Apple must win its case against Psystar -- or else

In a move that everyone was waiting for, Apple has finally sued Psystar for violating its copyright and has asked for the company's profits and a recall of all orders.

"As alleged more fully below, by misappropriating Apple's proprietary software and intellectual property for its own use, Psystar's actions harm consumers by selling to them a poor product that is advertised and promoted in a manner that falsely and unfairly implies an affiliation with Apple," Apple's suit claims. "Psystar's actions also have caused, and are causing, harm to Apple and constitute a misuse of Apple's intellectual property."

Everyone knew Apple would eventually make a move against Psystar, but I'm not too sure anyone thought the suit would feature the kind of saber rattling it does. That said, it's the smart move and one that Apple must make if it wants to get away from anything of the sort happening again.

But if it doesn't use its head and try to force Psystar to its demise, Apple will open a can of worms that it may not be able to handle so easily.

Psystar may be the only company that's willing to sell its own brand of computers with Mac OS X installed right now, but rest assured that it's not the only company that's thinking about it. In fact, I would venture to say that the vast majority of small computer companies are looking to jump on that bandwagon at any second and have waited this long because of their desire to see what happens to Psystar.

Here's how I see it going down:

If Apple gets everything it asks for and totally ruins Psystar, it will never need to worry about an unknown firm trying to sell Mac OS X again. The legal battle will be enough to send small companies packing and Apple will make Psystar just another example of what can happen to a small organization when it tries to stand up to a monster.

But if it doesn't get everything it asks for and it's forced to concede some points and the court orders Psystar to pay Apple some sort of licensing fee, Apple will have stepped on a bee's nest.

In one fell swoop, other companies will realize that they will be able to get away with selling Mac OS X on their own brand of computers and use the precedent of the Psystar case to their advantage if and when they face legal action from Apple.

In the process, these companies will crop up and start selling Mac OS X-based computers and instead of trying to deal with one company, Apple will be forced to play games with dozens.

But the story doesn't quite end there. Does Apple really know why companies actually want to sell Mac OS X? Inevitably, the company's lawyers will claim that it's due to the value of Mac OS X and its usefulness. But in reality, it has nothing to do with Mac OS X and everything to do with Apple.

Apple's policy of locking Mac OS X down to its own brand of computers has helped it sell Macs, but it hasn't won it any awards in the SME space. By only offering Mac OS X on its own computers, it's effectively blocking any and all companies out of the profit-making space and forcing them to try and sell Windows PCs.

On top of that, Apple is an extremely popular company right now that commands a lot of attention from both tech and mainstream media. Because of that success, companies like Psystar are taking notice and are trying desperately to jump on that bandwagon before it fizzles out.

So in an attempt to become a major player in a PC market that's dominated by a handful of huge companies where there simply isn't any room for small PC manufacturers, companies like Psystar are trying to find ways to capitalize on Apple's success and differentiate themselves as much as possible. And although it may not be the smartest move legally, Psystar is just the first of many that want to do that by selling Mac OS X-based machines.

Years ago, breaking into the PC business and solidifying your company in it wasn't nearly as difficult as it is today. In fact, it's practically impossible. But by selling Mac OS X-based machines, the chances of your company making some inroads are substantially higher.

And as more companies realize that, it becomes more imperative for Apple to play hardball with Psystar and try to take the company for all it's worth. If it doesn't and Psystar gets away with just a slap on the wrist, look for it to be the first of many companies that are looking to offer Mac OS X machines and Apple will be faced to deal with many more than one.

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[Sumatra-Bosch]

Apple will win. And no, companies will pop up every couple decades and try it and their executives will have their arms torn from their bodies. The Franklin case was, what, 1983? Yes, that's about right. New crop of dummies with lawyer brothers-in-law to suggest, "Oh, Apple can't do anything but let you walk all over them. Piece of cake. Jobs will be on his knees when I wave this memo in court, begging you to let him clean the tires on your car with his tongue." I wonder what Jobs will do with all those houses in Miami. . .

[gyranthir]

I wouldn't be so confident. Their EULA and Shrinkwrap licensing looks mostly unenforceable as it's unconscionable, some of the limitations that Apple has placed on it.

A lot of people are hoping Apple loses as it treats its customers like crap, covers up and paints over complaints, over charges about 30 to 80% on hardware and is just overall legally a bully, a big kid on the play ground with a big stick in his hands.

[wolivere]

Frankin computer was not about apple cloning, it was about using apple written software and putting your own name on it, and then selling it as your own.

Remeber up till 1997 Apple licensed out MAC clones, the largest MAC clone company was Power computing. When Apple decided to stop selling MAC O/S for MAC clones, the president of Power computing had a meltdown over it and was a huge Proponent of continuing the MAC clone buissiness. That is until Apple bought the company out.

And just who was that HUGE proponent of allowing MAC clones? Well none other then Steve Jobs, well at least he was PRO clone unitl he came back to Apple.

[Thad Boyd]

I'm with Gyranthir on the EULA enforcement -- I think it's a bad move and, worst-case, could call ALL EULA's into question. (Worst-case for the software industry, not consumers, of course.) Wired covered this back in April ( http://www.wired.com/gadgets/mac/news/2008/04/apple_psystar ).

Apple should stick to claiming Psystar is damaging its brand. Because long-term, that's what Mac clones are likely to do: a big part of Apple's "it just works" reputation is due to the fact that running OSX on a very limited scope of hardware means having perfect driver support rather than worrying about supporting every product under the sun. (Has anyone else here installed 64-bit Windows? Talk about a pain. Linux has better hardware support at this point.)

Wolivere brought up the Mac clones from the 1990's -- does anyone remember actually using them? They were pieces of crap.

All that said: I'm on Psystar's side. A little competition never hurt anybody, and Apple's license agreements ARE legally unconscionable.

[mdonovan90]

I think that Apple will emerge the clear winner against Psystar. They have great lawyer resources and I think that they will clearly show that Psystar is infringing on copyright. This case will be over very quickly. Psystar claims that they have the right to sell OSX on their hardware. That would be like apple saying that they have the right to put blackberry's operating system on the iphone or Garmin saying that they are able to put Tom Tom GPS software on their hardware. Apple will make a fool/example of Psystar!

[Dragon_Myr]

With all the Vista bashing Apple has done, I'm surprised they don't just go right for the throat and slice Microsoft in half. Apple has a lot to gain by licensing or allowing clones to use its boxed software. Apple's popularity and cult following of consumers and media alike could allow it to launch itself full force against Microsoft and do serious damage with an OS war where Apple has a much better footing this time around. Microsoft is not shy at all about doing these types of things. Zune is a great example. I think it would be smarter for Apple to team up with a handful of cloners (such as Psystar) and retail outfits, work out some details and rules, and then start a direct assault against Microsoft and their partners.

Personally, I've always hated Macs and the Apple OS's. I'm much more happy with Windows and Linux. However, I recognize the value of competition. Apple is competing with Microsoft in the OS arena, whether they want to realize it or not. Remember those Redmond photocopier banners from various OS X events? Apple's marketing team sure knows who their enemy is. The iPod never got international popularity by being sold only in Apple stores. Likewise, Apple software such as OS X will never get the mass market appeal it has the potential for unless Apple starts playing ball with Microsoft and expanding.

Apple really should settle and come up with some sort of licensing scheme and set ground rules. The risk that the courts will it for them is a realistic, but not inevitable, outcome.

[zaaz]

I think that Psystar is right when they say that what Apple is doing is like if a car maker would sell you a car and then tell you where you can go with it and where you can't or tell you which color you can use on it and which not. it's like a company selling hammers would only allow you to use the hammer to drive a nail in a piece of wood but not to break a nut. as a customer I should be allowed to buy a product and do with it whatever I want to because I BOUGHT IT. so, if I want to have a mac OS X on a pc then why not? because apple doesn't like it? of course that could be bad for Apple but fair to the customer. maybe what Psystar is doing right now is legally indeed questionable. but I think if someone ran a business which would simply offer customers a way to install a copy of mac OS X they legally bought on a pc then I don't think there is a fair law which could prevent it. so, it's like you buy mac OS X from Apple then you go to this company and they simply install the mac OS X on a pc you'd buy from them. I mean, just imagine if suddenly microsoft would decide you can only install their OS on dell computers. that's how bizarre this apple restriction is.

[tclark23]

Yes Thad, we had a couple of Power Computing Mac Clones and they worked just fine. I would even say they worked as well as the PowerPC Macs we were buying at the same time and were MUCH easier to repair. They were using IDE hard drives and CD ROM drives when Apple was still using more expensive SCSI drives. Repair parts were available off the shelf , but I never replaced a mainboard on one luckily. When Apple bought the company the next Macs were also using the non-proprietary parts, helping Apple sell at a lower price. The end result was that little bit of competition helped Mac users purchase machines at a lower price. Competition is good for the user.

Mac users are really hot on Parallels right now. Being able to run Windows on a Mac makes them laugh at Microsoft's discomfort. However, MS isn't really a hardware company. They make their money selling software and every Mac user running XP in Parallels is a good MS customer. What I want to do is run OS X on a cheap Windows box. The "it just works" stuff was different back in the day of OS 7 with polling instead of interrupts, nearly proprietary SCSI drives and specific RAM chips, however, now Macs are running non-proprietary hardware like SATA, IDE, DDR RAM and now even Intel Dual Core CPUs. The "special" hardware of a Mac isn't very special technically, only designed by an artist to look better. From the point of view of the mainboard, one SATA drive is like another, so it should be possible for a company to easily produce hardware capable of running OS X.

Apple, however, doesn't allow their software to run on anything but "Apple-labeled" hardware. That doesn't mean it won't run on anything else. Now in the day of OS X/Intel and what amounts to "off the shelf" hardware, the only thing stopping someone from installing OS-X on different hardware is that stipulation in the license. In this instance, Apple is being more greedy than MS, who allows some "virtualization" of their software. Although Apple has Boot Camp and Parallels has provided a really neat way to run Windows on a Mac, Apple hasn't seen fit to reciprocate in their license.

Bill and Steve may both be pirates, The GUI that MS "stole" from Apple was originally stolen from Xerox PARC and the Star. Apple even swiped the mouse from Xerox. But MS hasn't written a slick way to install OS X on a Windows box. Parallels has said that although they can run OS X in Windows they will not violate Apple's license. Now, although Psystar is probably a couple of pikers and fly-by-nights, it may well be that once the court has to pass judgement on the Apple license, we may find that the way opens up for virtualized OS-X on virtual Macs. That would suit me just fine. Apple is now making money elsewhere on iPhones, iPods, iTunes and soon iMovies, maybe they could loosen up on their license a bit to allow virtualized OS X to run on virtual Macs.

[piepiecakecake]

Um, that would be a 'hornet's' nest there, Don. Bees live in hives. Would have gladly sent this correction privately if the option were available. And the OS and mouse were actually legally acquired from Xerox, tclark23. Microsoft reverse-engineered a Mac without permission (it wasn't until later that portions of the OS were licensed to them). That's the difference. Microsoft could have approached Xerox just as easily as Apple did; they didn't. Psystar is selling products in blatant violation of Apple's licensing agreements, which, like it or not, puts them in the wrong from a legal stand point, pretty much period. If that rattles anyone, start writing letters to yon Congress People.

[hotinplaya]

First of all, when you purchase Mac OS X , you are in fact buying an "Up Grade" since your Apple computer came with it already installed.

I do not believe anyone thinks that $129.00 is a fair value for the OS, and that Apple is being fairly compensated by Shystar.

I believe we may see Apple licensing OS X to a select group of PC OEM's who agree to certain minimum hardware requirements with the up coming Snow Leopard!

If you have been following, Snow Leopard 10.6 drops PPC support (Intel only) and is being described as "lean and mean". about 1/3 as large as 10.5

I also believe if Apple license's OEM's and decides to sale Mac OS X to the public, it would be priced similar to what MS charges for their software, except they will offer one version.

[darryl365]

If somehow, Apple loses this case, (which I doubt) the problem will not only be one that Apple will face, but any manufacturer that has an EULA.
What many are failing to recognize is, that users agree to the terms before using the software. You have an option to not use said software, which must be agreed upon before using.
This isn't unique to Apple.
It's the same when you sign up with a carrier plan for cell phone usage. You have the option not to use. If you agree, it is legally binding.
If you do not like the terms, you simply do not make use of the software.
This is not about Apple being a bully.
If EULAs are not legally binding then, I want to duplicate copies of Photoshop and start selling it in my on package.

[kenaustus]

The $129 price for a full version of OS X has been a good deal for those that have bought a Mac. the Family Pack is even better.

Now guess what Apple will do if they do not win the case. What is the most expensive version of Vista? The retail price. Lots of activation joys also.

It doesn't take a rocket scientist to figure that Apple would set a price that keeps a clone from being cheaper than a Mac. You might be able to buy one for your old Dell, but you're going to comparing the investment with a new Mac, even if it is mini.

For those that own a real Mac Apple will work out a way to ensure their final cost will be $129. Accountants, lawyers and programmers can figure out that rather easily, especially since Apple maintains records of Mac serial numbers.

There is no joy to the clone makers if Psystar isn't burned at the cross by the court.

[byrontx]

I am hoping Apple loses on this. I love the Apple OS but I hate the rip-off pricing on hardware. The result? The systems I own are running Windows. I just will not cough up the premium that Apple demands. Were Apple to allow clones again it would really take off and give them some serious market share at a time when MS has really been stumbling. (BTW: I owned some of the Apple clones and they were good systems).

[tabeast2]

Apple: my software only on my machines. Ok, so the reciprocal result - Microsoft starts branding laptops and says the same thing. sorry dell and hp, its been real, go write your own OS.

[jbaustian]

Quote: "I'm on Psystar's side. A little competition never hurt anybody, and Apple's license agreements ARE legally unconscionable."

Apple already has a little competition, from every Windows PC manufacturer. It doesn't need competition from companies using its own OS.

Can Generic-Brand Cola buy Coca-Cola syrup and put it in their own cans? I don't think so.

Can any cable system take the HBO signal, give it a new name and sell it as their own? I don't think so.

[Stratoukos]

I would just like to point out some faulty assumptions I've read on countless debates

1. Apple is mean/evil for not letting me run OSX on other PCs
No they aren't. Have you ever complained because you cant play an Xbox game on your Playstation? Or because you can't watch a DVD on your washing machine? Every machine on your home probably has a processor in it, so with a little modification you could run anything on anything (I'm really oversimplifying things here..). If the manufacturer is ok with this you're ok. If not, tough luck. Microsoft's policy is to allow everyone to use their OS and so far it has worked great for them. Apple has a different approach so if you can't accept their terms, don't use their products.

2. I "bought" OSX so I can do whatever I want with it
No you didn't. You can't buy OSX as you would buy a car. You just licence a copy of it. That means that you make a "contract" (EULA) with Apple that permits you to use their software if you abide with some rules. You don't own OSX. Apple owns it. It's somehow like leasing a car. The leasing company lets you use their car but you have to agree with their rules. So... once again if you can't accept their terms, don't use their products.

Now Psystar may be a bunch of kids, but they're not stupid. EULA's legal power has been disputed in the past and it's called an end-user license agreement. End-user. In this case the end-users are those who buy the Psystar PCs. So theoretically Apple has to hunt down the users not Psystar, something that would have a devastating effect ontheir reputation. Of course it's not that easy to beat a giant like Apple, but these guys saw that they had 0.1% chance to become rich as hell and the took it. Wether they win or lose, we just have to sit back and watch.

[Stratoukos]

(Sorry for the double post but I can't find a way to edit my comments)

Psystar also uses the Netkas EFI to emulate Apple hardware on non-Apple PCs. Netkas' EFI EULA clearly states that his EFI cannot be used for any commercial use so that's another EULA violation.

[solitare_pax]

If it is fine for Psystar to build Macintosh computers, one has to wonder how long it will be until Psystar starts building knock-offs of X-Box, Playstation, Sega or that very nice, expensive Nintendo WII ? All of those systems probably use off-the-shelf parts, like Macs, but they are grossly overpriced, if you are just looking at the hardware, and have had their own flaws like any machine does.

[tclark23]

piepiecakecake, Xerox sued Apple for their use of the Star GUI and mouse after Apple sued Microsoft for taking the interface from them, but the case was thrown out by the court because the three-year statute of limitations had expired. Apple eventually lost the court case against Microsoft, losing their claim to the GUI as well. That isn't the same as paying royalties or entering into a contract with Xerox. It sounds more like getting away with theft because Xerox didn't pay close attention to their GUI intellectual property while being preoccupied with Laser Printer patents.

[PFYC]

What Apple is doing is what IBM was found guilty of in its antitrust case -- bundling. They need to sell OS X separately from the hardware, although they could probably ask any price they want. When Apple was a niche player they could get away with a lot, but now that they're beginning to move into the mainstream they need to watch their step.