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TMO Reports - Psystar's Official Response: Apple Abusing Copyright, Tying OS X to Hardware
by , 1:00 PM EDT, August 29th, 2008
Late on Thursday, Psystar filed its official response to Apple in a 54 page document with the U.S. Northern District of California. In it, Psystar claims that Apple is abusing its copyrights in order to establish an anticompetitive tying of Mac OS X to Apple hardware and that that tying creates an illegal monopoly.
Earlier in the week, Pystar publicly disclosed the gist of its coming response to Apple's trademark and copyright infringement lawsuit. At that point, company owner Rudy Pedraza revealled his company's plans to invoke the Sherman and Clayton Antitrust acts.
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Just before the deadline on Thursday, Psystar filed its complete 54 page response to Apple's July 3 complaint for copyright and trademark infringement.
Psystar's Case
An attorney who follows the case closely told The Mac Observer that Psystar is asking the court to declare Apple's EULA illegal because it prohibits running OS X on other than a Mac. Psystar aslso raised questions about the supposedly vague and ambiguous meaning of "Apple labeled hardware."
Psystar also denied that it modifies the supplied copy of Mac OS X in any way, and that the copy provided is fully licensed. The problem there is that Psystar is not a licensing authority for Mac OS X.
The attorney, who asked not to be named, told The Mac Observer that, in his opinion, Psystar doesn't have a sound case. Apple has the legal right to restrict Mac OS X to its hardware the same way an author and book publisher have a monopoly right to publish a copyrighted work. In other words, copyrights create a legal monopoly to protect the author and his investment. "That idea, that the author has the right to create a monopoly and enjoy monopoly rents, is an idea that is as old as copyright and is how Congress has chosen to reward authors and inventors for their inventions so as to foster, promote, and facilitate the creative arts," he told TMO
In addition, the "tying" aspect of the case is on tenuous grounds, he said, because Mac OS X doesn't stand alone as a useful product. For example, when Toyota sells a car, it stands alone as a useful product. If Toyota then required the customer to buy gas at only their stations, that would constitute illegal tying. However, Mac OS X has no utility without running, under license, on Macintosh hardware. So that argument should fail, the attorney suggested. Apple can also claim that Mac OS X runs better on their hardware.
"For the court to hold otherwise would involve the court in interminable litigation over the design and function of OS X or require the court to take and transfer some part or all of Apple's constitutionally protected proprietary interests to copy, design, and/or develop OS X to Defendant Psystar," he said. Courts typically don't like getting involved in that.
The court is also not likely to buy into Psystar's affirmation that Apple is a monopoly in general because of Apple's minor position in the market place, the attorney added. Apple could win on that basis alone, but that would be an unfortunate way to win since it appears that in the long run, Apple resurgence could place it in a much stronger market position against PCs, and then the monopoly argument could be more successfully raised in the future. Instead, Apple would rather win on its rights to legally copyright, protect, and license its intellectual property.
What's Next
It's likely there will be a long period of legal discovery now, lasting perhaps eight months. In addition, some additional legal procedures will end up placing the court date out about a year from now.
The U.S. District Court of Nortern California, San Francisco Division, is well versed in copyright and licensing law and is not likely to be misled by arguments not well founded in traditional copyright law, and the outlook could be grim for Pystar if they lose - especially with legal fees that could easily reach an estimated US$40,000 per month for more than a year.
There is a lot at stake for Apple, and the long delay in filing its complaint may have been the result of a careful deliberation of its position to make sure the company wins this important case without encountering any legal surprises along the way. If Apple does win, in the fashion it would prefer (copyright infringement), it could seek damages that, along with hefty legal fees, could put Psystar out of business and close the door forever on this issue.
There could still be a long road to travel, however.
Observer Comments
Following the Microsoft anti-trust trials during 2000, I learned a lot about what constitutes illegal behavior of a monopoly.
The free trade restriction usually means that you insert yourself between customers and those selling products the customers want. As an example, Microsoft was inserting itself between customers and Dell, etc., by preventing Dell from selling any OS other than Windows. If Microsoft actually sold PCs with Windows (making the whole widget) and did not sell it as a separate product then there is no illegal trade restriction.
Another illegal behavior of a monopoly is tying one unrelated product to another and using monopoly status to force the issue. For examples, IE and Windows, Windows + DOS. This sort of thing is illegal only if you are first considered a monopoly.
Neither example here applies to Apple since they make the whole widget. The Mac and OS X are "inseparable". Microsoft tried (and failed) to make the "inseparable" argument about IE during their trials as well. The judge didn't buy the argument since it was a separate product that also ran on Macs.
I am not a lwayer, however I disagree with the logic in the conclusion reached by the unnamed source.
Psystar could argue Mac OS can not be compared to an automobile, the best comparison would be Windows or Linux, in which case Mac OS would be seen as other OSs, and therefore as a "stand alone product" since all other commercially sold OSs are considered so.
Fri Aug 29, 2008 2:33 pm Subject: "The first thing we do, let's kill all the lawyers"
What I've been wondering are how did Psystar get its hands on enough legal copies of of OS X to install one per computer it builds? Shouldn't that only be available to officially licensed OEMs like in China or Taiwan where they manufacture the official Macs? If a guy walks into an Apple store and buys 100 DVDs wouldn't that draw a red flag? So how is Psystar going to sustain its business over the course of the court case for a year if it continues to ship 1 legit copy of OS X DVD with each computer?
It's the license that counts. Windows is licensed to to various hardware manufactures (OEM license) and then the end user agrees to a separate license to use the software. Apple doesn't make OEM license agreements-- that's why it can only be installed on Apple labeled hardware.
It's like driving on public streets-- you can do it without a license, but it's not legal and you can be prosecuted for doing so.
QuoteVoltaic wrote:
Psystar could argue Mac OS can not be compared to an automobile, the best comparison would be Windows or Linux, in which case Mac OS would be seen as other OSs, and therefore as a "stand alone product" since all other commercially sold OSs are considered so.
Actually, the best analogy I have heard was that this is like Sony not allowing someone to install Sony brand Playstation games on a Wii. They make the whole device and so have the right to control what gets installed where.
Fri Aug 29, 2008 4:25 pm Subject: Sony Playstation/Wii argument
Fri Aug 29, 2008 4:34 pm Subject: Psystar, The Anti-SCO(and i don't mean that in a good way)
Psystar is trying to deliver freedom and openness with proprietary software? That ridiculous, if that is what they cared about they would only ship computers with GNU/Linux, *BSD, and OpenSolaris. I think they are just trying to make a quick buck. Apple can only sue the corporation, not the owner(s). The owner(s) can only lose what they put into a corporation. Starting up Psystar probably required minimal initial investment. The odds of success are slim, but if they win the payoff would be well worth it. I'm not saying they would be anywhere close to the size of Apple, but the money of even a small computer manufacturer is quite large and the controversy they've stirred up has their name out there. As the alternative to Apple for OS X as their strong point they would make quite enough money, maybe not Forbes level, but enough to live comfortably for the rest of their lives. Sure other companies would follow suit, but the large respectable companies would probably wait for some sort of deal with Apple, giving Psystar plenty of time as the largest alternative to Apple. Maybe the guys at Psystar aren't the morons we initially saw them as.
QuoteVoltaic wrote:
I am not a lwayer, however I disagree with the logic in the conclusion reached by the unnamed source.
Psystar could argue Mac OS can not be compared to an automobile, the best comparison would be Windows or Linux, in which case Mac OS would be seen as other OSs, and therefore as a "stand alone product" since all other commercially sold OSs are considered so.
No. Mac OS X is an operating system for Apple hardware. It is neither made nor intended for other hardware.
Fri Aug 29, 2008 5:35 pm Subject: Software is never the same thing....
Psystar have to convince Jury that Mac/OS X is a monopoly on his own. If they are unsuccessful, it's over. And it's not because Apple doesn't have a big market part that Psystar will lose. The thing is that OS X could be considered as a different market, OSX Market. There are many things that are relating only to this market. And it's exactly what Psystar is trying to do. And everyone act like this. A Mac is a PC with EFI, but everyone distinct Mac and PC. Why? Two market, in another market ( PC and Mac/OSX in intelligent hardware like cars and boats in transport ).
NB:
-Books and softwares are really different and a book doesn't have interaction with others like OSX have with softwares.
-The idea of Toyota/car doesn't stand if OSX is considered as another market.
-Every Windows9x needed DOS to run subsystem. Sure MS could have done this another way but they didn't.
-Intellectual property and copyright is not the same. You will be the creator for ever but you won't have the right to restrict something to others for ever (ex: pharmaceutical industry where after some years you can create legal generic drugs. This can apply here but it's a proof of manipulation to copyright depending the product!
-OS X can run on PC with a custom bootloader and with the addition of 2 drivers to installation so it can be alone, a useable product... if not, every OSX software could be controlled by Apple.
I Could say others things but it's long and I just want to say that I support Psystar in this trial but I think Apple is right to what Psystar did with the illegal use of "certified for Mac" ( because something that can run it is not proved to be able to run software in every conditions ) and not to have bought Licenses that include the right to sell the product in a solution. I suppose it's the price to pay to free OS X from Mac Only Hardware.
Fri Aug 29, 2008 5:41 pm Subject: Number sold and shipped
QuoteGuest wrote:
What I've been wondering are how did Psystar get its hands on enough legal copies of of OS X to install one per computer it builds? Shouldn't that only be available to officially licensed OEMs like in China or Taiwan where they manufacture the official Macs? If a guy walks into an Apple store and buys 100 DVDs wouldn't that draw a red flag? So how is Psystar going to sustain its business over the course of the court case for a year if it continues to ship 1 legit copy of OS X DVD with each computer?
I suppose that they could have bought copies of OSX from Amazon, or other online retailers.
Now this begs the question. Does anyone have accurate numbers of the Mac clones sold/shipped by Psystar?
Dear Voltaic: OS X is copyrighted, as is true for Windows and Linux, but, unlike Windows and Linux, Apple does not license OS X to others to install on third party computers. Thus, if Apple's copyright is valid and enforceable in this context, Psystar infringes by installing OS X on its computers.
My analogy is based on the idea of an author of a copyrighted work restricting that work to, for example, a particular publisher, say Random House. Another publisher would be laughed out of court, if it maintained that it should be allowed to license the author's book on the same terms as Random House so as to break Random House's monopoly. Why? Because the very purpose of copyright is to permit the proprietor of the copyright to establish a monopoly so that it/he can enjoy monopoly rents by the exercise of its exclusive rights, among which are the rights to make copies and make derivatives of the copyrighted work.
Windows and Linux permit licensing of their operating systems for installation on third party hardware. Apple does not.
>>>Actually, the best analogy I have heard was that this is like Sony not allowing someone to install Sony brand Playstation games on a Wii. They make the whole device and so have the right to control what gets installed where.<<<
Sony games canNOT be installed on a Wii, it's technically impossible or at least very difficult. Instead, there are not technical reasons for OS X not be installed in HW not sold by Apple.
"Mac OS X is an operating system for Apple hardware. It is neither made nor intended for other hardware. "
That Psystar (Freex86 project) was able to run OS X with minimal effort on "generic" x86 HW, does prove there is nothing special about "Apple HW". If you mean standard HW sold through Apple's channels, then I can understand but, nonetheless will not buy that argument. On the other hand, there have been cases of too-restrictive licenses challenged and voided in court. Look that up in Google.
This was Psystar's plan all along. It was never about making mac clones. It was all about getting Apple to bite the lawsuit bait. They don't expect it to go to court, they're betting on settlement.
They want to get a free ride off of Apples success.
Soon some one will claim that Apple has a monopoly on the iPhone OS.
QuoteGuest wrote:
"Mac OS X is an operating system for Apple hardware. It is neither made nor intended for other hardware. "
That Psystar (Freex86 project) was able to run OS X with minimal effort on "generic" x86 HW, does prove there is nothing special about "Apple HW". If you mean standard HW sold through Apple's channels, then I can understand but, nonetheless will not buy that argument. On the other hand, there have been cases of too-restrictive licenses challenged and voided in court. Look that up in Google.
QuoteGuest wrote:
Mac OS X and Mac hardware are only inseparable because apple makes them so... To all the fanboys out there... whatever...
Fri Aug 29, 2008 7:29 pm Subject: Inseparable...uh, yeah. Doh!
Apple makes it inseparable. Yep. That's their right. It's their product. The courts are going to force them to sell it to somebody else? I still don't get this. OSX has ALWAYS been licensed only on Apple Branded hardware. Always. It was built into the system. The last licensed clones go back to OS 8. Sure, you could install OS 9 on them, but by that point, the clone program was almost completely dead.
OS X is now 8 years old. The EULA has stood up 8 years of the OS and hardware inextricably linked.
If Michael Dell couldn't figure a way to get Apple to separate the two, what makes this gnat of a company think it can?
I think they're not only a bit late in attempting the argument, I think that Psystar is just stupid, wrotten to the core, and obviously run by spoiled wrotten "me generation" wannabes who think the world owes them anything they want.
And all this fanboi crap people have been throwing around...leave that for the 8-10 year olds or go back to your sandbox. This forum has been a good source of lively debate. If you want to act like you're in elementary school and throw around names, go whine somewhere else. Macs are big toys for big boys (and girls).
There is no market for OSX because Apple does not sell OSX. It sells OSX upgrades. Moreover, Copyright law for better or worse gives copyright holders the exclusive right to decide how their software is to be copied, and distributed. The only exception to that exclusive right is when something is deemed fair-use, which essentially is a defense to copyright infringement. Courts very rarely uphold a fair-use defense when the infringing use is commercial in nature especially when the commercial use directly interferes with the copyright holder's financial interests.
To buy a monopoly argument, Pystar will have to convince the Court that the market is not the general PC market, but instead the market for computers that run OSX. However, as I already stated there is no market for OSX. Instead, the market is only OSX upgrades.
People rooting for Pystar, are essentially rooting against the free market. Companies are allowed to choose how to sell it's product. The market decides if that model will be successful or not.
Fri Aug 29, 2008 7:44 pm Subject: Well if they lose
QuoteGuest wrote:
This was Psystar's plan all along. It was never about making mac clones. It was all about getting Apple to bite the lawsuit bait. They don't expect it to go to court, they're betting on settlement.
They want to get a free ride off of Apples success.
Soon some one will claim that Apple has a monopoly on the iPhone OS.
I doubt that Apple will settle out of court on this. As Tiger said bigger players than Psystar would have already done it. Furthermore if Psystar loses they lose big time, there is a lot at stake here for both sides. However, I am not a lawyer, only a 5 time juror, so maybe some clever lawyer has found an Achilles' heel in the OSX EULA
As to Psystar wanting to get a free ride from Apple, well they can already get free ride on the coat tails. Apple makes is easy to become an Apple Developer and a lot of small shops are selling Mac and iPhone software.
Gotta run for a few hours. You all in the USA have a great Labor Day weekend. To our friends from other countries, have a great weekend where ever you may be.
What is does mean: -Intellectual property and copyright is not the same.
First of all, your grammar is bad. It should read "are not the same."
Second you don't know what you are talking about. Copyright is a type of Intellectual Property, as are patents and trademarks. All three types of Intellectual Property (IP) give their owners the right to exclude others from using that IP. Presumably, Apple has copyrights and patents to cover their OS, and can set the terms for obtaining a license to use it. For instance, they can say that it cannot be used on a machine that was not built by Apple. Essentially, IP provides a legal framework for given a creator monopoly rights for a limited time,
Fri Aug 29, 2008 9:56 pm Subject: I disagree with this completely
QuoteAnonymous wrote:QuoteTerrin wrote:
There is no market for OSX because Apple does not sell OSX. It sells OSX upgrades.
You are the first to actually get this right. OSX has never been sold as anything other than an update.
OS X has never been sold as an ?upgrade?. It?s only been sold in full versions. If you wipe your hard drive and try to install MacOS X from a CD/DVD, it doesn?t require a previous version on the drive first. It will install as a full version.
Sat Aug 30, 2008 12:23 am Subject: Well Psystar is right about one thing
I read this over on http://computerworld.com
"Psystar alleges that the Windows operating system is not and cannot be considered an effective substitute for the Mac OS" 
Sat Aug 30, 2008 10:55 am Subject: So now it's okay to make Sony, Nintendo, Xbox clones
So I guess now it's okay to make Sony, Nintendo, and Xbox clones too then.
Sorry, that won't fly with many businesses, and Apple has the right to license or NOT to license there own intellectual property. I think Sony and the others would object highly if someone decided to make a PS3 out of Dell hardware! Then claim they have a monopoly? Come on, where's the common sense?
Apple now has about 10.5% of the computer market. I don't see how that is a monopoly.
"Psystar alleges that the Windows operating system is not and cannot be considered an effective substitute for the Mac OS"
That statement is exactly the point where Psystar is trying to con the judge, jury and their esteemed audience (Psystar sent their 54 page response not only to the court, but also directly to the press, which is an unusual move if your goal is to win a court case). They claim that a Macintosh user would never ever consider to buy a PC running Windows, therefore Windows is not a substitute for MacOS X. (Important when you talk about monopolies; you don't have a monopoly if another product could be used as a substitute. )
Apart from the fact that unfortunately for Apple some Mac users _do_ buy Windows PCs, their logic is wrong. If Windows PCs and MacOS X computers were different markets, then there would be no relationship where buying one precludes buying the other. As an example, people buying Macs don't stop buying DVD players, tennis rackets, underwear, hamburgers, or any other product that is in a different market. If, as Psystar claims, MacOS X users would completely stop buying Windows PCs (which is partially true, but not completely true), then MacOS X computers and Windows PCs must therefore be in the same market. Exactly the opposite of what Psystar tries to convince you of.
The way I see it Apple's has an out here if they loose. They can require any/all third party hardware manufacturers/providers that can/will run Mac OSX to apply a very large warning label on their hardware and packaging that Apple does not recommend the installation of Mac OS on non-Apple hardware and will not provide support or guarantee compatibility with current or future upgrades to their OS.
Its not illegal to be a monopoly. Were this the case many government services would be trouble.
Rather it is illegal to be a monopoly that abuses its position. While it is likely that many could make the argument that government everywhere engage in abusive monopoly behavior - and quite possibly correctly - it is a matter of record that Microsoft were (1) found to be a monopoly and (2) to be abusing their position. It is this combination of findings that mattered rather than the first one alone.
as I understand it (IANAL) is that Pystar legally purchased copies of OSX and were not required to agree to any license before paying the money. A lot of people seem to be confused about copyright. A license is a contract and not a copyright; they are not the same thing.
It's my understanding that if one posses a legal copy of a copyrighted work one is free to do whatever he desires with that copy (except of course to make and distribute more copies to the public). The doctrine of first sale means that a person can re-sell his legal copy of a copyrighted work, which is what Pystar seems to have done.
The question is whether or not Pystar has entered in to a contractual/licensing agreement with Apple just by purchasing and using the OSX software. To the best of my knowledge there is nothing in copyright law that requires the purchaser of a copyrighted work to do so. BY the same token there is nothing a rights holder from making the sale on whatever terms he desires.
If Apple required it's customers to sign a sales contract before taking the money and delivering the merchandise they would have a much better case. It seems like in this case the contract came after the fact. After the money was paid the merchandise was delivered and inside the packaging was a contract (EULA) to which the purchaser never agreed.
In the above mentioned car analogy you buy a Chevy and the dealership delivers it to your house. You open up your glove box to read the user's manual and it says "You have a right to drive this car only if you use GM gasoline. Your new car will work better using genuine GM".
A copyright holder
This is like Microsoft specifying that Vista can ONLY be run on Lenovo, Dell, and HP. All other use is illegal.
Or MSOffice can only be run on Vista and Windows XP even if technology exists to permit it to run on alternative OSes like Mac or Linux.
Is this right?
Does copyright extend to specifying everything about how the product gets used? Can it limit use to weekends only? How about use by men only? Or use by people under 30 only? Or use by US citizens only? The list goes on and on.
Can a Apple prevent people from producing a system that can run MacOS even if it ships with Vista? Can Dell provide device support for MacOS and ship with Vista pre-installed? The end user could just install MacOS if he liked.
For a vary long time copyright controlled the right to make a physical copy. Beyond that it didn't control what could be done with the work. It keeps getting expanded to give more rights to the owner and fewer to the user.
"However, Mac OS X has no utility without running, under license, on Macintosh hardware."
That statement is demonstrably false. If it were true, OS X would not run on Pystar hardware.
Here's the true version of that statement, see if you can spot the differences:
"However, Mac OS X has no utility without running on hardware."
Fri Sep 05, 2008 12:47 pm Subject: Re: OSX is based on FreeBSD
QuoteAnonymous wrote:
Could be interesting and relevant perhaps, on how much copywrited material is really Apple's. About the only thing the BSD license doesn't do is transfer the copywrite itself.
All of the GUI. Many of the included apps. The underlying kernel, Darwin, is based on BSD and is freely available from Apple.
And not to be picky, but it is copyright, not copywrite.
Fri Sep 05, 2008 12:52 pm Subject: Re: The Problem for Apple is ....
QuoteAnonymous wrote:
as I understand it (IANAL) is that Pystar legally purchased copies of OSX and were not required to agree to any license before paying the money. A lot of people seem to be confused about copyright. A license is a contract and not a copyright; they are not the same thing.
As an individual, that would probably be correct. Psystar, however, is a business. I think, in this context, they are acting as a reseller of OS X, which they are not authorized to do. They have no reseller agreement with Apple.
IANAL, so I may be incorrect. Nemo may chime in and set us all straight. I believe this is in his area of expertise.
QuoteIntruder wrote:QuoteAnonymous wrote:
as I understand it (IANAL) is that Pystar legally purchased copies of OSX and were not required to agree to any license before paying the money. A lot of people seem to be confused about copyright. A license is a contract and not a copyright; they are not the same thing.
As an individual, that would probably be correct. Psystar, however, is a business. I think, in this context, they are acting as a reseller of OS X, which they are not authorized to do. They have no reseller agreement with Apple.
IANAL, so I may be incorrect. Nemo may chime in and set us all straight. I believe this is in his area of expertise.
If I legally purchase something, I don't need a reseller agreement with the manufacturer to legally sell it. If I go into Borders, and buy every copy of IRobot on their shelves, I can turn around and resell those copies to whomever I wish. The same holds true if I go into an Apple store, and buy every copy of OS X they have in stock.
Thu Sep 11, 2008 11:26 pm Subject: