[Updated 8/04] Apple Sues Unauthorized Clone Maker Psystar

[Cara Veteran]

July 16, 2008

Apple wants Psystar to snatch back Mac clones from customers

http://blogs.zdnet.com/hardware/?p=2248

Engadget's summary of the filing:

Copyright infringement: According to Apple, Psystar modified and redistributed OS X without a license, so straight copyright law applies. This is probably a winning argument -- even if the EULA (which forbids modification and redistribution) is held invalid, redistributing a modified copyrighted work is a big no-no.

Contributory and induced copyright infringement: As we pointed out a while back, by building a business model around the knowing copyright infringement of its customers, Psystar is probably liable for contributory copyright infringement -- this is the same principle that MGM v. Grokster was decided upon back in 2005.

Breach of contract: This is the EULA violation claim. Contrary to what you may have read elsewhere, EULAs in general have been tested in courts many times and have been held enforceable in several states, including Florida, where Psystar is located. In addition, EULAs are currently valid in the federal Ninth circuit, where Apple's brought suit. It's true that there are some cases holding that EULAs are unenforceable and the Apple's Leopard EULA has never been litigated specifically, but this claim isn't nearly as shaky as it's been made out to be -- it's just not a big money-winner like a copyright claim.

Inducing breach of contract: Apple says Psystar "advised, encouraged, and assisted others" in violating the EULA. Considering that's the heart of Psystar's business, we'd say this one lives and dies with the main EULA claim.

Trademark infringement: Apple has registered trademarks on both "Mac OS" and "Leopard," and it says that Psystar infringed those marks when it advertised that the Open Computer could run "Mac OS Leopard" in a way that made it seem like it was an official product. We're not convinced that this is the strongest claim -- Psystar was basically marketing itself on defiance of Apple, not any kind of official support -- but we can see how a court would buy it, especially since Apple makes a big deal of how Psystar's subpar machines were causing harm to the OS X brand.

Trade dress infringement: This one is pretty interesting, actually -- Apple says that the Mac OS X user interface is well known to consumers and has become associated with Apple to the point where it is protectable trade dress -- and that Psystar infringed on Apple's trade dress rights when it shipped Open Computers that contained OS X. It's around this point where you get the sense that Apple's going for the jugular -- there's no way that any damages Apple gets from Psystar are going to cover the additional cost of litigating a claim like this.

Trademark dilution: Dilution is a special trademark protection reserved for "famous" brands -- Apple undoubtedly qualifies. It's a complicated doctrine, but basically Apple says that by using its trademarks, Psystar caused damage to its brand.

State unfair competition: Apple says Psystar violated California law by infringing its copyrighted works, specifically the California Business and Professions Code. We're not up on our California law -- any readers want to flesh this out for us? We'd say it's just a failsafe claim to at least get an injunction in case everything else gets thrown out.

Common law unfair competition: This is basically the same as the state unfair competition claim, only based on a different set of doctrines.

That's quite a set of claims -- and it's probably enough to at least get an initial injunction against Psystar while the case heads to court. In the end, though, Apple wants an injunction against the further sale of Psystar boxes in addition to asking for the recall of every Psystar machine sold (which would be fairly unusual if granted), a dizzying array of monetary damages, and its attorney's fees and costs -- which alone would probably bankrupt Psystar. For its part, Psystar has been saying all along that Apple's refusal to allow OS X to run on non-Apple hardware is a violation of antitrust laws and that it's got a "team" of lawyers at the ready, so it should be interesting to see how this all plays out.

http://www.engadget.com/2008/07/16/apples-...ystar-examined/

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Previous Information

Apple Inc. is fed up with a small Florida-based firm that has been selling its own brand of computers running hacked versions of the Mac OS X operating system and has finally slapped the company with a lawsuit.

The Mac maker filed a formal complaint in the U.S. District Court for the Northern District of California on July 3rd, just one day after Psystar began distributing a modified version of the Mac OS X 10.5.4 Leopard update to customers who had previously purchased one of its unauthorized Mac systems.

While details of the suit are unclear at this time, AppleInsider has learned that Apple and its counsel at Townsend and Townsend and Crew LLP filed the suit on grounds of copyright infringement.

In April, Psystar made headlines when it announced a $400 desktop dubbed OpenMac (later renamed Open Computer) which was described as "a low-cost high-performance computing platform" based on the ongoing OSX86Project -- a hacker-based initiative aimed at maintaining a version of the Mac OS X operating system for everyday PCs.

A representative for the company, identified only as Robert, would later go on record and challenge Apple to bring formal charges against his firm, arguing that the Mac OS X end-user license agreement, which prohibits third-party installations of Mac OS X on non-Apple hardware, stands in violation of antitrust laws.

"What if Microsoft said you could only install Windows on Dell computers?," he said. "What if Honda said that, after you buy their car, you could only drive it on the roads they said you could?"

With Apple remaining largely silent on the matter, Psystar last month continued to taunt the Mac maker by aggressively staking its claim as the lone company outside of Apple selling Mac OS X systems, unveiling a pair of Xserve-like rackmount computers unofficially based on Mac OS X Leopard Server.

As part of its unauthorized Mac clone business, Psystar has promised to provide customers with altered versions of Mac OS X system updates for its Open Computing products shortly after Apple releases official versions for its own systems.

http://www.appleinsider.com/articles/08/07...er_psystar.html

About bloody time. :p

[giga Veteran]

Copyright infringement on the 10.5.4 update definitely makes sense.

[Cara Veteran]

Copyright infringement on the 10.5.4 update definitely makes sense.

The question I have to ask is...will this trickle down to X86 as well given the fact that there are modification of files going on that too. Hrm...this could get interesting and furry quickly.

[simsie]

If Apple's Our OS on Our Hardware policy is against the law then I reckon Apple will lose.

[afusion]

Apple is too late anyway..

[Cara Veteran]

If Apple's Our OS on Our Hardware policy is against the law then I reckon Apple will lose.

I think legal is going after the fact that X86/Pystar modify original Apple System Files at some point or another to insure compatibility, this would be illegal given it's unauthorized modification/use of Copyrighted data.

As for the EULA, that might also come into play before the end of this trial and set the de-facto standard one way or the other. :)

Pystar's site has gone completely offline now...

Database Error: Unable to connect to the database:Could not connect to MySQL

[HawkMan]

This is where the US has to decide wether MS get's to do what they want, or wether Apple has to actually treat their customers as actual customers. No more treating companies differently.

[Fabian-]

Pystar's site has gone completely offline now...

It's up for me :p

This will be interesting....

[tomwarren Veteran]

I hope Apple lose, they shouldn't restrict people to have to purchase hardware as well as software. If people wanna run this on PCs then let them and start selling it properly, cash in!

[sundayx Veteran]

Nice sig Cara.

[Steven P. Administrators]

This is why Microsoft will always have the larger market share, because unlike Apple many mobile vendors can license Windows Mobile to run on their phones, as with Windows. The upset of that deal is only (of course) the quality of the hardware delivered with Microsoft software (of which some are certified, and others aren't).

People keep making the mistake of blaming Microsoft for the short-comings of the hardware, but in all fairness, when you buy cheap crap, don't expect much.. There are many vendors that are certified to carry Microsoft software that also work as well (or better) than Apple's own hardware setups.

[bdsams Veteran]

This is where the US has to decide wether MS get's to do what they want, or wether Apple has to actually treat their customers as actual customers. No more treating companies differently.

Exactly, This case is going to be a lot bigger than what first appears. Why, software modifcation is an untested ground for copyright infringment. Is it illeagle to take legally boughten software and modify it for your own use as that is essnetially what Pystar is banking on...remeber, they sell you a sealed box of OSX.

This could have effects on the EULA, is that allowed? Can you really tell someone who buys software that they cant do what they want with it? Sure you can cut off support but whose to say that you cant do what you want with it....Im really interested to see how this plays out, although it will be for many years

[DrunkenMaster]

I would think Apple should have filed a cease-and-desist order as soon as was known that Pystar was selling these systems.

That said, if Apple loses the case, their whole business model save for iPod/iTunes is completely screwed. Only question is, can Pysatr sustain the Apple legal team's pockets?

[Dev Null Zen]

Exactly, This case is going to be a lot bigger than what first appears. Why, software modifcation is an untested ground for copyright infringment. Is it illeagle to take legally boughten software and modify it for your own use as that is essnetially what Pystar is banking on...remeber, they sell you a sealed box of OSX.

This could have effects on the EULA, is that allowed? Can you really tell someone who buys software that they cant do what they want with it? Sure you can cut off support but whose to say that you cant do what you want with it....Im really interested to see how this plays out, although it will be for many years

I completely agree. This could very well change the entire face of the software industry.

[bdsams Veteran]

I would think Apple should have filed a cease-and-desist order as soon as was known that Pystar was selling these systems.

That said, if Apple loses the case, their whole business model save for iPod/iTunes is completely screwed. Only question is, can Pysatr sustain the Apple legal team's pockets?

Exactly, their idea of being a closed hardware system is what is up for play here...loose this case and many more vendors can spring up selling Mac clones

Another point (before my boss comes by!) There is no piracy taking place. Its not like your stealing a copy of OSX, you buy it and have it modified to run on your system. Apple cant claim that they are loosing money. Sure, they could say that the hardware is a loss, but in fact its not as any consumer can go buy the same parts from Newegg and build his own Mac clone, slap on OSX and be done with it

[Cara Veteran]

I hope Apple lose, they shouldn't restrict people to have to purchase hardware as well as software. If people wanna run this on PCs then let them and start selling it properly, cash in!

We've covered many reasons why this isn't a valid business practice for Apple before...consider the entire Hardware business. :)

Nice sig Cara.

Thanks.

This is why Microsoft will always have the larger market share, because unlike Apple many mobile vendors can license Windows Mobile to run on their phones, as with Windows. The upset of that deal is only (of course) the quality of the hardware delivered with Microsoft software (of which some are certified, and others aren't).

People keep making the mistake of blaming Microsoft for the short-comings of the hardware, but in all fairness, when you buy cheap crap, don't expect much.. There are many vendors that are certified to carry Microsoft software that also work as well (or better) than Apple's own hardware setups.

Actually boss, I'm going to agree with you on the first part. The Openness, oh my God did I just call Windows open, of being able to load Windows / Windows Mobile on any device on the planet has lead to a wide spread adoption... Apple keeping their platform closed has lead to a better user experience, however, a much smaller section of the market.

I also agree people blame Microsoft for the wrong reasons, Windows runs GREAT on a Mac, it isn't always the code that is to blame...

Exactly, This case is going to be a lot bigger than what first appears. Why, software modifcation is an untested ground for copyright infringment. Is it illeagle to take legally boughten software and modify it for your own use as that is essnetially what Pystar is banking on...remeber, they sell you a sealed box of OSX.

This could have effects on the EULA, is that allowed? Can you really tell someone who buys software that they cant do what they want with it? Sure you can cut off support but whose to say that you cant do what you want with it....Im really interested to see how this plays out, although it will be for many years

I agree that this is a huge case...however something tells me Legal sat back on their hands for the length of time that they did in order to make this an airtight case...I suppose we'll see. Keep in mind however that though they may sell a copy of sealed Mac OS X, the copy installed on the computer has to be modified in order to process updates and that in this case the updates come from Pystar and not Apple...thus there is the unauthorized use of copyrighted materials angle since Apple doesn't license their software patches for redistribution.

[SakuraKira]

Psystar is based in Miami, where I live. Some time ago there was an article about them in the local paper. I knew it would only be a matter of "when", and not "if", Apple would bring on the lawyers.

[bdsams Veteran]

I agree that this is a huge case...however something tells me Legal sat back on their hands for the length of time that they did in order to make this an airtight case...I suppose we'll see. Keep in mind however that though they may sell a copy of sealed Mac OS X, the copy installed on the computer has to be modified in order to process updates and that in this case the updates come from Pystar and not Apple...thus there is the unauthorized use of copyrighted materials angle since Apple doesn't license their software patches for redistribution.

Your probably right on this, they will go for the redistribution aspect...but again, if they dont go for the other side of it, you will see other companies pop up

[rajputwarrior]

I hope Apple lose, they shouldn't restrict people to have to purchase hardware as well as software. If people wanna run this on PCs then let them and start selling it properly, cash in!

I completely agree. This could very well change the entire face of the software industry.

i don't know about that. I can't see psystar winning. I personally think this case will be pretty easy one for apple. they have a EULA, before you can use their software or hardware you have to agree with it. Its backed legally in many countries and if you break it they have a right to go after you and what you are doing is technically illegal. I don't see how this case is going to be anything significant

[AgEnTsMiTh]

The question I have to ask is...will this trickle down to X86 as well given the fact that there are modification of files going on that too. Hrm...this could get interesting and furry quickly.

It will not trickle down to X86 at all. This has to do with a company making money off there property. If someone released software you have to purchase to run OSX on X86 then we can talk.

[revvo]

That should send a message to Apple: Start targeting customers with affordable Apple computers, because you got a huge market there that is dominated by Dell and the others, and with Vista ****ing them off, you can better easily steal these customers if y our PC's were cheaper and didn't suck, meaning no stupid "all in one" impossible to upgrade iMac or overheating mac mini with not enough ram or a $2000 heatsink (macbook pro).

Apple's alive because of their hardware sales, and ipods. There is nothing special in their hardware. it's either cheap or overpriced.

[Soldiers33]

That should send a message to Apple: Start targeting customers with affordable Apple computers, because you got a huge market there that is dominated by Dell and the others, and with Vista ****ing them off, you can better easily steal these customers if y our PC's were cheaper and didn't suck, meaning no stupid "all in one" impossible to upgrade iMac or overheating mac mini with not enough ram or a $2000 heatsink (macbook pro).

Apple's alive because of their hardware sales, and ipods. There is nothing special in their hardware. it's either cheap or overpriced.

that hardly meant any sense, or maybe im just not reading it right since its so hot.

[Brian M. Veteran]

Personally, I think that Pystar will win this.

It has already been decided that Apple's EULA which limits software to Apple Machines violates Antitrust laws, and is therefore rendered invalid. Also, EULAs are a civil, not a legal issue.

[giga Veteran]

This isn't about the eula as far as I know--it's about Psystar distributing modified 10.5.4 updates.

[Cara Veteran]

Personally, I think that Pystar will win this.

It has already been decided that Apple's EULA which limits software to Apple Machines violates Antitrust laws, and is therefore rendered invalid. Also, EULAs are a civil, not a legal issue.

I'm surprised how many people think Apple would sue only under the EULA...I'm seriously feeling the entire Copyright Infringement / Illegal Distribution angle here. :)