Apple’s Persuasive Arguments Against Psystar, End Could be Near

November 10th, 2008 at 2:00 PM - Reports by John Martellaro

Appleis legal team, lead by James G. Gilliland, Jr. has provided the Northern District of California Court with a persuasive response brief in support of its motion to dismiss Psystaris counterclaims. Psystaris counterclaim, based on antitrust arguments against Apple is also its defense, so if the counterclaim is dismissed, Appleis case against Psystar gains considerable momentum.

An attorney who is following the Apple v. Psystar case, and wishes to remain anonymous, has provided TMO with analysis of Appleis "Reply Brief in Support of Apple Inc.is Motion to Dismiss Psystaris Counterclaims."

At issue is Psystaris counter claims is that Apple has a monopoly in Mac OS X and they should be allowed to compete in that market. The claim is similar to a claim that General Motors has a monopoly in its Buick "brand" and that other companies should be able to copy and sell Buicks.

Psystaris Problem

In the opinion of the attorney who contacted TMO, Psystaris antitrust claims are fatally flawed and fail to meet the standard set forth by the Supreme Court ruling in Twombly. Single brands within a competitive market are not recognized by the courts as a monopoly unless the brand has "market power. "Other federal courts have held that the Mac OS X is one OS in a market that consist of other competing operating systems and that Apple does not have market power, because its market share is less than 30%," he said.

In fact, Psystar itself confirms the competitive market by installing Linux and Windows on its "Open Computers"

Accordingly, it appears that Apple has sufficient grounds for an immediate dismissal of the counterclaim, according to the attorney monitoring this case for TMO:

1. "The U.S. Supreme Court and numerous lower federal courts have held that an implausibly defined relevant product market is sufficient grounds for dismissal. Apple cites an impressive list of authority.
2. "Several lower federal courts, including the Ninth Circuit, have held that an attempt to define a single brand product market is implausible and is, therefore, sufficient grounds for dismissal."

Appleis Reply Brief cites an impressive and compelling number of previous cases that support their argument and undermine Psystaris antitrust claim.

The problem now faced by Psystar is that a potential dismissal of their counterclaim, which also constitutes their defense in Appleis original suit, severely damages Psystaris legal position.

The Courtis Choices

Judge Alsup has two choices. "In its motion to dismiss, Apple has moved the court to dismiss the the essential core of Psystaris defenses and its counterclaims on the grounds that they donit state a violation of antitrust law."

If the judge does dismiss Psystaris counterclaim, he could then proceed to find immediately for the original plaintiff, Apple, because Psystaris counterclaim, also its defense, has been repudiated. The court is mindful that an ensuing trial would be expensive and time consuming, and if Appleis arguments are as persuasive as they appear to be, it could all end rather quickly.

On the other hand, Judge Alsup could allow the case to continue, move into discovery and an eventual trial. However, if Psystaris counterclaim is dismissed, Psystar would be unable to defend its antitrust claim and would be in a vastly weakened legal position during a trial.

Judge Alsup could pass on "summary judgment [for Apple] so as to insulate his judgement from any chance of reversal on appeal. In any event, it appears that the law and the pleadings favor Apple, and I would expect Apple to ultimately prevail," he concluded.

Apple has asked for 1) an injunction to stop Psystar from shipping computers with Mac OS X, 2) actual damages or, barring that, statutory damages, 3) courts costs and attorney fees and 4) that all computers shipped with Mac OS X be recalled by Psystar. If Psystar is found to have intentionally deceived the public, damages could be treble.