Psystar's bankruptcy protection filing could minimize Apple suit
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.
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica. 
If someone buys a retail box of Mac OS X because he loves the box design and decides to frame it and display it over the fireplace, is he breaking the agreement?
"If someone buys a retail box of Mac OS X because he loves the box design and decides to frame it and display it over the fireplace, is he breaking the agreement? "
Unless the fireplace and frame are Apple Certified Hardware, then yes, they are violating the EULA. You can only use OS X with Apple authorized hardware.
I stand by my statement... they'll be dead in a month.
"The greater point of this is to get a legal precedent."
BINGO. Apple cannot afford to have a legal declaration made in this case. It's far better for Psystar to simply disappear without the court getting a chance to dig into the validity of the EULA that software companies use to threaten and bully consumers with.
Apple, Microsoft, Sun, Adobe, etc, all do not want a precedent made here. It is better for it to just quietly disappear as if it had never happened.
So all the claims about the existence of such a market, all the whining about monopoly and competition, all the wishful thinking by the cheap, headless Mac crowd, was all wrong from the get-go. All the armchair marketing geniuses who pontificated about how Apple needs to be in the el-cheapo market to stay alive were smoking ganja. So Psystar was going to force Apple to lower its prices and make cheaper Macs, huh. I guess not.
However, I wouldn't mind running OS X on cheap hardware. I think there could be a demand, but the way Apple protects its OS it's hard to sell something running OS X without it being pretty undesirable.
As long as Apple has a stranglehold on its operating system, they can sell expensive hardware and be protected by legal and technical barriers.
Basically what I'm trying to say is that if Apple didn't try and defend their OS so much, there could be a demand for running that software on other hardware. The real question is are they allowed to do that? Right now they are but Psystar's main argument was probably that restricting the hardware your OS can be installed on seems anticompetitive.
What if Microsoft decided Apple hardware couldn't run Windows? We'd all blow a gasket. Is that situation comparable to this one?
Windows running on Apple is just a marketing crutch to help people make the transition to OS-X.
Apple is doing quite fine selling highly polished, quality and capable machines. People like macs, because they like polish and quality. They are not just boxes of chips. Most PC manufacturers would LOVE to have Apple's reputation for quality and coolness. They don't have it, because they are generic. They run windows, and they don't control the entire widget. Macs don't get in the way of the user, PCs do, to a much greater extent. PCs force you to do everything the way the PC thinks you should. Macs seem to encourage you to work the way you want to work.
One point no one here has made is that the sale of desktop PCs are now lower than laptops. This includes Apple-manufactured laptops. This is a critical point to make because manufacturing a clone laptop is next to impossible of being profitable long-term. I really don't believe Psystar is doing bad because of the Apple lawsuit. Rather, I think it is because the PC clone market with ANY operating system will forever be dead IMO.
Oh sigh! (I mean, oh "Psy"!) Next Mac cloner.
Yeah, that's what I want - cheap hardware with no warranty and no recourse. The judge should take that filing and burn it - what about consumer protection?
My Apple Touch has a headphone jack that is coming loose. It's two weeks past the warranty. Apple's answer? Please pay $499 to replace the unit. it was a known defect in the unit, but Apple chose to ignore it until the warranty was expired, *then* admitted to me they knew about the problem.
Am I upset about it? Nah, it's just par for the course for Apple or any other OEM. You're expected to buy a new unit once the warranty is expired.
What if Microsoft decided Apple hardware couldn't run Windows? We'd all blow a gasket. Is that situation comparable to this one?
Then Apple users will be crying.........;.Macs wouldnt be around much longer
Windows does not offer anything OS X cant do better.
Nope, no reason for Microsoft to cut Apple off.
If they did, however... yeah, Apple would be in a tough spot. If Microsoft decided in their EULA to start enforcing the shutdown of any and all Windows installations on Macintosh hardware, it would only backlash horribly in the court of public opinion.
Remember it's a double standard. Everything Apple does is Good. Everything Microsoft does is Evil.
Its been just wait 10 years since this apple geek kids has causes this anti-Micro soft BS............I remeber when Apple and MS use to live happy. But know the Rah Rah Apple geek attacks started happenign and then now we stuck with this types of trash untrust reviews and comments. I never knew Apple geeks were this touchy about anything otehr then Apple products and services? Then again they dont know the diff between good hardware and or hype products like apple products. because of all this i wil not touch ipods, iphones etc.....I wish people would lets otehrs be hgappy with what they want or like? Then pressing and causing hate related remarks for the sole supoose of their lack or understand and narrowminded thinking. Give me the old days. Not this new way of trash and burn things because a geek hates somethign they cant afford/ dont understand.
Although that sounds ridiculous, it is supposed to. The idea that ANY operating system must work with ANY hardware platform is completely stupid. No one complained when Windows NT 4.0 could not run on a Motorola processor. No one complained that ProDOS could not run on a Commodore 128 or Atari 800. A company has a God-given right to write an OS and not have it run on a Wintel based platform. The only reason the EU is in a hissy-fit over Mac OS X and Windows is that the only OS they could come up with within the entire continent is Linux, and quite frankly I could see the EU favor their hometown OS over anything American.
Psystar... I TOLD YOU SO.
- by digital_iconoclast June 21, 2009 4:43 PM PDT
- EULAs are not enforceable and Apple knows it. You're asking someone to essentially agree to something only readable once you've already bought the product, opened the box (no refund policy, only exchanges after that for most retailers), and started installing the software. What average person reads (and actually fully understands) this stuff anyway? I would have liked this to go to trial, just to see a ruling handed down. IMHO, if you buy the software, it's yours, you own it, and it's none of their business what you do with it.
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(38 Comments)So Apple is going to tell me I can't run their OS on any old Intel PC (even though with enough time, effort, and a little research I can get their retail product installed) - but can you figure out why is there Boot Camp, not to mention virtual machines such as VMWare Fusion and Parallels then? I don't understand how they can persist in the one-sidedness and not come out of this looking like worse bullies than Microsoft (who WANT to sell you their OS to put on every Intel Mac). This is just one more reason why GNU/linux and GPL FOSS is really looking attractive from a consumer choice standpoint.