my argument supposes hardware to be IP as well.
Yes - and although the design of a computer - and of the chips which constitute it - is a big deal, and although the production of those chips and printed circuit boards is done via processes which are very similar to photographic copying, the computer is hardware.The argument of Phystar was essentially that OS X is hardware - a physical disk. The court's ruling was that even tho software may be stored on hardware, that hardware - the physical disk - is not OS X itself. And the traditional understanding, that software usage can be licensed subject to restrictions was upheld. Apart from restricting the license to a particular brand of computers, licensing may be more expensive on a mainframe and less expensive on a less capable machine.
Phystar was attempting to force Apple into Microsoft's business model of charging for the OS directly. Apple's business model is to sell the whole system, software and hardware. This has an advantage to the customer, in that Apple then takes system responsibility and doesn't point fingers at the hardware manufacturer or the software manufacturer - Apple is both.
Apple doesn't price OS X copies on the basis that OS X has to make money independent of the hardware it sells. In fact, Apple distributed Lion on line, no physical copy involved in the transaction. So Phystar's model for claiming that OS X copies are "hardware" would be defeated in that way.
OK, NOW I get it. Thanks for making sense out if it for me. ..Need sleep ;)