Apple, Psystar agree to dispute resolution process

Apple and Psystar have agreed to pursue a mediated settlement to their legal dispute over Psystar's Open Computers.

Psystar's Open Computer, the source of the legal dispute between the clone vendor and Apple.

(Credit: James Martin/CNET News)

The Mac Observer turned up a court filing from earlier this month in the Apple-Psystar case noting that the two parties have agreed to participate in the Alternative Dispute Resolution process. As you may recall, Apple sued Psystar earlier this year for copyright infringement after Psystar began selling low-cost Open Computers with Mac OS X preinstalled. Psystar then countersued Apple on antitrust grounds.

ADR, as it is known, is a way to bypass the costly legal process as well as keep the outcome private, which is one of Apple's favorite words. I downloaded the document in question from the U.S. District Court of Northern California's Web site (click here for PDF), and it says that Apple and Psystar have agreed to three portions of the ADR process: non-binding arbitration, early neutral evaluation, and mediation. The parties have agreed to hold their sessions by January 31, 2009.

It's not exactly clear what Apple and Psystar are thinking with the decision to choose this path. If Apple loses the case, and Psystar is allowed to continue selling Mac OS-based Open Computers, it won't really matter if the outcome is kept private, since the availability of Open Computers will tell the tale. If Psystar is forced to stop selling Open Computers with Mac OS, we'll likewise notice that.

Psystar has never appeared to have a ton of resources to use on its behalf, despite hiring a big-time Silicon Valley law firm to represent it against Apple. So it might very well be interested in a cheaper method of resolving the dispute, especially if Apple has the upper hand.

And Apple may very well not want to concede in a public courtroom that Psystar has a chance of proving its antitrust claim that the relevant market for this case is Mac OS computers, rather than just personal computers in general. That could hurt Apple in other antitrust cases it's facing regarding iTunes and the iPhone.

[humanssssss]

Apple is looking to pay Psystar to reduce the bad publicity.

Still, Steve Jobs needs to go to jail.

[shycelticwitch]

For what? Giving the American public a better choice in computing? You must be a Windblows fan...

[bootchmagoo]

That may be one of the least intelligent things I have heard all day.

[digiguy23]

Apple designed the Mac and the OS. Why should anyone have it?

[Mr. Dee]

Its quite clear what Apple is doing, buying them out for a cool sum of money. Paying Psytar 10 million is nothing to Apple a Company with 24 billion dollars in the bank. They did this with the mac rumor site Think Secret and they are just applying the same process again. It still does not stop the thriving Mac OS X x86 community which has even come up with a hardware based conduit that allows you to install OS X on almost any computer. Then again, its not hurting Apple either and past quarters have proven so.

[drhamad]

What does ADR have to do with buying out Pystar? Not to mention that buying out Pystar wouldn't have an effect on the ability of other companies to do exactly the same thing, which seems like a bad thing for Apple. Also, Think Secret was a court-room legal battle, not ADR.

[Vegaman_Dan]

It makes sense for Apple to buy out Open Computing entirely and make the lawsuits disappear. Even if they won the lawsuits, it could expose very sensitive areas that I'm sure Apple doesn't want anyone looking too closely at- such as the EULA itself.

A shame that it's going private. But then unless the results of the agreement are made public, it does nothing to stop someone else from doing the exact same thing. I would not be surprised at all if someone else starts up a new group to test the waters.

If Open Computing goes away entirely, then Apple gets a black eye for bullying a smaller company and forcing them out of business. It will appear that they are trying to hide the truth, whatever that truth is. Unless Apple is open about it, the lack of answers will be more damning than if they simply say what they are doing.

If Open Computing stays in business, then that opens the door to other companies to do the same thing and Apple loses control of their price point defense.

Should be interesting to see what happens.

[steelhoof]

What is the great mystery? the issue likely revolves around the BSD License. OSX is based on (derived from) BSD unix.

* Redistribution and use in source and binary forms, with or without
* modification, are permitted provided that the following conditions are met:
* * Redistributions of source code must retain the above copyright
* notice, this list of conditions and the following disclaimer.
* * Redistributions in binary form must reproduce the above copyright
* notice, this list of conditions and the following disclaimer in the
* documentation and/or other materials provided with the distribution.
* * Neither the name of the <organization> nor the
* names of its contributors may be used to endorse or promote products
* derived from this software without specific prior written permission.

There are other aspects of the license, but key is the notion of open binaries and open codebase.

[shycelticwitch]

I know two people who puchased Psystar machines. They are wishing they had not. To me, it's kind of like putting caviar on a graham cracker... MAC OS is superior to Windows not just because it is superior programming, but because Apple provides superior hardware to run it.

[humanssssss]

I bought myself 4 Psystar machines. Had 3 setup for my staffs and one for myself. So far no issues, performance is great.

Can you tell me what model the Psystar they bought?

[Michichael]

By superior hardware you mean overpriced throwbacks from last year, right?

If anything Windows would be more superior because of hardware, not Mac - you're probably trying to argue Mac is more STABLE than windows, which in some cases is true, because all hardware in the system is thoroughly tested with the OS by the maker of the OS - ensuring stability. This, however leaves Mac substantially behind the curve of third party open development that the Windows and Linux platforms enjoy - at the risk of instability.

Personally, since i know what I'm doing, there is little to no risk for using the latest hardware.

[Tom Krazit]

My Open Computer, one of the first off the line, has run smoothly since I got it.

[goodspeed8701]

There is nothing superior in macs... My friend run osx on his hp laptop and i tell you it runs like macs. If you they the Os and the hardware is superior, why does it take apple a year or two to sell one mac here in Nigeria.

With tutorials on the net you can run mac on a pc. and its rubbish as it has too many eye candy and cant perform as windows. It is stable i agree. It runs on only one company hardware apple. Windows is built to run with anything you throw at it. so who is superior now?

[shycelticwitch]

I own 5 Macs, one of them a Color Classic. they range from 16 to 6 months old. ALL of them still run perfectly and all of them are still used. One of them (first generation G5) was dropped 6 feet and STILL WORKED PERFECTLY. You will never get me to buy the BS that Windows and windows machines are superior. How many of you have a 16 year old PC that still runs on ORIGINAL EQUIPMENT???

Superior OS, superior hardware... jealous winfans who blow too much money on bubblegum and comic books and can't afford a mac... here's a sucker, now go play.

[Mr. Dee]

There is nothing to hide, its very obvious, this is a small threat to their hardware plus software monopoly. Leaving Psystar alone in Apples opinion is suggesting that they would be approving this communities efforts. Apple thrives on its hardware business, the recent MacBook announcements are proof of that. Anyway, if you want a Mac, I say buy one too, its just so much better. I have tried running OS X x86 on a PC and its just too much hassle. The patches, the incompatible applications the PHD required to be reading the latest approaches to dual booting with Windows etc. Its just too much for an OS.

[mchally]

Apple wants the story to go away, because the story itself puts them in a bad light. The best way to do that is to enter into a process which starts with both parties agreeing to keep it private. In short, this is Apple pwning Psystar, who wouldn't be able to afford a full-on court battle, anyway.

[jaypres]

Apple knew it won't recover the damages from the doomed psystar. No point sue it to bankrupcy. The outcome will be to ensure psystar do not continue their business. That's all.

[Mathue]

The suit has little likelihood ending well for Psystar if you properly read the pertinent laws. I would like to know which entity initially asked for mediation, but I somewhat doubt it was Apple. I have two colleagues in Florida who bought these machines, never having been Apple users before. They both ended up installing old XP licences as they found the whole experience was rather lacking. Thankfully it didn't dampen their interest in real Apple machines and while they have not taken the plunge, I did give one an old Dual G4 that is at the very bottom of the useable machines with Leopard. So far, even though it's rather underpowered compared to the Psystar he's been pleased. The Hackintosh stuff is pretty cool and its fun for the better geeks out there to tinker with the latest Mac OS, but at least from what I saw, it's not for use by 'Joe Plumber'.

[iConquered]

The issue at hand, is that Apple will be essentially losing a competition, against itself. If Mac OSX is available for a non Mac platform, that means there will be a potential decline in the popularity of Mac machines, since the majority of the novelty/improvement, comes from the exclusivity of Mac OSX. For Psystar, the question of the hour, is whether or not they can legally redistribute hardware that is preloaded with Mac OSX. Much like how purchasing a copy of windows is for one person and one machine, Mac OSX is also licensed for an individual. Psystar may be at fault, for purchasing Mac OSX, then reselling it.

[bootchmagoo]

I would have to agree with this ending badly for Psystar. Apple filing suit is fully within their rights and they have a hell of a case.

Contrary to what Psystar and some others may think, Apple is not a monopoly. Apple does have the sole right to distribute their software on their machines. If you don't like it, you have several other computing choices to pick from.

As others have said, it's doubtful that Psystar would be able to cough up the damages and Apple just wants them to stop.

If other companies step in to challenge this in the future, I imagine Apple will not be so kind.

If Microsoft changed their EULA would they be able to stop Apple from using their bootcamp software in the future?? It's the same concept. The EULA should not dictate every aspect of software licenses. I'm also not very happy with the outcome of the Blizzard vs (that glide company that i cant remember the name of). We're headed in a bad direction if you can get in this kind of trouble just for loading a program into memory.

[digiguy23]

It's a da*mn computer package. Apple has every right to design it and manufacturer it under their own name. It's not a necessity, it's a luxury. The market has other offerings in terms of computers and OS's to choose from.

[tom_kite]

Please stay with your core competency and ask if you don't know.

All federal law suits REQUIRE that all parties enter in to non-binding Alternative Dispute Resolution.

Don't read ANYTHING in to this.

[open-mind]

For years the world has been waiting on an entry-level expandable Mac mini-tower. Apple apparently has no interest in selling a mini-tower, even though (with their buying power) they could easily match Psystar's price while making a good profit. So if that's the case, they should just authorize Psystar (and only Psystar) to sell the damn things.

[zorakic]

Tom_kite is right on this one.

There is a Federal law called the "ADR act of 1998" that states: "Notwithstanding any provision of law to the
contrary ... each district court shall, by local rule adopted under section 2071(a), require that litigants in all
civil cases consider the use of an alternative dispute resolution process at an appropriate stage in the litigation."

[Deekman]

Psystar as competition to Apple? Ludicrous. ADR is REQUIRED. The only interesting (and rather pointless, as the author points out) point is that the proceedings are private. Perhaps Apple is considering expanding their open-source endeavors to include a more typical "builder" path, that which "gamers" or "modders" may find attractive. Apple apparently considers the iPod Touch as a viable gaming platform; it's conceivable that Apple is interested in finding new ways to attract this user-base that has traditionally been dominated by Microsoft software.

[cyclonica1980]

Psystar charges more money for one of their computers than a midline Apple computer. Apple just does not want people tinkering with OSX and the hardware. I use a Macbook Pro, the new one but a-lot of times I find myself wanting to go back to a PC laptop with specs that match the price.. All apple wants to do here is just assure no one touches its pride and joy Leopard. But hey when you sell the operating system by itself what do you expect techies will tinker with it. If you do not want people being able to develop hardware for Leopard, simple solution. Do not sell it in individual packaging, include it with the comps only.

[mbenedict]

Since an ADR mediation is non-binding, this process only plays to Psystar's favor by buying them time, especially since there isn't a preliminary injunction in place.

Hence Apple will want to dispense with the ADR process as soon as possible, while Psystar will try to stretch it as long as possible.

Contrary to some of the posts here, Apple is not going to "buy out" Psystar. Doing so would only encourage copycats hoping to be similarly bought out. Truly stupid idea.

Psystar isn't a legitimate business. They have nothing at all to lose. Their intent is simply to milk as much money as they can -- while they can -- then they'll declare fake "bankruptcy" and/or simply run with the money.

In our legal system Apple can do very little to stop the Psystars of the world. Even if they dispense with the ADR process quickly and go all the way through the jury trial and win an injunction and damages, they know Psystar will never pay up.

Apple's strategy can be summarized as: 1) pursue Psystar through a full trial to discourage copy-cats; 2) paint Psystar products as poorly as possible to discourage people from buying them; 3) at the same time use the legal proceeding as marketing to show how "desirable" Apple products are.

In the meantime, the people behind Psystar will laughing somewhere in Eastern Europe or South America, well away from the (short) reach of the US District Court of Northern California.

[aMUSICsite]

It seems quite simple Apple can't afford to lose an antitrust counter claim, it would open the door for anyone to do this.

Then again when people realise this, it opens the door for anyone to do this.

Please let me know when a company starts shipping a laptop with OS X and firewire please ;) First one to do it could make a mint!

[Mike_2112]

In my opinion, Psystar should have a good point in their anti-trust case. Here is how I see it, Apple doesn't only sell Macs, it also sells Mac OSX, but restricts its legal use to their own hardware. I do not think this should be right. It's like a company that sells can openers telling their customers it will be illegal for them to use the can opener on anything but its own brand of tuna!!! A can opener is a can opener, and an x86 architecture OS is just that. If a person or a company can make it work on other brands of x86 machines out there, why should this be illegal? Because Apple said so?

If, on the other hand, it was the case that OSX is only obtainable when you buy a Mac from Apple, that's another story, then Psystar would be stealing the OS then. But this is not the case.