After 17 months of litigation, the hammer has finally fallen on Psystar.
The U.S. District Court for the Northern District of California on Tuesday granted Apple's request for permanent injunction against the Mac clone maker. This bars Psystar from peddling PCs with the Mac OS X operating system preinstalled, from circumventing the technological measures Apple uses to prevent unauthorized copying of Mac OS X, and from assisting others in doing so.
"Defendant must bring its conduct into compliance with the injunction by midnight on December 31, 2009, at the latest," U.S. District Judge William Alsup wrote in his ruling. "Defendant must immediately begin this process, and take the quickest path to compliance; thus, if compliance can be achieved within one hour after this order is filed, defendant shall reasonably see it done."
It would seem, then, to be over for Psystar, though we likely haven't yet heard the last of it. Alsup's injunction doesn't include the company's Rebel EFI software, which allows Mac OS X to be installed on PCs. So for now the company can continue to sell it, though Alsup warns that to do so is a risky legal proposition at best.
"Rebel EFI will not be expressly excluded from the terms of the injunction," Alsup wrote. "It should be clear, however, that this ruling is without prejudice to Psystar bringing a new motion before the undersigned that includes real details about Rebel EFI, and opening itself up to formal discovery thereon. This would serve the purpose--akin to a post-injunction motion vetting a 'design-around' in a patent action--of potentially vetting (or not vetting) a product like Rebel EFI under this order's decree.
"Moreover, Psystar may raise in such a motion any defenses it believes should apply to the factual circumstances of its new product, such as the 17 U.S.C. 117 defense raised in its opposition and at oral argument. Whether such a defense would be successful on the merits, or face preclusion or other hurdles, this order cannot predict. What is certain, however, is that until such a motion is brought, Psystar will be selling Rebel EFI at its peril, and risks finding itself held in contempt if its new venture falls within the scope of the injunction."
Below is the permanent injunction order in full:
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Although a judge recently ruled in favor of Apple in its copyright infringement case against Psystar, the two companies have reached a new settlement, according to Computerworld and other reports.
Details are sketchy at this point, and there's no confirmation from Apple, but Psystar claimed in a motion filed Monday that a partial settlement has been reached.
"Psystar has agreed on certain amounts to be awarded as statutory damages on Apple's copyright claims in exchange for Apple's agreement not to execute on these awards until all appeals in this matter have been concluded," noted Psystar's motion filed in federal court in San Francisco. "Moreover, Apple has agreed to voluntarily dismiss all its trademark, trade-dress, and state-law claims. This partial settlement eliminates the need for a trial and reduces the issues before this Court to the scope of any permanent injunction on Apple's copyright claims."
Psystar also seems to be looking for a loophole against any injunctions. Apple had asked the court to prevent Psystar from selling clones not just with Leopard, but also Snow Leopard, which was released after the lawsuit began. But in its filing, Psystar argued that it should be allowed to sell its Rebel EFI utility, which lets customers install Snow Leopard on clones sold by the company, thus moving the legal burden away from Psystar.
Psystar's motion also indicated that another motion with further details would be filed Tuesday with Judge William Alsup.
Apple's lawsuit against Psystar began in July 2008 after Psystar started selling Mac clones with OS X installed on them. Apple has argued that its end user license lets people install its operating system on Apple computers only.
On November 13, Alsup ruled in favor of Apple, finding that Psystar's use of OS X on its clones was not "fair use" as the company contended and further finding that Psystar violated the Digital Millennium Copyright Act (DMCA) by "circumventing Apple's protection barrier."
Since then, Apple has been keen to shut down Psystar's Mac clone business permanently, calling for an injunction against the company and potentially millions of dollars in damages, substantially more money than the clone maker has.
Alsup's findings and Apple's fervor in going after Psystar raise the question of why Apple would agree to any kind of settlement at this point. A hearing was set for December 14, with a full trial scheduled to start in January. But if the latest news from Psystar is true, then the company may be able to avoid further courtroom drama.
Neither Psystar nor Apple has responded to requests for comment. We'll provide further details of this latest development as court documents become available.
Having diligently hewn Psytar's legal coffin over the past year and a half, Apple has now taken up its hammer and set about nailing the Mac clone maker into it. This week, the company called for a permanent injunction against Psystar's operations.
"Psystar...has built its business on infringing Apple's copyrights and trademarks, free-riding on Apple's research and development efforts, and trading on Apple's hard-earned reputation for high quality, innovative and easy-to-use computers," Apple said in its motion.
"Psystar's appropriation of Apple's intellectual property and goodwill has been systematic and brazen, from the name of Psystar's 'OpenMac' computers to its deliberate pirating of Apple's Mac OS X," the company added.
"Psystar even seeks to profit from Apple's efforts to protect its rights, extolling this litigation as Psystar's 'opportunity to gain market share,' in a pitch to venture capitalists....Unless Psystar is permanently enjoined, it will not stop its unlawful conduct-conduct that is causing irreparable harm to Apple's business, brand and goodwill."
Catch that? Psystar was pitching VCs on its plan to use Apple's IP to "compete directly against Apple." Shameless. Little wonder Cupertino is so intent on burying the would-be rival.
And make no mistake, Apple legal is going to grind Psystar into fine silicon dust. In addition to the injunction, Apple is requesting compensation for legal costs and statutory damages owed under the Copyright Act and the Digital Millennium Copyright Act. And according to Apple's expert witness (PDF), statutory damages for the former should run "between $1500 and $300,000″ and for the latter "between $449,500 and $4,495,000."
Suffice it to say, that's quite a bit more than the current value of Psystar's assets which, according to its bankruptcy filing, are no more than $50,000.
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A judge has ruled in Apple's favor in its copyright-infringement case against Psystar, which has been selling Mac clones running Mac OS X.
U.S. District Court Judge William Alsup on Friday granted Apple's request for a summary judgment, while denying Psystar's counterclaim.
"In sum, Psystar has violated Apple's exclusive reproduction right, distribution right, and right to create derivative works," Alsup wrote in the ruling (PDF), which was posted by legal site Groklaw.net.
Apple filed its suit in July 2008, a few months after Psystar began selling Mac clones. The case revolved around Psystar's contention that it could run Apple's Mac OS X operating system on non-Apple machines. Apple denied this, stating that its Mac OS X end user license agreement allows people to install the OS on Apple computers only.
Both Apple and Psystar had a requested a summary judgment, which is a determination made without trial based on the merits of a case.
Neither Apple nor Psystar could immediately be reached for comment.
One of Psystar's contentions was fair use. The judge rejected this, stating the company "does not even attempt to address the four factors used to determine fair use." Another of Psystar's claims was "first sale" doctrine, which allows someone who buys copyrighted material to sell it. But Alsup said this doctrine applies only to legal copies, not to the "unauthorized copies" that Psystar produced.
The judge also ruled in favor of Apple's claim that Psystar violated the Digital Millennium Copyright Act. "Psystar has violated the DMCA by circumventing Apple's protection barrier and trafficking devices designed for circumvention," Alsup said.
In addition, the judge rejected Psystar's claims that Apple had misused its copyright and that Apple's licensing agreement was unduly restrictive.
Alsup's ruling did not include a permanent injunction against Miami-based Psystar because, he said, Apple has not requested one yet.
There are other claims Apple has made that could still go to trial, including breach of contract, trademark infringement, and trademark dilution. A hearing to determine remedies is set for December 14. The trial has been scheduled to begin in January.
Updated at 4:15 p.m. PST with more details from the ruling.
Psystar, the clone company Apple is suing for selling generic hardware with the Mac OS pre-installed, is expanding its business to include selling software that will allow anyone to install Apple's operating system.
(Credit:
Psystar)
Psystar said on Thursday that its Rebel EFI suite is available for download from its Web site. The software will allow anyone to install any modern operating system on their computer, including Apple's Mac OS X Snow Leopard.
According to the company, the software is compatible with the Intel Core 2 Duo, Core 2 Quad, i7 or machines running the Xeon Nehalem CPU.
A demo version of the software is available for download so users can "test-drive" it before they buy. Psystar says the demo would allow users to install Mac OS X, but with "limited hardware functionality as compared with the full version."
Psystar said after downloading the software, users just need to burn it to a CD and follow the onscreen instructions. The full version of the Rebel EFI suite, removing any hardware limitations, costs $49.99.
Microsoft's Windows 7, released today, is also compatible with the Rebel EFI suite, according to Psystar.
Psystar is best known for selling clone computers and being sued by Apple for copyright infringement. A trial date has been set for January 11, 2010.
Psystar lawyers have begun deposing Apple executives in the copyright infringement lawsuit brought by Apple last year, the Mac clone maker announced.
Surprisingly, it seems that Psystar executives are actually enjoying themselves. In a Thursday post on its Web site called "A taste of their own medicine," Psystar seems to gloat over the fact it is now deposing several Apple executives. "For the past week and for the following ten days we will be doing depositions of some of Apple's highest level people. After numerous depositions of Psystar employees and associates the shoe is finally on the other foot, oh the joy!"
Apple accused Psystar of copyright infringement after it began making Mac clone computers and selling them with Mac OS X installed. Apple's license agreement clearly states that the operating system can only be installed on an Apple-labeled computer.
Psystar is even allowing its customers to submit questions to ask the Apple executives, according to a report on AppleInsider. The company said it will take the top 10 questions to each executive deposition.
According to the blog post, Apple executives being deposed are:
- Aug. 07 -- John Wright -- OS X -- Senior Software Manager
- Aug. 12 -- Kevin Van Vechten -- OS X -- Software Engineering Manager
- Aug. 13 -- Phil Schiller -- Marketing -- Senior VP Worldwide Product Marketing
- Aug. 14 -- Mike Culbert -- Mac Hardware -- Senior Director
- Aug. 18 -- Gary Thomas -- TBD
- Aug. 19 -- Simon Patience -- OS X -- Head of Core OS
- Aug. 21 -- Mark Donnelly -- Apple -- VP Finance and Worldwide Business management
- Aug. 21 -- Greg Christie -- TBD
- Aug. 21 -- Bob Mansfield -- Mac Hardware -- Senior VP Mac Hardware Engineering
Psystar said these executives were chosen because they are the most knowledgeable in their field.
The company kicked up the rhetoric a notch since changing lawyers in July. Psystar is now being represented by Houston-based Camara & Sibley, which is also defending convicted music-pirate Jammie Thomas-Rasset.
Psystar filed for bankruptcy protection in May, which normally could shield a company from its legal woes. But Apple asked the court to lift the automatic stay of proceedings in the copyright case. Apple won its argument, and a new trial date has been set for January 11, 2010.
Mac clone maker Psystar has hired a new legal firm--the same one defending Jammie Thomas-Rasset--for its courtroom battle against Apple's copyright infringement suit.
Psystar used its hiring of Houston-based Camara & Sibley, which is also defending convicted music-pirate Thomas-Rasset, to comment on the suit.
"Psystar has always been more a Cowboy than a Hippie. Now we've changed lawyers to better reflect who we are," the company said Tuesday in a post on its Web site. "Everyone here values openness. And that's how we're going to fight Apple: in public."
The company was previously using Carr & Ferrell of Palo Alto, Calif., though it's not clear whether the "Hippie" reference is to that law firm.
The posting goes on to explain Psystar's position in the lawsuit. Claiming that it is "probably one of Apple's biggest customers," Psystar said it buys legal copies of Mac OS X from retailers, just like anyone else. The only difference is that it also installs extensions, allowing Mac OS X to run on its computers.
"Apple's copyright on OS X doesn't give Apple the right to tell people what they can do with it after they buy a copy," Psystar said in the post. "Apple can't tell an applications developer that it can't make a piece of Mac-compatible software. And they can't tell us not to write kernel extensions that turn the computers we buy into Mac-compatible hardware."
Unfortunately for Psystar, that is exactly what Apple believes.
Apple contends that the Mac OS X End User License Agreement (PDF), which each user must agree to before installing the software, is all the proof it needs. The agreement clearly states that the operating system can only be installed on an Apple-labeled computer. That could leave any clone maker without a legal leg to stand on.
Psystar filed for bankruptcy in May, which normally could shield a company from its legal woes. But Apple asked the court to lift the automatic stay of proceedings in the copyright case.
Apple won its argument, and a new trial date has been set for January 11, 2010.
Apple wanted Psystar back in court, and now it's going to happen.
An automatic stay of proceedings imposed when Psystar filed for bankruptcy in May has been lifted by the court, according court documents shared with CNET News.
Judge Robert A. Mark, who serves the Southern District of Florida U.S. Bankruptcy Court, lifted the stay on Friday, opening the door for Apple to continue its copyright infringement case against the company.
Apple made a strong case for having the stay lifted, noting that Psystar filed for bankruptcy after a motion was granted compelling Psystar to give Apple additional documents. The bankruptcy filing also came just before a scheduled deposition from Psystar.
Apple cleared the way for the bankruptcy court to lift the stay by agreeing that it would not try to collect any monetary damages against Psystar if it won the infringement case. That was also a condition imposed by Judge Mark in making his ruling.
It seems clear that Apple feels it has a strong enough case against Psystar to win a favorable ruling or it would not be pushing so hard to get the case back in court.
Apple insists that its Mac OS X license agreement (PDF), which users must agree to before installing, should stand up to the court's scrutiny. In fact, the agreement clearly states that the operating system can only be installed on an Apple-labeled computer. That should leave any clone maker without a leg to stand on.
Apple has been dealing with several clone companies this year, but the Psystar case is the furthest along, so it makes sense for Apple to see it through.
If Apple were able to get a favorable ruling, it could use that precedent as a deterrent against other companies that want to get into the Mac clone business. RussianMac and PearC have started selling clones in Russian and Germany, respectively, and Quo Computer opened the first Mac clone retail store in Los Angeles.
Apple is not giving up on its desire to get Psystar into a courtoom.
Apple filed a motion on June 5 asking the court to modify a stay of proceedings and to compel Mac clone-maker Psystar to show up in court in November as previously scheduled.
Psystar got an automatic stay of proceedings when it filed for bankruptcy in May, but Apple doesn't think the company should be able to use the bankruptcy laws to do so.
Apple points out in the court documents that Psystar filed for bankruptcy in May, after a motion was granted compelling Psystar to give Apple additional documents. The bankruptcy filing also came just before a scheduled deposition from Psystar.
At the heart of Apple's new motion is that despite Psystar's bankruptcy, the company is still in business and continues to sell its computers with Mac OS X pre-installed. The latter is what prompted Apple to file a copyright infringement lawsuit in the first place.
It's clear from the court documents that Apple is looking for a judgment in the case, not monetary damages. The company said in the filing that it understands that it can't collect against Psystar except through bankruptcy proceedings.
Psystar is just one of the clone companies Apple has to contend with. RussianMac and PearC have also started selling Mac clones in Russia and Germany, respectively.
One of the biggest Mac clone stories to come along in recent months is Quo Computer, a California-based company that has opened a retail store in Los Angeles.
Psystar, the controversial Florida company trying to sell so-called clones of Apple computers, says it doesn't have the money to fend off Apple's legal dogs. But with the company's Chapter 11 bankruptcy protection petition filed last week, it looks like Psystar could have minimized the damages it may have to pay Apple.
The bankruptcy petition filed last week shows that Psystar, the maker of the Open Computer, a Mac clone, is more than $250,000 in debt, due to poor sales. Most of the debt is owed to shipping companies, PC parts makers, and more importantly, its law firm Carr & Ferrell, which is representing the company in a suit brought by Apple. Apple sued Psystar last year for copyright and trademark infringement for selling Mac OS X on non-Apple hardware.
But now it looks like Apple will have to get in line. Under normal circumstances, when a defendant in a copyright infringement case files for bankruptcy protection, the copyright case is terminated and there is a hearing, or mini trial, held in the context of the bankruptcy proceeding that will quickly determine if there is indeed money owed to the copyright holder, according to Jesse Fried, co-director of the Berkeley Center for Law, Business and the Economy. In this case, that could mean an accelerated version of the copyright case brought by Apple, which was scheduled to begin hearings in November, to determine if Psystar did indeed infringe on Apple's trademark.
In some cases, the bankruptcy court will allow another court to determine a judgment first--in this case, the U.S. District Court of Northern California, where the copyright claim was filed. But that is a very expensive proposition, and one that's usually unlikely for companies that don't have a lot of money.
Either way, though Apple had asked the court for monetary damages and Psystar's profits it is not likely to get much.
"The bankruptcy court may say this company (owes) Apple $10 million. But that doesn't mean Apple will get that money," said Fried. "They'll be treated like an unsecured creditor."
Unsecured creditors are last in line after secured creditors, which usually means lenders, business debts, and back taxes. Secured creditors can usually recoup the amount owed to them in a bankruptcy. Unsecured creditors get to divide whatever is left over equally.
Essentially, what Psystar's bankruptcy protection filing has done is pressed the fast-forward button on the copyright proceedings and minimized what it could owe.
"They (probably) hope to have Apple's suit quickly resolved, have the dollar amount figured out, and pay Apple only a fraction of the dollar amount determined by court," noted Fried.
Psystar could not be reached for comment. But by filing Chapter 11, which allows companies to pay off their debts and re-emerge as a business in the future, they can pay unsecured creditors like Apple through equity in a new company or debt in a new company, he said.
And because Apple might only get a few cents on the dollar with Psystar now in bankruptcy proceedings, it may not have an incentive to continue with more litigation. Apple had no comment on Psystar's bankruptcy protection filing.
