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

[rajputwarrior]

^^^ Doesn't Intel work closely with Apple and give them priority? Including first access and release of new designs, like the CPU used in the Air?

priority may be one thing. Who knows, apple may have paid some of the development costs for the specialized chip. Apple also got the core duo first and that made dell and hp very mad. What i am saying is that if they are giving apple higher quality products for the same prices as they are providing chips as other OEM's, that could lead to A LOT of trouble.

[Cara Veteran]

yeah that doesn't make sense. Cara you are saying that intel shafts its other OEM partners by giving them inferior products? If thats true OMG the repercussions intel and apple would face would be phenomenal.

In terms of the case, apple is going to win, there is no way they are not...

Actually, Intel offers different chip grades based on the tests conducted with batches of chips. Tier 1, Tier 2, and Tier 3. Dell purchases Tier 2 for all their business, Tier 3 for consume, and Tier 1 for Higher Education and Enterprise. (Confirmed with my Dell rep)

What this means is not that a chip performs lower than others, simply that there was an identified item with the lower tier chips which could cause a lower lifespan than Tier 1 chips.

No one is oblivious to this, the major OEM's have contracts regarding it. :)

Pardon the slower response, my Husband whisked me away for the weekend. :)

[-Hiroshi-]

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.

Apple is too late on that department, as there are solutions now that allow you to install OS X on a standard PC without modification of the DVD contents.

[Hurmoth]

Mac clone maker hires Apple-beating law firm

The Miami-based Macintosh clone maker that was sued by Apple earlier this month has retained a law firm that has beaten Apple in the past, court documents show.

In a Monday filing that extended Psystar Corp.'s deadline to respond to Apple's lawsuit, the company was represented by lawyers from Carr & Ferrell, a Palo Alto, California-based firm that touts its intellectual property (IP) expertise on its website.

The stipulation filed Monday, which was agreed to by both Psystar and Apple, gives the former until 18 August to reply to the lawsuit entered into federal court earlier this month. Previously, Psystar had until Monday to respond to a summons issued 8 July.

At that time, Apple charged Psystar with multiple counts of violating copyright, trademark, breach-of-contract and unfair-competition laws by installing Mac OS X 10.5 on Intel-based computers that it has sold since April. According to the lawsuit, Psystar violated the Mac OS X end-user licensing agreement (EULA) when it installed Leopard on its OpenComputer desktops and OpenServ servers, both which can be ordered from the company with Apple's operating system onboard.

Psystar has declined comment in the past about the case.

Three attorneys at Carr & Ferrell were listed on the Monday stipulation, including Colby Springer, Christine Watson and Robert Yorio, a partner at the firm.

Both Yorio and Springer were among the lawyers who represented Burst.com in its patent-infringement case against Apple that started in 2006. The case was settled out of court late last year when Apple agreed to pay Burst $10 million to license its audio- and video-streaming patents. Burst had accused Apple of using its technology in the iPod player and the iTunes online music store.

Burst also took on Microsoft in a similar patent lawsuit. That case was settled out of court when Microsoft agreed to pay $60 million to end Burst's antitrust and patent-infringement claims. Microsoft's settlement, like Apple's, gave the company non-exclusive rights to Burst's technology.

Yorio also represented Burst in the Microsoft case.

Psystar has a lot riding on the lawsuit, according to one prominent IP attorney. If the small computer maker loses the case and the court grants Apple's requests for relief, Psystar will have to recall all the machines it has sold with Mac OS X preinstalled. That would probably put the clone maker out of business, said Carole Handler, a partner in the IP department at Wildman, Harrold, Allen & Dixon, two weeks ago.

Springer acknowledged receiving an emailed request for comment but was not immediately available to answer questions about the case or Carr & Ferrell's background in IP litigation.

[Cormier6083]

What a twist.

[Hurmoth]

Psystar Lawyer Hints at Anti-Trust Defense

Computerworld reports on comments made by Psystar's attorneys who suggest that anti-trust issues may arise in their defense of the Mac-clone company. Apple sued Psystar in July after Psystar had begun selling a Mac-compatible computer for almost two months prior. Apple's lawsuit not only asked for the cessation of sales but also for a recall of all computer sold. Such a move would, of course, bankrupt the small clone company.

Some other intellectual property lawyers agree that Psystar "would be smart to play the antitrust card".

"What Psystar might say is, 'What we would like to do is use the Mac operating system's unique features more broadly on a variety of hardware,'" said Handler then. "I think it's a very, very hard argument to make, but I wouldn't be surprised if they tried.

Carr & Ferrell LLP, the lawfirm that is representing Psystar, has gone up against Apple before in another intellectual property case involving Burst.com. Colby Springer, one if Psystar's lawyers, promises "This will be an interesting case."

[giga Veteran]

"What Psystar might say is, 'What we would like to do is use the Mac operating system's unique features more broadly on a variety of hardware,'" said Handler then. "I think it's a very, very hard argument to make, but I wouldn't be surprised if they tried.

Won't happen since there are other competitors to fill in those shoes. Same reason why Blackberry OS can be restricted to RIM devices--closed source software just like OS X. With that reasoning, I could sue Adobe for not giving us Photoshop on linux platforms natively.

[Hurmoth]

Won't happen since there are other competitors to fill in those shoes. Same reason why Blackberry OS can be restricted to RIM devices--closed source software just like OS X. With that reasoning, I could sue Adobe for not giving us Photoshop on linux platforms natively.

Considering RIM is a Canadian based company, US law doesn't apply (hence the 1984 ruling) and the same ruling wouldn't apply to Photoshop either considering Photoshop isn't an operating system. The argument, if they indeed try to make that one, would definitely bring up the 1984 ruling.

[markwolfe Veteran]

...

With that reasoning, I could sue Adobe for not giving us Photoshop on linux platforms natively.

More to the point, could Adobe sue someone for using Photoshop in Linux using wine? Essentially enabling use of software on a platform for which it wasn't intended.

Pystar's biggest problem here is it doesn't seem they just offer/resell the Apple OSX CD, but they modify Apple's files and re-distribute them.

And that is going to be the sticking point. Not EULA, but copyright.

[Hurmoth]

Pystar's biggest problem here is it doesn't seem they just offer/resell the Apple OSX CD, but they modify Apple's files and re-distribute them.

And that is going to be the sticking point. Not EULA, but copyright.

But Psystar could argue that they wouldn't have to modify the files and break copyright laws if Apple wasn't breaking the law by forcing users to purchase their hardware.

[giga Veteran]

Considering RIM is a Canadian based company, US law doesn't apply (hence the 1984 ruling) and the same ruling wouldn't apply to Photoshop either considering Photoshop isn't an operating system. The argument, if they indeed try to make that one, would definitely bring up the 1984 ruling.

Why wouldn't it matter if it wasn't operating system? Still software and usage, just a slightly different application

"What Linux users might say is, 'What we would like to do is use the Adobe Photoshop's unique features more broadly on a variety of hardware,'" said Handler then. "I think it's a very, very hard argument to make, but I wouldn't be surprised if they tried.

But if you really want examples of a hardware restricted operating system from a US company, Xbox OS/dashboard.

[Hurmoth]

The 1984 case ruling only applied to operating systems (as far as I could tell), not an application.

A gaming console isn't the same thing as a PC. Nor is a BlackBerry. You can't compare an apple to an orange.

[markwolfe Veteran]

But Psystar could argue that they wouldn't have to modify the files and break copyright laws if Apple wasn't breaking the law by forcing users to purchase their hardware.

Yeah.... They could argue that. But they broke copyright law. Period.

Apple has... ummm.. an EULA they disagreed with.

No contest, in my opinion.

It would be like me putting a slight remix on someone else's song, and re-selling it. Sure, I didn't agree with the song's license terms, but that doesn't permit me from remixing it and re-releasing it myself.

[giga Veteran]

But Psystar could argue that they wouldn't have to modify the files and break copyright laws if Apple wasn't breaking the law by forcing users to purchase their hardware.

A company can restrict their own propriety software license to their hardware as long as there is a form of competition and/or alternative software.

A gaming console isn't the same thing as a PC. Nor is a BlackBerry. You can't compare an apple to an orange.

Still an operating system. This is really a reach, even Psystars lawyer said it.

[giga Veteran]

I did some more research on that 1984 case, which led me to H.R. 2674, "THE INTELLECTUAL PROPERTY

ANTITRUST PROTECTION ACT OF 1995" presented by Joel Klein [who prosecuted Microsoft in 1995].

http://www.usdoj.gov/atr/public/testimony/209800.htm

Typically, one of the most important factors in determining whether a civil antitrust law violation has occurred is whether the firm engaging in particular conduct has market power in a relevant antitrust market. Market power is the ability profitably to maintain prices above, or output below, competitive levels for a significant period of time. A question that can arise with respect to a particular product that is the subject of an intellectual property right is whether that right, whether it be a patent, copyright, or trade secret, confers market power upon its owner.

Section 2 of the bill would provide that, in any antitrust action against an owner, licensor, licensee, or other holder of a patent or copyright, concerning the intellectual property right owner's "marketing or distribution of a product or service protected by such a right,"(3) no presumption of market definition, establishment of market power (including economic power and product uniqueness or distinctiveness, attributes which at times have been held to be signs of market power) or of monopoly power may be drawn from the mere existence of the patent or copyright. The rule that this bill sets forth is an accurate statement of how intellectual property rights should be analyzed under the antitrust laws. While intellectual property rights, just like other forms of property rights, may well be relevant to the existence of market power or monopoly power, or to market definition, they must be viewed in the context of surrounding market facts, especially the presence of alternatives to the technology, expression, or goods protected by the intellectual property rights.

The Supreme Court cited this rule most recently in dictum in Jefferson Parish Hospital District No. 2 v. Hyde,(8) a tying case that did not even involve intellectual property. In the very same case, though, Justice O'Connor (in an opinion for four Justices) sounded the rule's death knell in her concurrence, noting that "a patent holder has no market power in any relevant sense if there are close substitutes for the patented product."(9) Since then, with the exception of the Ninth Circuit's decision a few months later in Digidyne Corp. v. Data General Corp.,(10) the rule has faded into well-deserved obscurity.

In Digidyne, the Court of Appeals held that Data General's copyright in its operating system created a presumption of economic power sufficient to make it liable for tying sales of its central processing units to sales of the operating system -- thus keeping the operating system out of the hands of original equipment manufacturers that wished to use it in conjunction with another maker's CPU. There appeared to be evidence that, once an original equipment manufacturer had committed to making computer systems using Data General's operating system and CPU, and developed customized applications software at great cost, Data General had it over a barrel. And certainly Data General's copyright protection played a role in this. But, at least barring the kind of market imperfections that the Supreme Court has held could give rise to separate "aftermarkets,"(11) the conclusion that Data General's copyright gave it market power over the OEMs ignored the fact that Data General may well have had to compete hard for the OEMs' allegiance at the very outset.

The strength of Justice O'Connor's concurring opinion in Jefferson Parish and the weakness of the Digidyne analysis make it unsurprising that this Ninth Circuit opinion has been the lone decision since Jefferson Parish upholding the rule of Loew's. Rather, one Circuit Court of Appeals after another has rejected the idea that the mere existence of an intellectual property right alone could give rise to a market-power presumption.(12) This reflects, I think, the wisdom of allowing the Sherman Act to evolve through case law, in which repeated exposure to real-world market situations and developments in economic thinking give judges and advocates the chance to apply the law's general mandates with flexibility and circumspection.

In addition to case law, the vast majority of antitrust scholars and commentators have for many years concluded that the mere existence of a patent, copyright, or trade secret does not necessarily confer market power upon its owner. That is because of the inescapable logic that even different products may, and in many circumstances do, compete with one another to a sufficient extent that even having an exclusive right with respect to an individual product does not allow the seller of that product to profitably maintain prices above, or output below, competitive levels for a significant period of time.

To clarify how the federal antitrust agencies enforce the law with respect to this question, the DOJ/FTC Intellectual Property Guidelines of 1995 state that "[t]he Agencies will not presume that a patent, copyright, or trade secret necessarily confers market power upon its owner." Our reasoning was that "[a]lthough the intellectual property right confers the power to exclude with respect to the specific product, process, or work in question, there will often be sufficient actual or potential close substitutes for such product, process, or work to prevent the exercise of market power."

These are all outlined in the US Antitrust Guidelines: http://www.usdoj.gov/atr/public/guidelines/0558.htm#t22

And by the way:

The Agencies recognize that the licensing of intellectual property is often international. The principles of antitrust analysis described in these Guidelines apply equally to domestic and international licensing arrangements. However, as described in the 1995 Department of Justice and Federal Trade Commission Antitrust Enforcement Guidelines for International Operations, considerations particular to international operations, such as jurisdiction and comity, may affect enforcement decisions when the arrangement is in an international context.

[(Spork)]

imho apple is shooting themselves in the foot

[Cormier6083]

Psystar to countersue Apple for antitrust violations, will ask court to declare Leopard EULA void

by Nilay Patel, posted Aug 26th 2008 at 7:44PM

Wannabe Mac cloners Psystar hired itself some hotshot lawyers to defend against Apple's lawsuit, and they're not wasting any time earning their fees -- as Psystar's hinted in the past, it's going to countersue Apple for antitrust violations and ask that the court declare the Leopard EULA void. That's a pretty longshot argument, especially since EULAs have traditionally been upheld in California and Florida and we find it hard to believe a court would find a company with ten percent marketshare to be abusing a monopoly position, but we'll see how everything goes down -- this one is going to have some fireworks for sure.

Link >> http://www.engadget.com/2008/08/26/psystar...ons-will-ask-c/

Edited August 27, 2008 by Cormier6083

[Raa]

Theres no way they can possibly pull that off.

[Joel]

Theres no way they can possibly pull that off.

Why not?

[giga Veteran]

Apple has a 10% marketshare. OS X is Apple's own intellectual property and there are sufficient close substitutes and/or alternatives for their operating system which prevents them from having any sort of dominant market power.

[shihchiun]

Maybe I'm just incredibly stupid, but I fail to see how Apple is a monopoly in any way. You can choose to use other hardware and you can choose to use other software. What's the problem?

This "OMG MONOPOLY!!!111" stuff is getting a little old.

[strekship]

What market to they claim Apple has a monopoly over? Apple computers?

[giga Veteran]

What market to they claim Apple has a monopoly over? Apple computers?

Yep, it's funny.

http://www.usdoj.gov/atr/public/guidelines/0558.htm#t22

Intellectual property and market power

Market power is the ability profitably to maintain prices above, or output below, competitive levels for a significant period of time.(10) The Agencies will not presume that a patent, copyright, or trade secret necessarily confers market power upon its owner. Although the intellectual property right confers the power to exclude with respect to the specific product, process, or work in question, there will often be sufficient actual or potential close substitutes for such product, process, or work to prevent the exercise of market power.(11)

If a patent or other form of intellectual property does confer market power, that market power does not by itself offend the antitrust laws. As with any other tangible or intangible asset that enables its owner to obtain significant supracompetitive profits, market power (or even a monopoly) that is solely "a consequence of a superior product, business acumen, or historic accident" does not violate the antitrust laws.(12) Nor does such market power impose on the intellectual property owner an obligation to license the use of that property to others. As in other antitrust contexts, however, market power could be illegally acquired or maintained, or, even if lawfully acquired and maintained, would be relevant to the ability of an intellectual property owner to harm competition through unreasonable conduct in connection with such property.

[The_Decryptor Veteran]

This would have worked a lot better back when Mac's were more than just a PC in a special case.

[jesseinsf]

I don't know what Apple did to you when you were young, but I own this MacBook because I like using Mac OS X - quite frankly, the look of it doesn't even enter the equation when I purchase it. Sure, its great that it looks nice, but that isn't the reason I purchase it. Take a look at the MacBook, its hardly a revolutionary design - just a very simple design which anyone could duplicate if they so wished.

I like running Mac OS X, that is the reason. So I don't know where you come off labelling every Mac user as some sort of 'elitist *******' aka the following:

As for the cost, its hardly expensive. NZ$2099 for a MacBook laptop - sweet bugger all.

Lier