Psystar to countersue Apple, cites antitrust laws

updated 05:00 pm EDT, Tue August 26, 2008

Psystar countersuing Apple

Psystar, a Mac-clone manufacturer and defendant in a copyright infringement lawsuit filed by Apple, has been preparing its defense and is planning a countersuit. According to CNET, the legal battle between the two companies has been heating up for a while, beginning with Psystar's blatant modification of Mac OS X so it can be installed on its cheaper $400 PC. Apple finally filed suit on July 3rd after a long silence, following Psystar's release of the Mac OS X 10.5.4 update for free to its customers.

Apple's suit and Psystar's defense both center around the Mac OS X license that prohibits it from being installed on any other hardware. Apple claims this to be copyright infringement, while Psystar alleges that the license itself is a violation of antitrust laws. The company says that Apple inflates the prices for its hardware and the end user license agreement unfairly prevents other companies from competing with alternative systems.

The law firm representing Psystar is Carr and Ferrell, LLP, a firm which successfully sued Apple in 2006 in a patent infringement suit that lead to a $10 million out of court settlement. Psystar defiantly announced it was "definitely still shipping" its clones earlier this month. It was the first company to begin selling clones but a few other companies have since followed.

Apple appears to be preparing for the same angles with their an attorney James Gilliland, Jr, who is familiar with antitrust, breach of contract, and intellectual property suits. This is a high stakes fight for Apple: if they were to lose, the damage would be much larger than anything Psystar could inflict with their competing products. Many other companies have seen the opportunity in direct competition with Apple, but have not taken the risk of legal issues. A successful defense by Psystar, and more importantly a successful antitrust countersuit, would open the doors to companies eager to take a bite of Apple's market share.

By Electronista Staff

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Guest

Fresh-Faced Recruit

Joined: Nov 1999

-10

08/26, 05:08pm | report spam | (2 replies) close | reply

Remember IBM

Apple could loose this. Remember IBM, they lost when Amdal created a IBM clone and ran IBM software on it.

jameshays

Joined: Mar 2003

+11

Compete

"The company says that Apple inflates the prices for its hardware and the end user license agreement unfairly prevents other companies from competing with alternative systems."

Apple doesn't stop you from competing. Windows and Linux compete just fine. You can compete all you want, you just can't compete by using their products. There's nothing wrong there. I can't wait to see this unfold. On the other hand, Psystar has absolutely nothing to loose here. Even if they loose, all they have to do is file bankruptcy. They have nothing to loose and everything to gain with this legal battle. The worst that would happen is they loose their business and they are set back a few years.

icrew

Joined: May 2005

08/26, 05:23pm | report spam | (1 reply) close | reply

Upgrade license

I thought the only way to purchase a full license for Mac OS X was to buy a new Mac and get the license included with it. I always understood that the licenses in the boxed software were upgrade licenses, not full licenses.

If that's accurate, what Pystar is doing would be analogous to purchasing an upgrade copy of Photoshop, hacking out the previous version check, and reselling it cheaper than Adobe does. That's very obviously illegal, ergo what Pystar is doing is illegal too.

Koda

Joined: Jul 2003

08/26, 05:25pm | report spam | close reply

DMCA?

Wasn't there something in the DMCA about reverse engineering software like what Pystar did to make the update work on their hardware?

On The Other Hand. . .

"Apple could loose [sic] this." Covering the intellectual waterfront here . . . "Apple could also WIN this."

Nowhere in Microsoft's current EULA does it specify the platform on which platform their software can be run. (They changed this policy briefly with VISTA, but soon backtracked thereon.)

As a major shareholder of AAPL, I expect Steve and company to spare absolutely no expense to drive these cheap, opportunistic b******* into the sea. Let MSoft/Dell/et al live on bargain-basement software and components--not Apple.

nat

Junior Member

Joined: Mar 2002

08/26, 05:34pm | report spam | (1 reply) close | reply

hmmm...

I'm curious, did Amdal modify IBM's software to make it run?

Jamesshays is right, this as no different than modifying PS3 software to make it run on your own game box, or modifying Xbox software for the same purpose.

Inflates the price? Geesh, how many articles have to be written that show that comparable Windows machines cost roughly the same?

dliup

Joined: Jan 2006

08/26, 05:45pm | report spam | close reply

WTF???

Oh no, only Gucci can sell Gucci bags?! Only Tiffany can sell Tiffany jewelry? Why don't the scam artists from psystar go sue every single corporation?

Not sure who has IQ low enough to pick up this case.

PS. I like the photoshop example. You've nailed it.

lkrupp

Joined: May 2001

08/26, 05:49pm | report spam | close reply

Putting up a front

This is sounding more and more like Psystar is just a front operation for someone with deep pockets looking to test the legal waters. Psystar came out of nowhere. Where did they get their capital? Is the law firm representing them putting up the cash to carry this forward? This is going cost millions to carry through and Apple can keep it in the air for years, maybe a decade, if they want to.

Follow the money. Something ain't quite right here.

climacs

Joined: Sep 2001

-3

08/26, 05:54pm | report spam | close reply

oughta be open-and-shut

if i understand correctly, they are not getting the licenses from Apple for these OS X installs?

Then that is pretty much open-and-shut, shouldn't it be?

Oh and remember

I remember all the dire predictions and hand wringing when LCO filed suit against IBM over Unix ownership. As time went on and the facts came out it became clear that LCO was trying the old shakedown on IBM. It didn't work and LCO is history. Just sit back and watch what happens with this little chess move.

-8

08/26, 06:02pm | report spam | (1 reply) close | reply

Low IQ

Someone asked: "Not sure who has IQ low enough to pick up this case."

The answer is:
Carr & Ferrell, a company which specializes in intellectual property law. This was the law firm which represented Burst.com in a patent infringement case against Apple dating back from 2006 (this was settled last year when Apple agreed to pay Burst.com $10 million). The law firm also backed Burst.com when it went up against Microsoft, a move which earned the company $60 million in an out of court settlement.

Low enough IQ for you?

Johnny Niles

Joined: Jun 2007

+13

08/26, 06:09pm | report spam | (2 replies) close | reply

Off topic

I am saddened by the continuous butchery of the English language on the internet. How can you not know the difference between LOOSE and LOSE? They're two different words that mean two different things.

The written word is the medium of the internet. Please learn how to spell and which words to use. This is among the most basic of skills, something that you should have learned in 4th grade. There really is no excuse.

danviento

Joined: Dec 2005

08/26, 06:12pm | report spam | (1 reply) close | reply

Different product

What this article fails to state is that Apple is putting out a different product that much of the rest of the industry. It has an integrated hardware and software platform because it chooses too.

That is a business model and product, not a market and single commodity. The end-to-end model and product of Mac OS X is not in any way a monopoly. Sorry guys, but I guess that's the best defense that you can come up with.

unity@mac.com

Joined: Sep 2005

08/26, 06:41pm | report spam | close reply

This is...

This is like saying McDonalds has the "monopoly" on BigMacs.

The software and hardware are tied together as a complete product, just as the game boxes and the likes of WebTV and TiVo or even the iPhone, Newton, etc.. The list can go on forever. Even most cars have specific software.

I see this going nowhere.

Jonathan-Tanya

Joined: Oct 2004

-22

08/26, 07:09pm | report spam | (1 reply) close | reply

of course they inflate

the price is inflated.

Period, if you don't think so, you are drinking the coolaid.

My core 2 duo 2.5ghz from Dell laptop with video card, etc...I won't go into all the specs because at $750, it is far faster than the macbook pro or macbook, and far cheaper.

yes, I got it on sale, but nevertheless...far cheaper.

Expandable tower mac? one that you can swap the graphics card on? about $1000 more than a similar pc.

So, you want to argue the law...go ahead, its interesting, but if you dispute the facts.....the obvious fact that mac's are overpriced, then, you need to go shopping at pystar and see what the price could be, go educate yourself.

RiquiScott

Joined: Oct 2007

08/26, 07:18pm | report spam | (2 replies) close | reply

Just read the SLA

I just got done reading the Software License Agreement for Leopard, and the Psystar guys are unquestionably violating it six ways to Sunday. The only hope they have of winning this case is if they can convince the judge that the SLA is unenforceable.

Their lawyers have never really won a case against Apple - they've just managed to get an out-of-court settlement from them once. But in this case, Apple can't afford to settle out of court, because what Psystar is doing could easily be duplicated by any company anywhere at little cost or initial investment.

Apple needs to crush these guys and get a judge to rule that the SLA is legal and enforceable, because anything less is going to result in an entire cottage industry springing up overnight to sell generic PC components with Leopard pre-installed.

eclux

Joined: Jul 2008

08/26, 07:47pm | report spam | (1 reply) close | reply

First clone maker?

For those (including the editors, apparently) with hindsight shorter than 10 years, Psystar is far from "the first company to begin selling clones". Apple's second post-Jobs CEO, Michael Spindler, started licensing clones in 1994, and there were several successful manufacturers -- so successful that one of Steve's first actions after his return to a barely breathing Apple Computer in 1997 was to rescind the clone licenses and in at least one case buy the company (Power Computing). Arguably a good move, given where Apple is today.

horvatic

Joined: Apr 2002

08/26, 08:16pm | report spam | close reply

So GM can make Fords?

So Pystar is saying its Ok for GM to make Fords and VW can make Toyota's.

WRONG!!!!!!!!!!!!!!!

08/26, 08:29pm | report spam | close reply

jonathan-tanya

just one of a great many you can easily find...

http://www.computerworld.com/action/article.do?command=viewArticleBasic&taxonomyName=macintosh_os&articleId=9023959&taxonomyId=123

go educate YOUR self pal. what vintage ms koolaid are you consuming?

08/26, 08:55pm | report spam | close reply

EULA

The issue here is the legality of the EULA and whether it is overbroad.

OSX is a piece of software that is sold separate from the underlying hardware. I can buy a copy of this software and not buy an Apple computer.

The EULA restricts my usage of that software to an Apple designed computer thereby creating a monopoly for the software.

This benefits Apple by allowing them to sell somewhat more expensive computers, with albeit better functionality and design, and the premium Apple logo.

The question for the court to decide is whether these EULAs are good or bad for the advancement of technology and society and whether Apple is restricting advancement and abusing their software monopoly ( of OSX).

If Apple ONLY sold OSX when you buy an Apple computer and did not ever sell OSX separately, then there would be no channel ( other than user to user resale) for any company or individual to buy additional copies of OSX to install on their non-Apple computer.

This raises a good question, where is Pystar getting the OSX install discs. Are they paying retail or wholesale? They are paying Apple the market rate for OSX and not stealing it. Apple is getting what they deem a fair price for the software.

OK, so say Apple tells its distributors not to sell the OSX disks to Pystar. Do the distributors have to listen? Is this a strong-arm tactic and thus raise the question of a monopoly.

The First Sale Doctrine has been litigated and says resale is allowable and companies can't stop it.

Read the Copyright Clause of the constitution people:

"To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

Apple's overly broad EULA should be dismissed and Pystar and others should be able to continue selling their inferior hardware.

Apple should rely on the superior design, support, hardware engineering, and additional WORK to make their product desirable rather than adding words to a piece of paper to keep fattening the hog.

There are lots of PC manufacturers, HP, Sony, Dell etc..selling Windows and making money. Each of them has their good points and bad points and people decide which hardware to buy.

We all know that OSX is a better operating system, and that Apple's hardware is the best...but competition is better and we should expect as much out of Apple as we do of Microsoft.

MeandmyMac

Joined: Feb 2008

08/26, 08:59pm | report spam | (1 reply) close | reply

Apple pokes fun...

with Microsoft's OS saying that they "copy" the latest and greatest from OS X. If Psystar is so intent to be able to run Mac OS on their stuff, then shouldn't Psystar, a second rate company, slapping together some second rate hardware, have that hardware run some second rate version of Mac OS X? Hey Psystar, install VIsta and shut up!

08/26, 09:52pm | report spam | (1 reply) close | reply

yeah but

do they have a license to resell OS X in their computers? Do they have the right to distribute a modified version of it?

testudo

Forum Regular

Joined: Aug 2001

08/26, 10:58pm | report spam | close reply

clones

Actually, clones came before Apple started licensing them. I recall reading an article in MacWorld of a company that completely white-roomed the MacToolbox/ROM and sold it in a computer that ran mac software (as well as another OS).

Company was called NuTek, and they sold their stuff in 93, I believe.

aristotles

Grizzled Veteran

Joined: Jul 2004

08/26, 11:26pm | report spam | close reply

You cheap buggers

OS X development is subsidized by hardware sales. I suggest you cheapskates get real jobs.

Everyone outside of software development seems to think software development is cheap. Grab a clue.

henjin

Joined: May 2007

-12

08/27, 12:53am | report spam | close reply

Justice

Apple's market share is rising, it's shipping amazing numbers of Macs let alone iPods. Why should the same laws that govern MS not govern Apple?
The fact that you can run Linux and Windows on Apple does not suffice. I should be able to run OSX on any Intel box.
Apple will still make a fortune but they are now a total monopoly and it has to stop.
I will always buy Apple products but I hate being forced to buy the OS and the box and the rest.

dimmer

Mac Enthusiast

Joined: Feb 2006

-5

08/27, 01:16am | report spam | (1 reply) close | reply

Upgrade

"If Apple ONLY sold OSX when you buy an Apple computer and did not ever sell OSX separately, then there would be no channel ( other than user to user resale) for any company or individual to buy additional copies of OSX to install on their non-Apple computer."

Apple DOES sell OS X only when you buy an Apple computer: thereafter, you can buy new versions to "upgrade" your installation. That's about it. There is no Tiger to Leopard update/upgrade.

-9

08/27, 02:29am | report spam | close reply

MacNNer

From the EULA:

1) This License allows you to install, use and run one (1) copy of the Apple Software on a single Apple-labeled computer at a time.

The EULA is clear, however in my opinion it is overbroad and this section should be invalidated.

If you replace Apple Software with Microsoft Software and Apple-labeled with Sony or HP-labeled people would be up at arms.

Apple software is like the drug-trade, keep the drug scarce (illegal) it remains expensive. People want the drug and they will pay the price.

Make the drug legal and the price comes down. Since the operating system is only a small portion of the system and many companies continue to sell billions of dollars worth of variants Intel Hardware, the only issue is fear of competition.

In 2007 Apple made ~10.5 billion off of Mac Sales.
11 billion on Ipod related stuff, 1.5 billion on software.

They can and would compete if the EULA is invalid and may initially lose some revenue, but CONSUMERS will benefit due to the more competition. Better hardware designs with more features to keep up with the PC world.

Those who have stock may say, oh no at first but the marketshare for OSX would rise tremendously. More software would be created and the creative process would be helped not hurt.

It is easier for Apple to spend 2 billion dollars filing a lawsuit than to compete. This happens so often.

Psystar has an uphill battle, but one that I commend them for fighting.

badbad

Joined: Nov 2007

08/27, 04:08am | report spam | close reply

"Guest" makes no sense

Is "guest" a shill for Psystar?

The "guest" is trying to make a point that selling a $99.00 disk called OS-X for third party PC manufacturers will increase the bottom line for Apple.

That argument is not supported by facts. It is at best conjecture which is ill-supported by investigating the history of Apple.

$99.00 per OS sale will not offset the loss of a Mac hardware sale. Nor will it offset a increase in hardware support which WILL happen.

The argument that "guest" is trying to make is poor and ill-considered. MSFT makes money off of millions of OEM sales and near millions of corporate sales per quarter. This is a guaranteed income in the case of MSFT.

In Apple's case, it is a complete unknown whether there would be enough $99.00 per OS sales to offset the loss of hardware sales. I would bet that Apple couldn't make up the difference.

Another point is that Apple and its OS attempts to differentiate itself from MSFT by being nimble and adding new features on a consistent basis. If Apple had to support third party manufacturers then the main reason to purchase a Mac would be diluted.

ibugv4

Joined: Jun 2003

08/27, 08:54am | report spam | close reply

WTF Folks

If Apple sold "Leopard Upgrade" discs -- which it HAS included in systems in the past, but has only sold FULL RETAIL INSTALLERS at their stores on the shelf -- there could be an issue.

However par the license, Apple says $130 is a fair price for their OS as a whole. Therfore why should I be limited to using it on just APple-branded hardware, when I can get a smaller and lighter (but not as thin) solid-state Asus EeePC and run OS X on it, for $600, or spend $3200 for a MacBook Air.

Yes, I'll compromise the screen and keyboard for the sake of travel, but I can't compromise the OS.

Until Apple makes Macs as cheap as ipods (the $500 price range, starting wtih laptops, $300 for headless Desktops) they are going to have this problem continue.

armwt

Joined: Aug 2006

-6

08/27, 09:08am | report spam | close reply

re: Overpriced

quote: "the price is inflated.

Period, if you don't think so, you are drinking the coolaid.

My core 2 duo 2.5ghz from Dell laptop with video card, etc...I won't go into all the specs because at $750, it is far faster than the macbook pro or macbook, and far cheaper."

Here is the key difference: Dell doesn't spend any $$ in R&D for the OS on your laptop. They don't need to recoup those costs, Microsoft has taken care of that for them. Apple does cost a bit more, yes, but that is because their R&D costs are far greater than Dells. Your example isn't a bad one, but is a flawed argument. The $10.5B in Mac hardware sales that were mentioned earlier in the comments? That just goes to pay for the OS development. The revenue generated by 10.5 retail sales alone would not be enough to pay for developing the OS. There is a reason that Microsoft charges far more than $130 retail for Windows licenses, and that is because they are not subsidizing their costs with hardware sales.

PRoth

Joined: Aug 2008

08/27, 09:17am | report spam | close reply

Guest who said "EULA"

By that logic, any company that makes software that only runs on ONE platform should be sued, no?

So we can all band together for a class-action lawsuit to sue the c*** out of game developers for forcing us to buy a PC to run them?

08/27, 09:39am | report spam | close reply

guest macuser

If i want a Yugo to run like a BMW i sue BMW to authorize me to buy parts to rebuild Yugos to run like BMWs AND then sell them as LIKE BMWs but cheaper, why dilute products. Everyone appears to want cheap stuff, cheap equals c*** hardware period. Apple don't cave in on this one. There are great deals on Mac everywhere if you want one. mario

Roehlstation

08/27, 09:49am | report spam | close reply

How is this antitrust?

In order to violate antitrust apple would have to require Mac OS X to be installed on EVERY computer, not only on their own. If I want to buy a Mustang, it will have to come from Ford. If I want to buy a Corvette, it will have to come from Chevrolet.

+10

08/27, 10:15am | report spam | close reply

And

More examples: I want to play PS3 games on my Xbox. Since you can only play PS3 games on a PS3, apparently that means Sony has a monopoly on its own games and is violating antitrust laws, since you can buy the games at retail stores.

And since I have an entirely misguided sense of entitlement, I think that I should be able to play PS3 games on any platform I want regardless of what Sony says, so let's hire Psystar's lawyers and sue Sony, because apparently this is a valid complaint.

Welcome to the future: People can sue you if they don't like your licensing agreement.

-1

08/27, 01:49pm | report spam | close reply

they're not too shabby

I've worked as a video editor for a couple of years now using Mac Pros. Recently our department has expanded but rather than buying in additional Macs my boss opted for a couple of Psystar Open Pcs with OSX. In my opinion, they're certainly not as good as my Mac Pro and if you want the end to end, hassle free, Mac experience then you should stick with Mac, but legal issues aside, we've been quite impressed with them.

08/27, 02:38pm | report spam | close reply

Psystar and FCP

If someone bought a Psystar to run a critical app like FCP then I think it penny wise and pound foolish. Wait until a necessary Quicktime update or app upgrade is required.

Zanziboy

08/27, 04:27pm | report spam | close reply

I want to sue Psystar

Clearly, you cannot legally make a Wii, PS3, or XBox clone without violating license agreements, which leads me to believe there is some dark money surrounding this case.

In a world where many countries do not respect US patents and copyright laws, ridiculous suits such as these threaten the long-term ability of US companies to compete globally.

How can the US expect to maintain any strength in the fast-paced technology sector when "standard practice" software license agreements are threatened in their own back yard!

Shame on us for allowing this to happen.

08/27, 06:03pm | report spam | close reply

Annual Reports Filings

Many of you need to go look up the facts.

The comment that Apple spends 10.5 billion on RandD is ridiculous. The person who wrote this does not understand software development and has not looked the facts up in public documents.

In Apple's 2007 Annual report they reported RandD spending of ~$780 million (3% of net sales) and 75 (0.2 % sales) million as a separate line item for Mac OSX Leopard development. They spend $3 billion (12% ) on advertising/sales.

AND THEY HAVE $16 billion in liquid cash equivalents.

Dell has RandD spending of ~$500 million for the same period.

The Mac OSX team is a fixed number of employees taking a framework of open source software , improving it and adding layers of visual enhancements and defining a development tookit to improve external software development efforts.

It is ridiculous to assert that this VERY small % of development costs will bankrupt Apple or cause them much financial issues, other than perhaps psychological for the short term.

In the long term, more users would be using Mac OSX, Apple's product would become EITHER better or cheaper, and Apple would make more money.

Other companies would make more money too. That is the fundamental purpose of antitrust/anticompetitive laws, because companies WANT to overly protect their work to the detriment a productive economy.

It is corporate socialism and subverts the INTENT of the copyright act.

An import issue is that there are 3 main desktop/server operating systems. Windows, Mac OS X, and Linux.

These operating systems are a fundamental building block of the tech economy. Allowing inappropriate restrictions of these important products subverts innovation.

Expanding the use of Mac OSX should be the goal every Apple fan should be proud of. Being an zealot for Apple's products myself does not mean one should excuse them or fight for them at all times, whether its this issue, vast restrictions on the iPhone, or back-dating of stock options.

08/27, 06:30pm | report spam | close reply

Software copyright

People should read the full wikipedia entry on software copyright before having a discussion on copyrights. If not they are just acting emotionally and not rationally.

http://en.wikipedia.org/wiki/Software_copyright

Read about Fair use and the elements of fair use including
effect on the market.

"the court notes that the Copyright Act was not intended to create monopolies, it was intended to foster creativity"

The uphill battle for Psystar is really on the back of the lawyers fighting the case. How much of their time will Apple cost them in time fighting the case? Are the lawyers looking for a settlement and at what price. 10 million, 100 million. If enough lawyers see that Apple is willing to pay to settle these cases rather then taking them to court for a final ruling, then more cases will be filed.

Seems like if Apple wants to maintain its monopoly on the operating system it created ( whether you believe that monopolies are good or bad is irrelevant), Apple should spend however long it takes. What's a few billion out of their cash. They have to see which way the wind is blowing and whether the legal system is interpreting Fair Use as pro consumer these days or pro-Apple.

The consumer wins if Fair Use and and thus Restraint of Trade is established.

The court does not have to force Apple to make its software work on ANY other computer. If Dell wants to add drivers, or pay Apple or Nvidia to make certain drivers so be it.

But Apple would no longer be able to say "you can't run OSX on anything but our box" Pay up.

08/27, 06:30pm | report spam | (1 reply) close | reply

MacMan2000

09/03, 05:20pm | report spam | close reply

Psystar already lost

They blatantly modified the OS to work on their box. This is illegal. you can not change someone else's work, without their permission, just so it will work on your system. This also goes for those of us using the apple OS on systems not approved for that system. like 10.5 on an iMac g3 333mhz. you can use a program to circumvent the restrictions. thus using a "hacked" or "modified" version. This is what they did, Thus the suit should end there. Now once they can put it on their box without "hacking" or "modifying" it, at that time their suit will hold some merit in a court of law.

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Psystar to countersue Apple, cites antitrust laws

updated 05:00 pm EDT, Tue August 26, 2008

Psystar countersuing Apple

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Remember IBM

Compete

Upgrade license

DMCA?

On The Other Hand. . .

Hey..

hmmm...

WTF???

Putting up a front

oughta be open-and-shut

Oh and remember

Low IQ

Off topic

Different product

This is...

of course they inflate

Just read the SLA

First clone maker?

So GM can make Fords?

jonathan-tanya

EULA

Apple pokes fun...

yeah but

clones

You cheap buggers

Justice

Upgrade

MacNNer

"Guest" makes no sense

WTF Folks

re: Overpriced

Guest who said "EULA"

guest macuser

How is this antitrust?

And

they're not too shabby

Psystar and FCP

I want to sue Psystar

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