Apple v. Psystar Ping!
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Posted on 05/26/2009 2:54:56 PM PDT by 6SJ7
Unauthorized Mac clone maker Psystar has filed for Chapter 11 bankruptcy protection in Florida, temporarily slowing down Apple's legal case against it. The filing may be an indication that the company's financial backers have pulled out, signaling they see Apple as the clear winner in court.
The bankruptcy documents were filed with the Federal Courts in Florida on Thursday, and Apple's legal team was most likely made aware of the situation over the Memorial Day weekend.
The Florida court will hold a hearing on June 5 where Psystar's equity creditors will be revealed -- which means if there have been deep pockets behind the company's fight against Apple, those names will finally come out of the shadows.
Psystar's bankruptcy filing will temporarily slow down Apple's case in northern California because all legal actions involving the PC maker are automatically put on hold while the bankruptcy court begins its proceedings. The judge overseeing the case will, however, most likely lift that stay within a few months, allowing Apple's case to start moving forward again.
Apple hit Psystar with a lawsuit claiming the company was violating the Mac OS X licensing agreement with end users, and that it was violating the Digital Millennium Copyright Act with the steps it used to install the Mac operating system on PCs.
Despite Apple's claims that the company doesn't have permission to sell PCs with Mac OS X, and now its bankruptcy filing, Psystar is still offering Mac clones for sale on its Web site.
Even if Psystar has plans of continuing its battle against Apple to sell PCs with Mac OS X installed, it isn't in a strong position to move forward once the Judge overseeing its bankruptcy lifts the automatic stay since it doesn't likely have money to pay for its legal defense. Without the cash to pay its legal team, Psystar probably won't have anyone to represent it in court, and won't be in a position to defend itself against Apple.
This could get interesting.
Mac ping!
Psystar Bankruptcy ping.
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Nah, it was interesting for a while, but once the rumors that Psystar was some other larger company's "stalking horse" (see Linux/SCO/Microsoft/Baystar), the investors pulled out. The truth always comes out eventually.
Now it's just a clean-up operation.
Buh-bye, lame clone-maker, next time do your own engineering, or stay legal (preferably both)!
Ping to tech (I see that others have pinged Swordmaker/Mac)?
Actually let me revise my prior comment slightly. Yeah, it could be interesting if they let it slip that the previously-unheard-of investors are actually fronts for better-known names. But that will take time.
I notice that Groklaw has been following it:
Psystar has begun to fill in the blanks already. Friendly tip: the amended motion to continue using business forms lists the date of the bankruptcy as 2008, so more corrections are likely. The initial filing [PDF] lists 1-49 as the number of creditors, $0-$50,000 as their assets, and $100,000 to $500,000 as their estimated liabilities. They don't expect unsecured creditors to get a thing. They also checked the box that states that they are not "a small business debtor as defined in 11 U.S.C. Section 101(51D)."The creditors listed as owed the most, the top 20 creditors, are their attorney, Carr & Farrell, listed as owed $88,468.84, and may that be a lesson to them, the IRS, around $12,000, JAMS ADR, some more debt paid for by credit card, I gather (NCO Financial Systems, OCZ, TIMBAR), and -- heh heh -- $120,000 to Rodolfo Pedraza, President of Psystar, an "Officer loan", and finally folks like UPS, FED EX, and DHL.
I've seen a couple of articles claiming that at the hearing we'll find out who the investors were who were backing this adventure. However the same articles are saying that the investors have backed away, so both can't be so. If they have pulled out, Psystar will not have to list them in their filings, I don't think. That may be the point.I think this means we may never know.
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Has anyone pinged dennisw to let him know that he’s going to have to find someone else to “beat on Apple”... LOL...
The whole case revolves around what should be a rather simple bit of law - what does the Apple license agreement state in black-and-white? The fact of the matter is, regardless of if someone agrees with such license agreements or not - it says what it says. That is why, upon installation (and often in the software packaging as well) there is the step that requires you to agree to the language of the license agreement. Period.
Did Psystar violate the license agreement by installing Apple’s OS on non-Apple hardware - yes, without a doubt. Case closed.
Now - if one wants to fight Apple’s license agreement, then file suit against Apple and question the legitimacy of such license agreements in the first place. I don’t think that would win either - because to install Apple’s OS, you have to “trick” it by showing code that is found in Apple’s “OpenFirmware” - and is Apple Hardware exclusive. The only way to “fake” it is to reverse engineer it, or steal it (or both). That right there is another case of not only license agreements, but a direct violation of a BUNCH of proprietary workings.
Our resident Apple-haters will piss and moan for months about this -- totally predictable. Nothing will come of it but noise, of course, but they've gotta have their catharsis, by calling names and trashing anybody who gets in their way. They're fighting a losing battle against the law, and I'm sure it's frustrating.
As long as the law is on Apple's side (as I suspect it has been and will remain), the clone-makers are doomed to throw themselves at the same brick wall over and over.
The real story isn't about cloning, per se -- it is about the silent investors who fund these turkeys. Same deal as SCO going after Linux on Microsoft's behalf.
Follow the money.
Psystar’s bankruptcy attorney is about the sloppiest user of pre-fabbed forms I think I have seen. Apparently he has no proofreaders. There are multiple 2008/2009 errors including one that says Psystar filed on “May 21, 2008 2009.”
I think you just did...
I sure would like to see the information come out about who has been behind funding this company...
I seem to recall that Darl McBride became essentially incoherent along towards the end of SCO. Maybe it comes with the territory. ;-)
Unfortunately, if PJ at Groklaw is right (and she usually is), the withdrawal of the hidden investors just prior to bankruptcy means that they can stay hidden. Their names need not come out in discovery. See my comment #7.
I definitely share your curiosity, though!
In a bankruptcy, any financial dealing for one year prior to the filing can be reconsidered and even revoked, requiring repayment of the monies received back to the bankrupt debtor and the payee required to get in line with all of the other creditors wanting to be paid. I got hit by this several times when I was in business. I have a friend who has just been hit when his major customer (contracts in the high 6 figures) declared bankruptcy and the court required my friend to repay all funds paid to him in the last year for work done and join the line of creditors. It's pushed his company into bankruptcy as well!
Any investors that have "walked away" may still be considered on the hook to the creditors if it is deemed they were allowed to "preferentially" withdraw, leaving just debts they may be liable for... especially if they received any profit distributions.
I am certain that Psystar has been doing this as well... and may have also paid certain investors dividends (draws of the officers?) that should have been used to satisfy debts.
Psystar is doing just fine. All part of the game plan until Windows 7 comes out and blows Apple up. So delay until then I guess
There are clone makers waiting in the wings and if/when Jobs returns he be popping lots of Excedrin
Quit lying, Dennis.
Look at the real world.
Psystar is NOT doing just fine. Psystar's own Chapter 11 filing claims liabilities in the range of $100K to $500K and assets in the $0 to $50K range. Those liabilities do not include anything for potential loss of the Apple v. Psystar suit. I do not understand how they can even be considered for Chapter 11 reorganization. Their assets are far less than half their liabilities, they have less than that $50K in cash, some of their prime creditors are UPS, FED EX, and their credit card processing company. How in HELL could they continue in business and regroup? They don't even list current customer deposits for unshipped computers as liabilities yet their shipping companies have stopped providing service and their Credit Card company is owed thousands of dollars. In another filing, they claim they need protection from the court because their computer parts suppliers are refusing to ship to them due to debt... yet they do not list ANY of those suppliers on their list of creditors! Their attorneys for their lawsuit with Apple were PAID WITH CREDIT CARDS... which they cannot pay... as were the court required mediators. The guy they have filing their bankruptcy writes the legal papers as though he got his law degree in a box of Crackerjacks!
Their plea to the court to allow them to continue operating is a joke. They claim they have proprietary "intellectual property" that when properly implemented will allow them to come out of bankruptcy and into solvency. There has been no demonstrated "intellectual property" about ANYTHING that Psystar has done. What they have is either stolen or infringements on other's IP. They also claim that their suppliers, contrary to what they claimed in another filing, are raising prices on them due to the economy... while we all see DROPPING prices of computer hardware components.
It's another Psystar legal whirlwind whipping papers around in hopes that one will stick on the judge's nose so that he might rule in their favor.
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