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Ruling Snuffs Psystar's Mac Dreams

By Erika Morphy MacNewsWorld ECT News Network
Nov 16, 2009 12:02 PM PT

Apple has won a summary judgment in its copyright infringement case against Psystar. The Miami-based startup turned heads last year with its offer of a US$400 Mac clone -- that is, non-Apple hardware running the Mac OS X Leopard operating system.

Ruling Snuffs Psystar's Mac Dreams

Several claims in the case remain to be briefed and tried if it doesn't settle first, which it likely will, as this motion has all but cut the legs out from Psystar's legal strategy.

Apple, to no one's surprise, filed a lawsuit in July 2008, shortly after Psystar's "OpenComputers" came to market, claiming that Psystar was violating its reproduction and distribution rights, and its right to create derivative works.

It also alleged trademark infringement, breach of contract and trade infringement, as well as unfair competition. The following month, Psystar countersued on the grounds that Apple's business practices were "monopolistic" and amounted to copyright misuse -- a case that was eventually dismissed.

Then, Psystar filed claims that its actions were not a derivative work; because of modifications made to the source code and kernel extensions, Psystar's Mac Clones could now be considered "fair use" of the copyright.

Judge William Alsup, District Court Judge for the Northern District of California, dismissed those arguments in his ruling.

Arguments Fizzled

"Psystar cites no decisions to reasonably support its argument that its modifications do not amount to a derivative work; whereas, Apple points to decisions showing that such deletions, modifications, and additions to software result in an infringing derivative work," he wrote. "In sum, Psystar has violated Apple's exclusive reproduction right, distribution right, and right to create derivative works."

Judge Alsup held that that Psystar's claims under the fair use doctrine were inapplicable because the works in question were not authorized, Raymond Van Dyke, attorney with Merchant & Gould, told MacNewsWorld.

Furthemore, since Psystar circumvented Apple's code protections, Alsup said it violated the Digital Millennium Copyright Act, which forbids unauthorized use of this sort.

"Psystar's allegations of copyright misuse and overly restrictive licensing practices went nowhere," Van Dyke said.

Not a Shocker

To say the decision was expected is an understatement, Christopher M. Collins, a partner with Vanderpool, Frostick & Nishanian, told MacNewsWorld.

"The copyright decision is consistent with other courts' rulings on what is required to violate the copyright holder's rights with respect to the creation of derivative works in software," he said.

Although there are additional issues for trial in January, this ruling essentially prevents Psystar from proceeding with its business in its current formulation, Collins said.

There is also the matter of damages, which the judge will rule upon at a damages hearing scheduled for December 14th. Depending on how that goes, Collins said, "Psystar may not be able to continue as a viable concern unless it posts a substantial bond [or] seeks bankruptcy protection against enforcement of any interim damages judgment."

Psystar is likely hoping that the judge will not issue a partial damages judgment before the trial; if he does, it will almost surely seek to block Apple's ability to recover on that partial judgment until the conclusion of the trial.

In short, Psystar's legal and financial options have become far more limited with this ruling than they were before, Collins said.

Settlement Time?

The summary judgment ruling is a significant win for Apple, Timothy J. Connors, an attorney with Calfee, told MacNewsWorld.

"At this point, if Psystar were like most litigants, they'd be trying hard to settle the whole case," he remarked. "On the other hand, if Psystar were like most litigants, they wouldn't have reached this point in the first place."

It's clear from both the judge's language and the substance of his rulings that he has very little patience remaining for Psystar, Connors said.

Larger Lessons

Indeed, it is difficult to find anyone -- outside perhaps of Psystar -- who thought the company had a fighting chance against Apple's legal juggernaut.

Apple CEO Steve Jobs hates jacked Macs, Van Dyke said. "Psystar's attempt to completely incorporate the code of the Mac operating system, including its look and feel, could not be countenanced."

The most significant consequence of this case is for others who follow Apple's model of requiring its software to be used only with proprietary hardware -- many of whom are not in the PC space at all, but who sell phones, gaming systems and other kinds of hardware, Connors said.

"There's been an argument from some quarters that requiring software to be used only on proprietary hardware constituted copyright misuse -- trying to extend the reach of a copyright in ways that violate public policy. That argument was mostly theoretical, because there isn't much case law on the subject of misuse. But now that argument has been tested in court and found wanting. The odds of someone else stacking their chips on the misuse argument, as Psystar did, are now significantly lower."

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