Psystar and Apple continue to battle it out in court

Thu, Oct 29, 2009

Legal, News

Last Friday, both Apple and Psystar filed motions in opposition to the other sides motion for summary judgment.  After pouring through all of the pertinent motions, and digesting all of the non-redacted exhibits, it seems abundantly clear that Psystar is grasping for straws.  Below, I’ve highlighted the arguments presented by each party.

If you recall, a key portion of Psystar’s position is that it’s not a licensee of OS X, but rather an owner of the software.  The designation is key because an owner of a product is entitled to certain liberties, and in this case, copyright defenses, that licensees are not entitled to.  Psystar argues that it owns each copy of OS X it purchases because a portion of the OS X Leopard license agreement states, “You own the media on which the Apple Software is recorded.”  In constructing that argument, though, Psystar selectively cherry picked one sentence out of the entire Apple EULA and willfully ignored anything that made reference to them being a licensee.

Apple, however, calls their bluff and points out that every copy of the OS X Leopard retail DVD includes a Software License Agreement (SLA) which specifically states that Apple “retains ownership of the Apple Software itself.”  Moreover, the box of every OS X retail DVD contains the following statement:

Important: Use of this product is subject to acceptance of the software license agreement(s) included in this package.  Don’t steal software.

Next, Apple points out that the phrase “You own the media on which the Apple Software is recorded” is in obvious reference to the disc itself, not the software it houses.

The Copyright Act makes clear that “ownership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied.”  Transfer of the “material object” in which the work is “fixed” does not convey rights in the work itself.

But even if we assume, hypothetically, that Psystar does indeed own each copy of OS X it purchases, Apple lays out a series of arguments which completely obliterate Psystar’s defense of its actions.

One of Psystar’s main defenses is the copyright doctrine of “First Sale”, which allows a person who purchases a DVD, for example, to then sell that DVD to somebody else and keep all the proceeds.  Psystar asserts that its actions are covered under the first sale doctrine, but the difference here is that Psystar is modifying and distributing the software on a massive scale.  It’d be akin to someone purchasing a book, adding in a few supplemental chapters, and then selling it to the public under the guise of being the same as the original.  Obviously, the first sale doctrine isn’t meant to protect that type of activity.

Moreover, the very nature by which Psystar installs OS X onto the computers it then sells to customers all but negates any ownership claims Psystar would otherwise have.

The illustration above details Psystar’s copying process.  It first purchases a copy of OS X and copies it to a a Mac Mini.  It then copies OS X onto an imaging station where it then modifies OS X to run on non-Apple hardware.  This modified version of the software then serves as Psystar’s “master copy” of OS X, which it then installs onto each computer it assembles and sells.  So as you can see, Psystar isn’t buying 1 copy of OS X, installing it on their own hardware, and then shipping it out to customers.  On the contrary, it buys and modifies one copy of OS X, which it then copies en masse onto every computer it sells.  In other words, the copy of OS X Psystar sells on its computers is different than the one contained in retail copies of the OS X DVD.

Thus, even if Psystar were deemed the owner of the particular copoies of MAC OS X that it purchased, Psystar may not assert the first sale doctrine with respect to any of the unauthorized copies it makes…

If Psystar’s interpretation of these doctrines was correct, a customer who purchase a book, movie or music CD would be free to make and sell unlimited reproductions of that work and to publish and distribute derivative works all because the customer is the “owner” of a single copy.  Such a result would completely eviscerate the copyright laws.

Psystar attempts to skirt around this issue by including a retail copy of an OS X DVD with each computer it ships.  Apple asserts that that is irrelevant, and moreover, writes that Psystar actually offers no evidence that it does, in fact, ship a retail DVD of OS X with “each of its computers, and its motion fails for this lack of admissible evidence.”  Interestingly, when Psystar president Roberty (Rudy) Pedraza was deposed this past April, he stated that the retail discs of OS X shipped with each computer are never taken out of the box because “it would take too long to individually insert the disk” into each individual system.  Last I checked, “taking too long” isn’t a viable legal defense.

And further diminishing Psystar’s position, Apple writes that the evidence thus far proferred in the case shows that the number of copies of OS X Leopard purchased by Psystar is significantly lower than the number of computers they’ve shipped out the door.

In discovery, Psystar produced purchase orders to and invoices from vendors showing the number of retail DVDs of Mac OS X acquired by Psystar. Psystar also produced documentation regarding the number of Psystar computers sold preinstalled with Mac OS X.

Psystar contends it shipped one retail DVD of Mac OS X with each computer it sold preinstalled with the software. However, based on Psystar’s production of the documents described above, the  number of retail DVDs of Mac OS X that Psystar acquired from vendors is less than the number of computers Psystar sold with Mac OS X. Psystar has produced documents showing the purchase of approximately 13% fewer retail DVDs than computers it sold preinstalled with Mac OS X.

In sum, the first sale doctrine isn’t so broad as to encompass “modifying software and creating a master copy for mass duplication”, as Psystar is clearing doing in this case.

Apple also notes that because Psystar modifies OS X when it creates its master copy, it’s illegally creating a derivative work of Apple’s OS, which is a right held exclusively by the original copyright holder, Apple.

Next, Apple accuses Psystar of willfully infringing on its trademarks and tradedress when advertising its products.  Psystar alleges that it’s not in violation because it clearly advertises the slogan, “It’s not a Mac – it’s for everyone” across its website.  Apple, however, attached a slew of screenshots of Psystar’s homepage which use Apple’s “word and design marks”, including but not limited to MAC, MAC OS, Leopard, Apple Logo, Mac Logo, and the Leopard Trade Dress.  And oh yeah, the above slogan appears nowhere on any of those pages, and Apple has the screenshots to prove it.

Psystar, for what it’s worth, argues that its extensive use of Apple trademarks is protected under fair use, but Apple retorts that Psystar hasn’t offered any supporting evidence or law to back up that claim, and that in a motion for Summary Judgment the burden falls on their shoulders.

Now if you remember, in Psystar’s motion for Summary Judgment, it wrote that it’s more than willing to agree to a permanent injunction to stop selling copies of OS X Leopard, noting that it would be “no great burden” for them.  And why would it be, Psystar now sells copies of Snow Leopard instead!

Apple, of course, is all in favor for an injunction but believes that it should apply broadly to cover all OS X releases.

Apple agrees that a permanent injunction is appropriate in this case, but an injunction limited to Mac OS X Leopard is manifestly insufficient, would not alleviate the irreparable harm that Apple suffers as a result of Psystar’s infrngement, and could encourage more infringement of Apple’s copyrighted software by parties other than Psystar.

… Psystar has advertised that regardless of this lawsuit, it plans to continue selling computers that infringe Mac OS X. Therefore, in order to ensure that Apple’s copyrights are no longer infringed and to avoid the harm that Apple wil necessarily suffer if Psystar is not stopped, the Court should permanently enjoin Psystar from selling its computers with any version of Mac OS X or other Apple software for the following reasons.

A solid point, because if you follow Psystar’s logic, each subsequent release of OS X would afford them a new “opportunity to mass reproduce and distribute unauthorized copies of Apple software.”

Psystar’s motion in opposition to Apple’s motion for summary judgment is a little bit more interesting.

Psystar presents the interesting legal theory that it’s not modifying OS X, but rather bundling OS X with its own software, just like how you might get a copy of Minesweeper with a retail copy of Windows 7.

It is just as though Psystar were selling computers with both OS X and Microsoft Word installed: it would not be the case in that situation that Psystar had “modified” OS X to include Microsoft Word (or vice versa); it would be appropriate to say, instead, that Psytar had bundled OS X with Microsoft Word while modifying neither.

Psystar does not create a new and upgraded operating system; it merely installs its own code along with OS X. This code enhances the operation of the resulting computer, just as third-party drivers help a computer work with hardware like scanners or printers and just as third-party application software like Mozilla Firefox or Google Chrome or Microsoft Internet Explorer helps a computer to surf the web or do other tasks. But the fact that third-party code lets a computer do what it could not do before does not mean that installing that code creates a derivative work of the operating system. It is only when the third-party code creates a new version of the operating system, and not a separate and distinct program, that a derivative-work problem arises.

Psystar asserts that it does nothing to the OS X source code, and that it just adds some extra code that enables OS X to run on non-Apple hardware.  I’ve got to be honest, it’s some crafty legal maneuvering, but ultimately, it has no legal legs to stand on.  The difference between Psystar and the examples it uses above is that in getting OS X to run on its machines, Psystar wilfully circumvents Apple’s technological prevention mechanisms in order to make things work.  And that’s an express violation of the DMCA, and something that developers at Mozilla and Google don’t have to do to get their programs up and running in OS X.

Psystar then makes a curiously shameless and emotional appeal to the Court:

Psystar is a company not unlike many thousands of other small businesses that are the backbone of the American economy.  Rudy and Robert Pedraza are the founders and, for the moment, remain the dedicated leaders of Psystar.  They are assisted by a small group of employees, many of whom are also family.  The Pedrazas are proud Cuban-Americans who embody the spirit of innovation and hard work of which all of us, as Americans, are so justly proud.

It should be clear from the papers that Apple has filed that Apple has spent millions of dollars pursuing this family business, trying to destroy them.  The record is replete with Apple’s admissions that this entire suit is based on a fierce motive to protect Apple’s market position by any means possible, legal or otherwise.  This Court should end this vexatious litigation.  It’s been millions too much.

Can you believe that Apple has the audacity to spend millions of dollars to protect its intellectual property?  The nerve!  And could that “it’s been millions too much” line be any more gag-inducing?  Save the dramatics Psystar.

Well, so there you have it.  The Court will rule on Apple and Psystar’s motions for Summary Judgment on November 12th, and I don’t think it takes a legal scholar to figure out that Psystar is going to be on the losing end of that decision.



3 Comments For This Post

  1. jim Says:

    We can only hope the court rules for Apple in the blatant ripping of Apple’s hard work at building the Mac OS, hardware and software they sell.

    The bigger question is though, at least to me, Psystar filed bankrupcy presumably because they were bankrupt. Otherwise they were lying to the court and what it that? But then, almost magically, they withdraw that filing and bring out new hardware, the software for generic PC’s and so on. So where they bankrupt or not? Does it point to others being the financial engine behind Psystar? The court should find those things out in all this.

  2. KenC Says:

    These Shysters are shameless!

  3. Chris C Says:

    I think these folks at Psystar are really acting rather shady. However,
    if they really did buy a copy of Mac OS X for each and every system
    they shipped(and could prove it) I am not so sure I mind what they are
    doing. I find Apple’s claim that any copy of OS X retail is an “upgrade”
    to a physical system absurd.

    Couldn’t Apple, for example, place some sort of hard protection on
    what browser you could install? For example, suppose the EULA were to
    forbid any browser other than Safari. You could reject the EULA I suppose and move to another platform. Fine.

    But take it to the extreme. What exactly can a EULA contain before
    it simply cannot legally be enforced any longer? For example, if Apple
    required you to submit a DNA sample to them in order to comply
    with the EULA the EULA itself would not hold up.

    Suppose you bought a Ford Mustang. You hot rodded it up, and then resold
    it at a profit. Could Ford, if there was a EULA preventing it, stop
    you from doing this? Again, I am assuming you bought the car legally
    in the first place and did not steal it. I would be OK with Ford
    voiding your warranty. But not taking away your right to modify the car.

    Let’s take this to the logical conclusion. Suppose Apple were to allow
    what Psystar is doing but they don’t directly support and are not
    responsible for the end user’s experience. What are the likely

    1. There are simply not enough people willing to take a risk that
    the system they buy may not work down the line. This becomes
    a niche market that perhaps cannot even sustain itself. At any rate, no
    sweat off Apple’s brow.

    2. These type of systems become a huge hit even with the risk. But what are the ramifications of this for Apple? The implication is that market forces create fairness, and that the market has chosen price over
    risk. If Apple’s claim that the value added in their products is the
    tight integration to avoid all of those Windows issues is true, how
    would this be any different? Answer: It isn’t. Given a choice, users
    will likely select a system in line with their needs. Some may choose
    said integration. Some will choose price, features, etc.

    Ultimately, if #2 has any basis in reality it would cause Apple to
    either lower their prices, add new product for missing market segments,
    or formally license their OS to cut this off at the pass.

    This is what happens to all markets not controlled by a monopoly.


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