Apple seeks permanent injunction against Psystar; $2.12 million in damages

Wed, Nov 25, 2009

Legal, News

About two weeks ago, Judge Alsup granted Apple’s motion for Summary Judgment when he ruled that Psystar’s actions infringed on a number of Apple’s copyrights while also violating provisions in the DMCA.  As such, Apple this week filed a motion seeking a permanent injunction which would prevent Psystar from selling OS X on non-Apple hardware and from distributing software which enables others to do so.  In addition to the injunction, Apple is seeking $2.12 million in damages.

We’ve poured over the multitude of filings from Apple, and there’s a lot of juicy stuff to discuss.  But first, let’s take a look at Apple’s motion for a permanent injunction.
As to the scope of the injunction, Apple seeks an order from the Court which would preclude Psystar from:

•    Manufacturing, distributing, preparing or using any non-Apple computer installed
with a reproduction or derivative work of Mac OS X;
•    Manufacturing, distributing, preparing or using any product that creates or facilitates the reproduction or modification of Mac OS X on non-Apple computers;
•    Circumventing any technological protection measure in Mac OS X;
•    Possessing any technology, product, device, component, or part thereof that has been used to circumvent any technological protection measure in Mac OS X, and requiring Psystar to destroy any technology, product, device, component, or part thereof in its custody or control that has been used to circumvent any technological protection measure in Mac OS X;
•    Manufacturing, importing, offering to the public, providing, or otherwise trafficking in circumvention devices using, containing or capable of generating Apple’s decryption key, or any technology, product, service, device, component or part thereof for use in circumventing any technological protection measure in Mac OS X; and
•    Inducing, aiding or assisting others in infringing Apple’s copyrights in Mac OS X or in circumventing any technological protection measure in Mac OS X.

Apple also makes a strong case arguing that the permanent injunction should apply broadly to all versions of OS X, and not just to OS X 10.5 Leopard.  Remember that Psystar recently initiated a suit in Florida seeking permission from the court that would allow it to sell copies of Snow Leopard on Psystar hardware.

Psystar, of course, claims that the issues raised in the Florida case are different from those in the ongoing case, but it doesn’t take a genius to realize that the underlying issues are exactly the same.  Besides, if the scope of the permanent injunction is limited solely to Leopard, than Psystar will essentially have a free pass to infringe on Apple’s copyrights anytime a new version of OS X becomes available.  Moreover, litigating an entirely new case every time Apple issues an OS release would be an extreme waste of judicial resources.

To further bolster its claim for an all-OSX-encompassing permanent injunction, Apple cites a case from 1984 wherein a defendant was precluded from selling t-shirts featuring copyrighted images of Mickey and Minnie Mouse.  In its ruling, the court also enjoined the defendant from selling t-shirts that featured other images of Disney characters, such as Donald Duck and Goofy.  The defendant argued that the ruling was overly broad as it encompassed characters that weren’t part of the original suit, but the court of appeals rejected that argument.  It reasoned that when there is a significant possibility of future infringement, “it is appropriate to permanently enjoin the future infringement of works owned by the plaintiff but not in suit.”   In other words, even if Snow Leopard isn’t directly at issue in this case (even though the case centers on OS X in the broadest sense), Judge Alsup is well within his means to issue an injunction that not only covers OS X Leopard, but all past and future versions of OS X as well.

Now, it’s not the end of the world for Psystar if they’re ordered to stop selling OS X based machines.  But Apple’s request for over $2 million in damages likely has the Pedraza brothers shaking in their counterfeit boots.  Here’s how Apple arrived at the $2.12 million figure.

With respect to statutory damages for Psystar’s DMCA violations (i.e. circumventing Apple’s security measures in OS X), the Copyright Act states that Apple is entitled to anywhere from $200 to $2,500 for each offense.  Here, Apple requests $2,000.  Apple then notes that Psystar sold 768 computers in addition to shipping 262 restore discs.  Taken together, Apple seeks statutory damages for 1,030 DMCA violations.  And at $2,000 a pop, that comes out to $2.06 million.

With respect to damages for Psystar’s copyright infringement, Apple is entitled to anywhere from $750 and $30,000 per violation.  Judge Alsup ruled that Psytar infringed 2 of Apple’s copyrights, and  here, Apple requests that Psystar pay the full amount per offense – a whopping $30 grand each.  This tacks on another $60,000 and results in the final tally of $2.12 million.

How much Psystar will actually be ordered to pay Apple is ultimately at the discretion of Judge Alsup.  Apple, however, lays out a case for why Alsup’s final total should swing on the high side.

The evidence, including that which supports Apple’s claim for irreparable harm, overwhelmingly supports a high statutory damage award. Psystar’s entire business is premised on infringing Apple’s copyrights and modifying its software code to enable Mac OS X to run on non-Apple computers. Through August 10, 2009, Psystar’s infringement has generated a gross profit of $243,055. Psystar has spent less than $2,000 on research and development compared to Apple’s several billion dollars spent over the last three decades. Psystar uses Apple’s trademarks in its advertising to draw in Apple’s customers.Thus, any statutory award must be sufficient to deter Psystar’s continued infringement and significant enough to discourage other companies who have been emboldened by Psystar’s infringement.

From evidence offered during discovery, there’s no way way that Psystar or the Pedraza brothers themselves can afford to pay that amount.  Indeed, Apple points out that quarter after quarter, Psystar was spending more money than it was bringing in.  But more so than the actual dollar amount, Apple’s request for damages sends a serious message that it will not tolerate any attempts by third parties  to infringe on their intellectual property.

Apple concludes:

Psystar’s whole business is premised on stealing from Apple.  Psystar pirates Apple’s software, circumvents Apple’s technological protection measures and illegally benefits from the good will and reputation Apple has built. Psystar’s conduct, if permitted to continue, will both tarnish Apple’s reputation for excellence and lead to the proliferation of copycats who also will free ride on Apple’s investments, infringe Apple’s intellectual property rights and cause further irreparable injury. Accordingly, Apple respectfully requests that the Court grant Apple’s Motion for Permanent Injunction. Further, as the evidence of Psystar’s willful infringement is both undisputed and overwhelming, Apple requests a statutory damages award of $2,120,000 under the Copyright Act and the DMCA and reasonable attorneys’ fees and costs as the prevailing party.

Psystar has a few days to respond to Apple’s motion, with Judge Alsup expected to render a verdict on remedies on December 14th.



Comments are closed.

eXTReMe Tracker