The Mac Observer

Skip navigational links

DealsOnTheWeb Daily Deal: OneCall's Weekend Sale - 20 Great Items at Great Prices All Weekend Long

Editorial - Apple's Curious Failure to Act Against Psystar

by , 4:50 PM EDT, May 21st, 2008

When Psystar, a Miami, Fla. company, started selling Mac clones pre-loaded with Mac OS X last month, everyone assumed that Apple would take immediate action. However, nothing has happened to date.

Several things may be going on, and no one is sure. Several theories are floating around.

Dow Jones reported recently that Apple is preparing to defend its IP rights and will take legal action soon. According to international IP law, the owner must police those IP rights immediately against significant infringements or lose them, I have been told. It could be that there is some threshold that must be reached, or that Apple is simply doing due diligence in its legal preparation. How long Apple has to defend its rights is not clear.

Theory #2, presented for the first time to my knowledge by Stephen Withers at ITWire is that Psystar is a front company for Apple, and the purpose is not yet clear. The statements made by the owners and the research Gizmodo did in the early days on them would seem to weigh against that, but it's still possible.

Finally, it could be that Psystar found a legal precedent in case law that backs them up and they're running with it until Apple figures out a better defense. [This is my guess.] Meanwhile, Psystar made some quick money. It's similar to when companies buy or discover that they already possess a nice weapon in their patent portfolio that they can use to raise some easy cash.

If Apple files a lawsuit soon, all doubts will be erased. In the meantime, the lack of prompt action by Apple has more and more people wondering what's going on and coming up with fascinating alternative theories.

Observer Comments

Show: Subjects Only | Full Comments
View Name:Guest
Subject: nice conspiracy theory
Close Name:ctopher Posts: 119 Joined: 25 Aug 2006
Subject: Maybe Apple is building their case

It could be that Apple sent a cease and desist letter the very day the news broke. At this very moment, lawyer letters could be criss-crossing in the postal service.

Apple doesn't have to hit the courts immediately to defend their IP. Just sending a letter is enough. Eventually they may have to sue, but they're probably happy to trade "no you can't" "Yes I can" letters for awhile.

In this way, they can see what Psystar's results are and if they are good, then sue Psystar and start the licensing thing. If they are bad, they just sue them. The only difference is the damage award.

But this is interesting stuff. I didn't actually read my Leopard license when I got my Mac, but I would imagine that it says something to the effect that you're not allowed to install this software on a non-Apple computer. If this is so, Psystar might argue that some kinda fair-use something-or-other does not allow Apple to claim that limitation.

Since they presumably purchase Leopard licenses at retail, there is no damage to Apple. Sure, Apple didn't get the hardware sale, but Apple is selling the operating system separately from the hardware.

So Apple may have sent a letter saying that the license is being violated, but then continue to trade letters without going to court. Given that there is no hardware support, Psystar has taken on a big burden. Also, the only advantage Psystar has that I can see is it's upgrade-ability, but what can you upgrade without Apple's support? They'll probably only be a niche in a niche player if they survive at all.

I think It's simple. Apple is just grinding it out slowly because there's no need to rush.

Close Name:ipaqrat Posts: 44 Joined: 14 Jan 2005
Subject: Nothing to gain... yet?

Maybe Apple is waiting to see just how well this cloner might do in the low-end-for-dirt cheap bracket. Whether folks will take them seriously. Whether they actually have any technology worth acquiring.

Apple itself has never really gone into the "Sub-Prime" price markets. Not with the Mac Mini. Hell, even the Mac LC and Classic were expensive in their day. To counter Schools compulsion to accept Microsoft's D.O.J.-contrived penance offers of free crap. To be more attractive to governments with less to spend all the time... Maybe, just maybe, Apple wants to research it in the wild - before stomping on psystar's pointy little head.

Close Name:WetcoastBob Posts: 82 Joined: 17 Aug 2006
Subject: Fizzle out?

My guess is that ...

1) Apple is waiting to see if Psystar can really deliver and not self-destruct.

2) At the same time Apple is doing their homework. As I understand it there has been no challenge to this type of ULA for a long time and that it may not stand up under a serious challenge.

If Apple sues they had better be sure they will win. This probably will be a benchmark case. Apple's success is due partly to the combination of hardware and software. The OS experience could be seriously jeopardized by sub-standard hardware. From what I have seen on Gizmodo and MacWorld, the Psystar is a little lacking in the "out of box" experience as well as booting up.

Part of the power of Apple is the "experience".

View Name:Guest
Subject:
View Name:Guest
Subject: EULA
Close Name:Sir Harry Flashman Posts: 750 Joined: 08 Feb 2007
Subject: Has it not already fizzled

Quote
WetcoastBob wrote:
My guess is that ...

1) Apple is waiting to see if Psystar can really deliver and not self-destruct.

2) At the same time Apple is doing their homework. As I understand it there has been no challenge to this type of ULA for a long time and that it may not stand up under a serious challenge.

If Apple sues they had better be sure they will win. This probably will be a benchmark case. Apple's success is due partly to the combination of hardware and software. The OS experience could be seriously jeopardized by sub-standard hardware. From what I have seen on Gizmodo and MacWorld, the Psystar is a little lacking in the "out of box" experience as well as booting up.

Part of the power of Apple is the "experience".


How are the Psystar units doing. I remember the when they first went on sale that pundits bought them and promised to do an in depth review. I haven't seen an in depth review, is it because the units are not a good deal despite the low price? Can some here post a link the PystarObserver where we can read some reviews?

View Name:Guest
Subject: reviews of Pystar not good
View Name:Guest
Subject: We'd all like a less expensive Mac.
View Name:Guest
Subject: Re:We'd all like a less expensive Mac.
View Name:Guest
Subject: The scene is like this...
View Name:Guest
Subject: Not a threat to Apple
View Name:Guest
Subject: Custom Upgrades/Patches - forget about it.
Close Name:xmattingly Posts: 223 Joined: 31 Jul 2007
Subject:

Quote
Guest wrote:
Apple has taken action. People will notice how fast "Mac" got dropped from the name. That was a clear trademark violation. Pystar responded before the product shipped.

Apple couldn't take action on any licensing claims until it could claim damages. For that to happen a product had to ship. Now that the product has shipped, Apple can sue.

Apple can probably successfully argue that Pystar is diminishing the good will of it's trademark because by installing Leopard there is an implication that most customers will think Apple approves of this action.
What you said sounded pretty good, until you threw in the "goodwill" legal du jour bit in there. I don't know why so many people like to throw that word around... goodwill has NOTHING to do with trademark issues, people. The only way Apple could win a legal case based on goodwill is if they could prove that Psystar had intentionally tried to harm their business. Sorry, but "implication that Apple approved OS X' installation" isn't legal precedence, on those grounds.

You were right on about them quickly dropping "Mac" out of the product name, though.

Close Name:xmattingly Posts: 223 Joined: 31 Jul 2007
Subject: Why sue? I'll tell you why

Quote
Guest wrote:
So why sue, why even bother?
Because that would open up a can of worms that Apple wouldn't want to get into, which would be another operation that has their $#!% together (or worse yet, a competitor like Dell), and can build quality consumer level machines. And doesn't ship them in boxes filled with loose packing peanuts. : )

Close Name:Nemo Posts: 23 Joined: 28 Aug 2007
Subject: Apple can't sit on its rights

Apple does not immediately have to defend its IP rights. It can, as mentioned, supra, issue a cease-and-desist letter and, for a time, attempt to negotiate its dispute with Psystar. However, Apple must be diligent in defending its rights, once it right to sue matures and the infringer has changed its position in reliance on Apple's inaction. Letters of demand and negotiation will only go so far in blocking the legal doctrine known as laches. There is no bright line or certain period of time, and a company or person does not need to defend against every act of infringement no matter how insignificant. However, where, as is the case with Psystar, the infringement is notorious, the right to take action appears to have matured, the holder of the IP rights has the ability to sue (i.e., it has the money and legal talent), and the infringer is establishing a significant business on the basis of Apple's failure to act, the doctrine of laches requires the holder of the IP rights, in this case Apple, to diligently police its IP rights with sufficient speed so that Psystar is not prejudiced by Apple's delay in suing. In other words, Apple can't simply sit back and let Psystar incur the costs to establish its business, when Apple could have sought to enforce its IP rights by suing. If Psystar raises the defense of laches, Apple will have to show that it was diligent in enforcing its rights and had a good reason for delaying its lawsuit, after the moment when it was or should have been aware of Psystar's infringement.

Now, there may be good reasons for Apple's delay, Apple could be preparing its lawsuit. IP cases are highly technical and often require the work of engineers working closely with IP litigators, who have been trained as engineers, to determine the exact basis of the infringement. The engineers often to have to reverse engineer the infringing technology. This is especially true if Apple is going for a preliminary injunction, which has a high legal standard. To get a preliminary injunction, Apple must show that it will most likely suffer harm that the court can't remedy with a subsequent legal judgment or equitable decree and that it will most likely win a trial on the merits. And to show that it will win on the merits, Apple's lawsuit can't present any dispositive factual issues, where the finder of fact could reasonably find for Psystar. So pursuing a preliminary injunction could explain the delay.

It could also be that Apple has doubts about the validity of its IP rights.

The last idea, that Psystar has Apple's license to install OS X on its computers, is almost certainly not true for several reasons. First, if Apple starts licensing OS X to third parties, it may find that antitrust law will require it to license OS X to others on the same terms, if Apple should ever get sufficient market power. For the reasons that Mr. Martellaro notes, supra, it does not appear that Psystar is part of Apple. And even if Psystar does have Apple's license to use OS X, that facts needs to publicized so that others know that Psystar isn't infringing and that Apple hasn't waived its IP rights.



Last edited by Nemo on Thu May 22, 2008 5:15 pm; edited 1 time in total
Reply | Quote
Close Name:geoduck Posts: 1841 Joined: 30 Dec 2003
Subject:

From the Wikipedia article on First Sale Doctrine

Quote
Federal district courts in California and Texas have issued decisions applying the doctrine of first sale for bundled computer software in Softman v. Adobe (2001) and Novell, Inc. v. CPU Distrib., Inc. (2000) even if the software contains an EULA prohibiting resale. In the Softman case, after purchasing bundled software (a box containing many programs that are also available individually) from Adobe Systems, Softman unbundled it and then resold the component programs. The court ruled that Softman could resell the bundled software, no matter what the EULA stipulates, because Softman had never assented to the EULA. Specifically, the ruling decreed that software purchases be treated as sales transactions, rather than explicit license agreements. In other words, the court ruling argued that California consumers should have the same rights they would enjoy under existing copyright legislation when buying a CD or a book.

This could be how Psystar is getting around the EULA and what may be causing Apple a lot of headaches. If Psystar is buying copies of OS-X but not opening the box then they are not accepting the EULA and therefore not subject to it and can resell the software with their Clone.

Original http://en.wikipedia.org/wiki/First_sale_doctrine

Close Name:Nemo Posts: 23 Joined: 28 Aug 2007
Subject: First Sale doctrine does not apply

The First Sale doctrine only applies to reselling a validly purchased item. If Psystar was simply reselling OS X, the doctrine might have some application. But Psystar is installing OS X on non-Apple hardware in violation of Apple's EULA, which has nothing to do with the First Sale doctrine. If Apple's EULA is valid, neither Psystar or an individual can buy OS X and install it on non-Apple hardware. I also suspect that altering, the CPU's ROM to run OS X is what Psystar is doing, and that too is in violation of Apple's copyrights, and possibly its patents as well, provided that Apple's copyrights and licenses are not invalid because of some other legal principle.

Apple's engineers having to reverse engineer Psystar's alteration or use of Apple's proprietary ROM BIOS could also explain Apple's delay in filing its infringement case. Reverse engineering and the legal analysis of what the engineers discover to determine the nature and extent of the infringement takes time.

Wired referred to some case that Psystar may be relying on, but Wired did not properly cite the case, and I haven't wanted to spend the money to find it on either Lexis or Westlaw.

View Name:Guest
Subject:
Close Name:Terrin Posts: 382 Joined: 29 Jan 2006
Subject: There is Goodwill in Trademarks

Sorry, my browser hasn't been signing in automatically for some reason.

I originally wrote, "Except you are wrong. Goodwill is a well known trademark concept. .There have been hundreds if not thousands of cases argued over the issue. Here is basic primer on the subject."

I should have added, See:

http://www.iusmentis.com/trademarks/crashcourse/introduction/

Do a Google search, and you will find thousands of hits on the topic. "


Quote
xmattingly wrote:
What you said sounded pretty good, until you threw in the "goodwill" legal du jour bit in there. I don't know why so many people like to throw that word around... goodwill has NOTHING to do with trademark issues, people. The only way Apple could win a legal case based on goodwill is if they could prove that Psystar had intentionally tried to harm their business. Sorry, but "implication that Apple approved OS X' installation" isn't legal precedence, on those grounds.

You were right on about them quickly dropping "Mac" out of the product name, though.[/quote][/quote]

View Name:Guest
Subject: BSD
Close Name:Sir Harry Flashman Posts: 750 Joined: 08 Feb 2007
Subject: Pre-installed and offering downloads

Quote
geoduck wrote:
This could be how Psystar is getting around the EULA and what may be causing Apple a lot of headaches. If Psystar is buying copies of OS-X but not opening the box then they are not accepting the EULA and therefore not subject to it and can resell the software with their Clone.

Original http://en.wikipedia.org/wiki/First_sale_doctrine


For a fee Psystar will pre-install OSX. That means that they are opening the box and accepting the EULA

I read on another blog that Psystar is offering downloads of Apple software updates, iTunes, QuickTime and such. I don't know if that is true or not, but if so then that opens up a whole new can legal worms.

Close Name:xmattingly Posts: 223 Joined: 31 Jul 2007
Subject: Re: There is Goodwill in Trademarks

Quote
Terrin wrote:
Sorry, my browser hasn't been signing in automatically for some reason.

I originally wrote, "Except you are wrong. Goodwill is a well known trademark concept.

Do a Google search, and you will find thousands of hits on the topic. "
Pfft. Right. Legal "expertise" coming from someone who can't even tell if they're logged in or not.

Goodwill is not a trademark concept. It is the general perceived value of a business based on reputation. Not based on its identity. So the headline of that paragraph is dead wrong: trademarks do not create goodwill. It goes on to say, "advertisements, exclusive sales channels and other means help to build up a prestigious image". Simply having a logo does not do this for you.

Quote
What you really should have added was, "I did a Google search for "trademark + goodwill" and called that thousands of references, with no vested interest in actually reading any of these.

So back to the point of topic: PsyStar has not infringed on Apple's trademark, neither have they shown any intention of diminishing their perceived value. They're pushing their product as a cheaper alternative, and at best may have violated Apple's EULA.

I'm telling you right now: Apple will never sue PsyStar based on a trademark violation, or harm to their reputation - under their current practices. If you honestly believe you're right (and you're not), then why don't you put your money where your mouth is and make a wager. Time to put up or shut up!

View Name:Guest
Subject: Apples fear of being sued as a Monopoly
Close Name:Sir Harry Flashman Posts: 750 Joined: 08 Feb 2007
Subject: Probably not a monopoly issue

Quote
Guest wrote:
They might not be doing anything for the moment because Apple does not know if the company is going to crash and burn and they (Apple) can make that happen just by putting some hardware checks in OS X then they do not have to sue Psystar just becomes a failure. This way they do not look evil. If they go after Psystar the word Monopoly might come up very quick and they do not want that kind of publicity.


If Psystar had a competing product other than taking Apple's product and installing it on a PC then Apple going after them could be considered a monopolistic practice. It isn't as if Pystar had developed their own OS that could run programs written for OSX.

By the way I just checked and it looks like Psystar is offering downloads for Apple software updates. What are the legal ramifications of that? Someone with more programming skills than mine would have to check to see if they are line by line matches for the Apple updates.

Close Name:gslusher Posts: 2070 Joined: 13 Nov 2002
Subject:

Quote
xmattingly wrote:
Pfft. Right. Legal "expertise" coming from someone who can't even tell if they're logged in or not.


Are you an attorney experienced with intellectual property law, yourself? If you are, you should say so, so that we may learn from you. (It would appear that Nemo is probably an attorney or at least a law student.)

Close Name:gslusher Posts: 2070 Joined: 13 Nov 2002
Subject:

Quote
Sir Harry Flashman wrote:


By the way I just checked and it looks like Psystar is offering downloads for Apple software updates. What are the legal ramifications of that? Someone with more programming skills than mine would have to check to see if they are line by line matches for the Apple updates.


They may be the same files. It wouldn't be difficult to download them and then load them onto a server. One would have to check the distribution rights for each file. Apple may allow them to be distributed by other means. For example, the AppleWorks User Group used to distribute CDs with collections of Apple software updates for its members with slow dialup connections.

The difference may be that Software Update won't work on a Psystar computer.

View Name:Guest
Subject: EULA? we dont need no stinkin' EULA
Close Name:xmattingly Posts: 223 Joined: 31 Jul 2007
Subject:

Quote
gslusher wrote:
Are you an attorney experienced with intellectual property law, yourself? If you are, you should say so, so that we may learn from you. (It would appear that Nemo is probably an attorney or at least a law student.)
Question the validity of anyone's comments based on whether they practice law or not in one breath, exhale who "appears" to be one in the next. Since you're obviously sporting preconceived opinions, I sure as hell don't owe you an explanation. This is a message board, not Lawyers R Us... if you need legal counsel that badly, I would suggest checking the yellow pages.

View Name:Guest
Subject: PA-Semi Co-Processor is coming
Comment on this Article


You cannot edit your comments.   You cannot delete your comments.
Log in | Register | Having Problems? Reset TMO Cookies & Try Again
Username:   Password:   Log me on automatically each visit   

You are not logged in, and this post will appear as "Guest." Log in with your username and password from the TMO forums. If you do not have a username, you can register here.
Please note that guests are limited to including a maximum of two URLs per post.


Post A Comment
  Subject


  Your Comments



Please enter the word exactly as you see it in the image above. Registered users aren't prompted for this. Having trouble reading the image get a new one.


Recent Headlines - Updated Monday, October 6th, 2008

Mon., 4:20 PM
TMO Reports - Antitrust case Against Apple, AT&T To Proceed
2:25 PM
iPodObserver - kickBACK iPhone Clear Case Introduced with Kickstand
2:05 PM
AAPL Drops 8.4% Amidst Broader Tech Selloff
1:50 PM
9to5Mac: Apple's Brick is a New Manufacturing Process
1:30 PM
iPodObserver - NPD: A Third of iPhone 3G Buyers are Switchers
12:50 PM
Nick DePlume Resurfaces, Says Apple's Gone Soft on Rumors
10:30 AM
Hot Forum Topic -