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Lawsuit Between Apple and Psystar Moves Toward Settlement
Posted by
Soulskill
on Sun Oct 19, 2008 12:15 PM
from the when-life-hands-you-apples dept.
from the when-life-hands-you-apples dept.
An anonymous reader writes "Psystar and Apple have agreed to alternative dispute resolution to keep the public eye away from their disagreements, and to reduce legal costs. This will eliminate any rulings that would set a precedent over Psystar's claim that Apple is violating anti-trust laws by tying Mac OS X to only their hardware and thus creating a monopoly. This could result in a profit for Psystar's business, but eliminate their line of open-computing Mac-compatible PCs. On the other hand, what's to stop a similar company from doing the same thing?"
Related Stories
[+]
Apple: Psystar Offers $399 "OpenMac" Computer 615 comments
mytrip writes to tell us that Psystar has announced a new line of Intel-based computers that promise to run an unmodified version of Mac OS X "Leopard". Unfortunately almost immediately after the launch their website went down and as of this story remains unaccessible. "Astute readers may well hear this news and ask themselves if it doesn't sound like a Mac clone, something whose time came -- during Gil Amelio's tenure at Apple -- and went shortly after current CEO Steve Jobs assumed the helm at the company. [...] It definitely defies the EULA for Mac OS X, which specifies that the purchaser of a legal copy of Leopard is entitled to install the operating system on an Apple-branded computer. If you buy the $399 OpenMac, you can check the EULA yourself if you also buy the pre-install option, as the company includes a retail copy of Leopard with your purchase."
[+]
Apple: Apple Suit Demands That Psystar Recall OpenMacs 759 comments
Da'Man writes "The Psystar saga takes another series of turns. Not only is the website down but an examination of the suit filed by Apple shows that the Cupertino Goliath wants Psystar to recall all Open Computer and OpenServ systems sold by the company since April. It seems that Steve Jobs is out to totally sink Psystar and put an end to Mac clones."
[+]
Psystar Will Countersue Apple 1084 comments
An anonymous reader sends us to CNet for news that Apple clone maker Pystar plans to countersue Apple. We discussed Apple's suit last month. "Mac clone maker Psystar plans to file its answer to Apple's copyright infringement lawsuit Tuesday as well as a countersuit of its own, alleging that Apple engages in anticompetitive business practices. Miami-based Psystar... will sue Apple under two federal laws designed to discourage monopolies and cartels, the Sherman Antitrust Act and the Clayton Antitrust Act, saying Apple's tying of the Mac OS to Apple-labeled hardware is 'an anticompetitive restraint of trade,' according to [an] attorney... Psystar is requesting that the court find Apple's EULA void, and is asking for unspecified damages."
Firehose:Pystar and Apple lawsuit by Anonymous Coward
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It's nonbinding (Score:5, Insightful)
Apple can punt on this at any time and haul it back into court if it's not going their way. 'quietly squash' rather than 'publically squash' is the plan. If that doesn't work out, they'll publically squash, because the entire vitality of Apple as a corporation depends on this issue: control of their hardware platforms.
IT'S STILL IN COURT FOR CRISSAKES! (Score:5, Informative)
It's amazing how colossally wrong an entire news story, submission, and long list of threads can be on an issue. Remember this when you criticize some judge for not knowing Linux or the Internet as well as you guys do, because said judge would look at this thread and say, WTF are you all talking about?
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That's a shame (Score:4, Insightful)
It would have been interesting to see the outcome in court, but like the rhetorical question at the end states, I doubt they'll be the last to try.
Re:That's a shame (Score:5, Insightful)
I do think that the legal question "How much anti-competition is allowed in an EULA" is an interesting one, but that it is better fought between two well funded parties. It might end up in a Supreme Court appeal.
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Re:That's a shame (Score:5, Insightful)
I think that both parties will benefit by a quiet deal that allows Psystar to sell their boxes; paying Apple a nice "per copy" price for OS-X. Apple does not want to litigate the "monopoly" argument; Psystar does not want to litigate "Breech of OS-X EULA". The nice think of a settlement is that it does not bind Apple to make the same deal with another white box maker.
There is no way that Psystar will get a license to ship with MacOS X. They have been pissing on Apple's shoes; so there will be no business between them. Apple has already replied to Psystar's idiotic "monopoly" arguments, citing about a dozen cases that say absolutely clearly a single product of a company cannot possibly constitute a meaningful "market", and therefore Apple cannot have a meaningful monopoly in the non-existing market of "MacOS X compatible computers".
This arbitration is something that the court can force on the companies; it cannot force them to agree on anything in arbitration.
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Re:That's a shame (Score:4, Interesting)
Apple has already replied to Psystar's idiotic "monopoly" arguments, citing about a dozen cases that say absolutely clearly a single product of a company cannot possibly constitute a meaningful "market", and therefore Apple cannot have a meaningful monopoly in the non-existing market of "MacOS X compatible computers".
What about computers that are able to run Mac OS X applications? Clearly, there is more than just the one of them, and Apple hardware is the only EULA compliant way to use any applications which are not open source or cross-platform.
Can Apple have a meaningful monopoly in the market of "Mac OS X Application compatible computers"?
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It would be a monopoly... (Score:5, Informative)
Re:It would be a monopoly... (Score:5, Insightful)
If Apple felt that there was no merit to Pystars claims then why obscure things? Does having a gentle legal dept. sound like Apple? It's far more likely that Apple is going to solve this problem with a check-book than with a lawsuit.
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Re:It would be a monopoly... (Score:4, Insightful)
I don't think Apple are really interested in paying out Psystar. Unless the resolution send a clear message that Apple does not tolerate Mac clones and will pursue their manufacturers/sellers to the bitter and expensive end, nothing will prevent a "StarPsy" form popping up again in a few months, hoping to either make a mint selling "open computers", or at worst to get a cool few millions form the mothership.
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Re:It would be a monopoly... (Score:4, Interesting)
Apple is also fond of pointing out that Macs are not PCs. It is illegal for Ford to insist that it's engines can only be installed in a Ford manufactured automobile.... I'm just sayin.
On what basis would that be illegal for Ford to do? They don't insist on these terms because they don't care much what you do with their engine, but if they did care, what would make it illegal? As a concrete example, Ferrari sells Formula I racing engine to the Scuderia Toro Rosso team. Now McLaren might be willing to pay a generous amount of money to lay their hands on a Ferrari engine, and Ferrari would be quite unhappy about it. If the contract between Ferrari and Toro Rosso says that the engines cannot be sold on, do you seriously suggest that would be illegal?
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Re:Who marked this "Insightful" (Score:5, Insightful)
A. you can buy ford crate engines, you can buy boxed copies of OSX
B. No, but preventing you from using the parts in something else is illegal.
C. They both sell parts that can be used for any purpose. First sale prevents them from limiting the uses of the item.
D. They can't stop you.
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I thought Apple sucks (Score:4, Insightful)
The ridiculous thing is that building a mac clone would be about half as hard as building the IBM clone. No one needs to work under clean room condition to make sure that the multiple phalanxes of IBM lawyers do not win the first born child of the cloners. No one needs to write a OS from scratch. All that is needed is an appropriate *nix subsystem, with a virtual machine that can run either windows and a Mac OS UI clone simultaneously. The technology is out there, all we need is some innovative company to do it.
Instead what we get is some kids hacking and selling POS hardware hoping they can get a little more than the razor thin margins currently awarded to the PC OEM. The reason we have not seen an innovative PC in 10 years is that there is no money in it. MS virtually destroyed the system builder, and now they are the only ones making money. The only hope for an innovative PC, besides Apple, is the market of competing virtual machine on top of commodity hardware. Whatever OS can run on top of it. This will break the cycle of single vendor malaise that lead to the crap Vista.
I am all for Apple to lose it's 'monopoly' of Mac OS X on Apple hardware. I am all for MS to be forced to stop 'illegally' tying an OS to a certain machine. But this is not going happen by putting out crappy machines running the same old crappy software. It will happen by a system builder designing a new kind of GPC. of course, the problem is will the market want it. Such a machine would require a significant amount of engineering, which would have to be recouped by a higher margin, which means a PC that costs more than $500, without a high level OS.
Both side benefit from an out-of-court settlement (Score:5, Insightful)
Apple has strong controls over their OS because they remember what happened the last time they allowed clones. The clones were poorly made and executed the old Mac OS rather poorly. This hurt Apple's overall reputation.
Psystar doesn't have a right to modify Mac OS X and put it on their machines. Apple has full rights to stop them. Psystar could make a machine that could take a modified version of Mac OS X. They just wouldn't be allowed to put this modified version on their machine.
My feeling is that Apple will allow Psystar to live as long as they stop selling machines with Mac OS X on them. Apple really doesn't care too much about the small market share they might lose to Psystar. Most likely, the people buying these clones wouldn't have bought a Mac anyway. If these people then want to spend $125 and get Mac OS X to work on Psystar, that's their prerogative and Apple won't stop them.
What Apple wants to avoid is the average user saying "Why should I spend $1200 on a iMac when I can by a Psystar for only $500?". Even worse, Apple doesn't want these same users saying, "Man, I bought this Psystar system, and Mac OX sucks! It keep crashing, and it is slow. I don't know why people think Apple is so hot. Their stuff stinks!".
Always remember: Apple is a hardware company that builds high quality hardware. They only make software in order to sell that hardware in the best light. Apple chose the premium market because they rather make $200 on each sale rather than sell five times as many machines, but only make $40 on each one.
Apple doesn't want some clone coming along and ruining their reputation. As far as Apple is concerned, Psystar can live as long as they don't mess with Apple's reputation.
Re:What's to stop Apple? (Score:4, Interesting)
Most small businesses can't afford 50hrs of lawyers fees a month for 3years. (About $500,000). Or if you try to go cheap and represent yourself they still can't afford to have their business partial stopped, have their stock dropped to nothing. And you boss of the company losing maybe 150 hours a month putting up a decent defense will surely have an effect on the company. In MOST case right or wrong don't matter. A big company can make anyone eat minimum a half million dollar bill. When I was starting up my company my lawyer cited an average $800,000 for ip suits, regardless of who wins. It only gets interesting when both sides can eat a million dollar loss without being too damaged (30million+ net-worth companies)
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Re: (Score:3, Insightful)
Re:What's to stop Apple? (Score:5, Insightful)
Even if Apple had a say 80% market share - still I don't think anti-trust laws should (could? I don't know this law in detail) apply. They have a business, a successful one, producing hardware and software. What is stopping them selling the software for their hardware only? This is not anti-competitive as anyone can build a computer and write an O/S by themselves.
Anti-trust laws, as applied against Microsoft, are for leveraging ones existing monopoly to gain entry into other markets. It would be a hard sell for a judge to convince Apple is doing that by setting up a business model (sell hardware with software tied together) and then gaining a great success with it. Only if Apple would have this market share and then starts e.g. blocking competing web browsers from their systems, now that would be an issue for anti-trust laws.
The only thing Psystar may have a case with is the first-sale doctrine: that a seller can not restrict what a buyer is doing with a product. Now there is the clash with copyrights, however afaik that means the buyer can re-sell the copy they bought (on CD or what-ever medium), but is not allowed to make copies of it. Installation on a computer is by nature making a copy of it, complicating the matter. I have no idea how copyright law provides for this kind of copy - one way or another it should be legal, or each software package should include a license allowing such copying for installation.
Complicated matter, but it is certainly not anti-trust matter. It's copyright and first-sale doctrine matter.
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Re:What's to stop Apple? (Score:5, Insightful)
Antitrust
Yes, Apple's argument is that the "market for Mac OS PCs" does not really exist, just as nobody else has the right to market Pepsi's soft drink, or sell BMWs, or force DuPont to license cellophane to them. The DuPont case went to the supreme Court in 1956:
"In a civil action under  4 of the Sherman Act, the Government charged that appellee had monopolized interstate commerce in cellophane in violation of  2 of the Act. During the relevant period, appellee produced almost 75% of the cellophane sold in the United States; but cellophane constituted less than 20% of all flexible packaging materials sold in the United States. The trial court found that the relevant market for determining the extent of appellee's market control was the market for flexible packaging materials, and that competition from other materials in that market prevented appellee from possessing monopoly powers in its sales of cellophane. Accordingly, it dismissed the complaint."
Apple's brief notes: "Psystarâ(TM)s effort to define a single-brand relevant market contravenes well-known principles of antitrust law. Relevant markets generally cannot be limited to a single manufacturerâ(TM)s products. As the Supreme Court recognized in the United States v. E.I. DuPont de Nemours & Co., 351 U.S. 377, 76 S.Ct. 994 (1956), the âpower that, let us say, automobile or soft-drink manufacturers have over their trademarked products is not the power that makes an illegal monopoly. Illegal power must be appraised in terms of the competitive market for the product.'"
"Most recently, in Spahr, supra, the court rejected almost identical allegations as those made here. Plaintiff claimed that Leeginâ(TM)s brand of womenâ(TM)s accessories, called the 'Brighton' brand, was a separate market because the products are unique, they are marketed as 'one of a kind,' customers would not consider other accessories as 'suitable substitutes,' and there was an 'inelasticity of demand' for these products. 2008 WL 3914461, at pp. 3, 8. Applying the Supreme Courtâ(TM)s decision in Twombly, the District Court dismissed the complaint without leave to amend because its definition of the relevant market was implausible 'from the face of the complaintâ¦.' Id., at 8."
forced licensing
Another thing to consider: if you think Apple should be forced to license the Mac OS in the way Psystar is claiming, it follows that you also must agree with Pystar's claim that Linux and Windows are so far inferior to the Mac to the point where they can't complete, therefore creating a distinct market. I believe these claims are ridiculous. Anyone who doesn't should go on record admitting that everything else in the industry is a joke compared to the Mac. That is a line of reasoning which I will be happy to use in future arguments where the opposite is claimed. One can't have it both ways.
"The right of a manufacturer to exercise independent discretion with whom he will deal."
"Ultimately," Apple's filing states, "Psystar seeks to force Apple to license its software to competitors, like Psystar, so they can use Mac OS to create Mac 'clones.' Psystar undeniably can sell, and is selling, its Open Computers running Windows or Linux in direct competition with Appleâ(TM)s Mac. Nevertheless, it also wants to sell computers running Appleâ(TM)s Mac OS in direct competition with Appleâ(TM)s Mac. However, one of the bedrock principles of antitrust law is that a manufacturerâ(TM)s unilateral decision concerning how to distribute its product and with whom it will deal cannot violate the Sherman Act:"
The Sherman Act "does not restrict the long recognized right of a trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal. And, of course, he may announce in advance the circumstances under which he will refuse to sell."
Myth 10: RIMâ(TM)s BlackBerry Will Contain iPhone Expansion [roughlydrafted.com]
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Re:What's to stop Apple? (Score:5, Insightful)
If your case is strong enough, you will win. There are a lot of arguments against Apple, especially the anti-trust one. The right to produce a competing product is fairly important in a free market.
Who says Psystar doesn't have the right to produce a competing product? Apple doesn't deny Psystar's right to a competing product. They just deny Psystar's right to take MacOS X and install it on their computers in clear breach of the EULA, and they have precedent (Xerox' plain paper photocopiers) that even a clear monopoly is under no obligation at all to help its competitors.
Psystar can compete by installing Windows XP, or Windows Vista, or Linux, or they can buy up the remains of BeOS or AmigaOS. Or write their own operating system from scratch. If they wanted MacOS X, they should have offered more than Apple's $400 million when NeXT was for sale. They can even download Darwin and build a GUI on top of that. It's their business, they should come up with their own ideas to compete.
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Re:What's to stop Apple? (Score:5, Insightful)
But there are lots of competing products. The OS market is currently dominated by Microsoft (who has been adjudged to have a monopoly), and in which there are several alternatives, some of them free. The market for hardware is rich and diverse, with multiple providers for just about any hardware component you can think of. How does tying the hardware to the software give Apple any more market share in either market? It' doesn't.
Anti-trust law specifically forbids using a monopoly in one area to increase your market in another. But in which area does Apple have a monopoly? Neither. No monopoly means no anti-trust violations.
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Re: (Score:3, Insightful)
Re:What's to stop Apple? (Score:4, Insightful)
They're doing pretty good, even tobacco has managed to hang in there. Given the moral issues the big AG lawsuits brought up the tobacco companies should be dead and buried by now and nicotine should be a DEA class II drug (along with alcohol, but I won't get started on that one now.
I'd like my pony now, please.
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Re:What's to stop Apple? (Score:5, Insightful)
If I had $20 billion, I couldn't make it legal for me to murder anyone.
Dude, you really don't pay that much attention to politics, do you?
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Re:Apple can do no evil (Score:5, Interesting)
"Why is Apple immune from the righteous wrath that they deserve for their business practices?"
I'd like you to point out an instance of their business practices that deserves "righteous wrath", as I can't think of one.
They don't get the same amount of crap that Microsoft does because on the evil scale Apple is '-1, A cursed ring that you cannot remove', whereas Microsoft is '-1000, Obliterates all life on the planet which it occupies'.
A.
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Couple of reasons: (Score:4, Insightful)
1. Because Google set themselves up for criticism by having a much-publicised motto of Don't be evil [google.com].
2. Because the idea that even Mac-fans regard Apple as saints is a total straw man. Mac fans love the products (provided they have Firewire and matte screens) - but only the most deluded would deny Apple's well-established record of playing hardball and looking after number one (go ask Apple corp, Microsoft, the firms which licensed Mac OS 9, would-be producers of Apple II clones etc.) Heck, nobody can progress beyond Junior Acolyte in the Church of Jobs unless their blog has been anointed by a DMCA takedown from the Holy One. Go look on a Mac fan site like macrumors.com sometime (they even have a convenient front-page tally of how many negative comments have been made about each posting, so you won't have to read endless speculation about what colour the jack plug on the next iPod is going to be).
3. Because Apple doesn't have a monopoly - if Steve Jobs screws your pooch, you are free to walk out of the Apple store and buy a Windows or Linux machine. If he screws too many pooches, Apple will go bust. OTOH, lots of people find themselves forced to use or upgrade Microsoft products because of their market dominance, and Microsoft can sell products like Vista and Office 07 that nobody actually wants.
4. Finally, just some of the recent articles from /. that seem to have escaped your notice:
Users Rage Over Missing FireWire On New MacBooks
iPhone Antitrust and Computer Fraud Claims Upheld
iPhone Tethering App Released, Killed In 2 Hours
Inside Apple's iPhone SDK Gag Order
iPhone SDK and Free Software Don't Match
Woz Dumps on MacBook Air, iPhone, AppleTV
Apple Bans iPhone App For Competing With Mail.app
Apple Laptop Upgrades Costing 200% More Than Dells
Now, is it just me, but could some of those be regarded as just a teeny bit crictical of Apple?
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Re:Apple can do no evil (Score:5, Insightful)
To prove my point, I get modded down as flamebait. This is halarious.
To disprove your point: Skip the tags and read the comments in the "Android Kill Switch" thread. Then head on over to any iPhone related thread and read the Apple bitching there.
Apple gets beat up all the time, here. Settle down.
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