorphous concept of public policy."

Well, judge, here's your chance. Send a signal to the copyright cartel that they can no longer abuse their customers through restrictive licensing, and instead make them rely on plain-old copyright. Guess not though.

Then on to DMCA. Yeah, well, that's true. But then it's kind of circular: the copyright cartel paid for the law, and then of course those who try to exercise their rights will run afoul of it. And why is it that everybody forgets Section (f) of the DMCA, the part about reverse-engineering for interoperability being legal? There are a few good tidbits in the DMCA that you'd think would make it not so bad, but I have NEVER heard of a court basing a decision on these sections.

I hope Psystar appeals, and with a better lawyer next time.

[Defiant]

Man, there are PR flacks and senior legal counsel who make $200k who care less about this stuff than you do. You ought to at least ask for some of that blogger payola.

Say what you will, you are parroting the fanboy line.

[antiRepublicrat]

Microsoft has an interest in selling as many copies of Windows 7 regardless of what hardware they run on.

But one of the selling points Apple advertises is that Macs can run Windows. Microsoft gets to take down an Apple selling point, and only has to forego a tiny, tiny percentage of its sales of Windows.

[MediaMole]

By going after the OSX clone market, Psystar set themselves apart from the hordes of white box PC makers. We’ve all heard of Psystar, but who’s ever heard of the thousands of other shops making generic PCs.

Of course, they brought down a legal firestorm on themselves in the process.

[antiRepublicrat]

You should explain to people that a consistent and rigorous defense of copyrights, trademarks, and patents is part of the test in future court cases involving companies with intellectual property.

Trademarks can be lost by non-enforcement, but copyrights and patents always remain until they expire or are voluntarily given up. However, in the latter two, a clear history of non-enforcement can affect how much a copyright holder can expect to get for damages.

[dennisw]

. . . and now are also selling a bootloader CD. . .

Which is also in violation of the Digital Millennium Copyright Act of which this ruling found them in multiple violation. AND it is inducement to breach of contract which is still scheduled for trial in California. . .

Apple has a real racket going on there where it always seem to get its Psystar trials venue in California even though the alleged crime takes place in Florida. Apple would lose in a Florida court. Corrupt California judges have every incentive to rule for Apple there because the Digital Millennium Copyright Act also is utilized in California courts by the scummy lawyers at RIAA and Hollywood. California benefits from the Digital Millennium Copyright Act more than any other state since it is center of the world's "entertainment industry". It's interesting that our traditional industries such as steel and automobile making never got one ounce of protection from foreign competition but Microsoft/Apple/Hollywood were able to get corrupt bribed (canpiagn donations) Democrat Congressmen to pass such legislation anti competition legislation

Steel and autos are real industries producing real useful items while Hollywood just churns out fantasies that get darker and more ridiculous every year. Plus lets face facts that the computers Apple sells are primarily entertainment machines for music, video and screwing around on the internet. Dittos for the iPod. 
Microsoft's software is used for the same entertainment factors ......facebook, you tube etc. At least MS makes business software to redeem itself

 

[antiRepublicrat]

The Software Licenses have been upheld too many times to be appealed... and now there is a STRONG precedent for the Miami case.

Court are mixed. Vernor v. Autodesk smacked down Autodesk's attempt to kill first sale. UMG v. Augusto stopped another attempt to use licenses to kill first sale (although with music rather than software). Other courts, not so nice to the consumer. In general, the 7th and 8th circuit appeals courts are the worst for the consumer (licenses can be enforced for anything), and the 3rd and some districts are friendlier (software is sold, not licensed).

[dennisw]

Does not negate the fact that for every Psystar clone sold and for every Psystar boot loader sold, California is losing taxes it gets from Apple. And Apple is a big money maker and tax payer in tax starved California which just might run a 25 billion dollar deficit this year