Judge Approves Settlement, Psystar Stops Selling Mac Clones

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Judge William Alsup approved the partial settlement in Apple and Psystar's legal battle over whether or not the PC maker could build and sell Mac clones without Apple's permission on Tuesday. By Wednesday morning, Psystar's Web site still displayed its Mac clones, but listed all models as out of stock.

Psystar's Web site, however, still shows its Rebel EFI product as available. Rebel EFI lets users install Mac OS X on non-Apple hardware, in effect letting the company sell Mac clones but leaving end users to install Mac OS X themselves.

"Now Psystar simply sells grey boxes and offers Rebel EFI so that one can infringe Apple's copyright in Mac OS X and violate the DMCA all on their own," The Mac Observer's legal contact said. "We will see if Judge Alsup permits this to continue."

Apple filed a lawsuit against Psystar in Northern California several months ago claiming the small PC maker was violating the Mac OS X end user license agreement, and that it was violating the Digital Millennium Copyright Act with the steps it used to install the Mac operating system on PCs. Psystar claimed that it should be allowed to build and sell PCs with Mac OS X pre-installed and that Apple is overstepping its bounds by blocking companies from selling Mac clones.

Apple has also asked the court in California for a permanent injunction blocking Psystar from hacking Mac OS X, selling Mac clones, and from selling its Rebel EFI tool for installing Mac OS X on PCs. Psystar seems willing to agree to an injunction that includes nearly all of Apple's stipulations, but doesn't want to see Rebel EFI included.

Psystar filed a parallel lawsuit in Florida a few months ago alleging that Apple is abusing monopoly power by locking Mac OS X to its own hardware. Apple has filed a motion to dismiss the case or transfer it from the Florida court to California because the arguments in both cases are essentially the same and Judge Alsup has already ruled on the issues.

Once the proceedings in Judge Alsup's court are completed, Psystar's next move will be to take the case to the Ninth Circuit Court of Appeals in hopes of overturning the rulings. The PC maker is also hoping to continue its parallel case in Florida, although that court may be inclined to hand the case off to Judge Alsup to avoid potential conflicts in rulings.

Comments

vpndev

They sold 768 machines and now have to pay $2.7 million. And there are lawyer bills to be paid too.

So just WHO is bankrolling this company? And WHY ?

Voice

This essentially means that if the appeal process ends with the same result Psystar goes into Chapter 7, and Apple gets about .01% of their ‘winnings’ here (the sum total of all assets owned by Psystar as a company).

James

Psystar cannot declare bankrupcy for some time.  The already did this in an attempt to interfere with apple’s requests

zewazir

Not all debts are released by a bankruptcy ruling.  The court can order them to pay anyway. Considering other factors, I think it would be likely a bankruptcy judge will tell them to pay up. iwonder how many Big Macs one would have to sling to pay off $2,700,000?

In addition, if PsyStar were to try to refile for bankruptcy, they could end up having to divulge the hidden deep pockets that kept them going through all the legal maneuverings. It oes not seem likely a bankruptcy court would be incurious where they’ve been getting the money for the lawsuit.  It sure as heck was not from selling clones.

But even if it is known who has been supporting PsyStar’s legal expenses, could Apple then go after the deep pockets, or does the PsyStar settlement shield them?

xmattingly

So just WHO is bankrolling this company? And WHY ?

That’s the big question. There is no way in hell Psystar could have gotten this far through bankruptcy, litigation, you name it without a financial backer. In my opinion, Apple should be pressing harder - if they still can - to uncover who their financiers are.

John Dingler

Psystar’s persistency and tenacity in the face of eventual defeat raises questions and suspicions in several areas:
1. What companies/individuals are/is financing its experimental litigation.
2. What it hopes to gain by protraction.
3. The quirky world view by the owners and the legal team.
4. Microsoft on the sidelines, disinterested in the ruling.
5. MS is not filing a pro-Apple amicus brief to protect its company’s interest in the event of a Psystar win.
6. What kind of company gains from an Apple loss.
7. Possible negation of all kinds of pro-big-corpo laws and statutes.

Joe Anonymous

But even if it is known who has been supporting PsyStar?s legal expenses, could Apple then go after the deep pockets, or does the PsyStar settlement shield them?

That depends very much on the circumstances. If the investor is a distant investor with no role in the business, Apple almost certainly can NOT go after them.

OTOH, if the investor has been involved in the day to day operations, it MAY be possible to pierce the corporate veil, but it’s very hard to do.

vpndev

Psystar cannot declare bankrupcy for some time

IANAL but I believe that they can liquidate (Ch 7). I understand that Ch 11 (reorg) is what they can’t do.

I suspect (only “suspect”, no evidence) that part of the reason for settlement now is to block further discovery, which might in turn expose the trail to their backers.

This has all the makings of a *very* high stakes poker game.

Bosco (Brad Hutchings)

Psystar is evil yes I know,
Because Groklaw tells me so.

They must have had financial backers,
Because they stole stuff from real hackers.

Apple smacked them down in court,
Now Psystar will pay child support.

I didn’t say what I really meant,
So I just edited my comment.

Now is the end of my silly song,
So it is time to say “so long”.

John Dingler

Psystar’s latest great lament,
is caused by it insistence to steal again.

Yes, we all know that it’s rebellious and cool,
we all know that it’s a sort of shifty fool.

We also know that it’s fighting still,
it even knows that it’s now all up hill.

Yes it continues to drudge along,
hoping its secret backers will bail it out soon.

But note that its lawyers have not given up
their struggle against all conceivable odds.

Judge Ito…I mean Alsup, gives them a wide birth, but get real.
He hopes to cover all the bases to prevent appeal.

In the meantime they have him twirled around their finger,
and they dance and snicker as they await his decision.

That’s OK. Psystar knows that it will lose,
so it filed an identical Fla. suit.

With the summary judgement, I thought that Apple won,
yet Psystar continues to win a few arguments more.

That Apple could not trounce it once and for all,
implies that Microsoft is the next in Psystar’s sight.

How the Psystar piss-ant got so lawyerly big,
is a testament to its and society’s reliance on theft and greed.

*S*

Bosco (Brad Hutchings)

Truly ironic Mr. John Dingler!
For I was the original jingler.

Fanboys get oh so moralistic
But can’t come up with original schtick.

Instead they steal mine and make it their own.
They change the message, they change the tone.

If I sued and won, it would make me cry,
The fanboys would just go Rebel EFI.

Good night now!

John Dingler

@ Bosco, *LOL*

xmattingly

Well, whatever moral or “legal” equation you’ve come up with to justify Psystar’s theft of technology Bosco, your boys have lost their asses through the court.

Bosco (Brad Hutchings)

It’s not “theft of technology”. It’s violation of copyright and violation of a license agreement. Psystar aren’t my boys, either. If anything, they demonstrate that a small pimple can really infect Apple’s arse. First and foremost, I am a student of history. Apple is going down the same path to protect its hardware tying arrangement that the RIAA went down to protect CD sales. The end result for the RIAA was court victories big and small while capitulating in the new online digital market to a complete newcomer (Apple), and eventually accepting no-DRM and about a 10% sell/use rate. In both cases, copyright enforce by a court is a huge freaking hammer, but it will prove unwieldy against a ragtag army of thumbtacks.

There will be Mac clones, eventually. How many of you remember that Chuck E Cheese game where the little gophers come out of holes in the board, and you have to react and strike them with a big padded mallet? You strike one place, a gopher pops out of another. That’s the game Apple has to play to stave off cloning. Sue for one thing, a cloner will do another. Add protection scheme, piss off legitimate customers.

If Apple isn’t proactive about licensing Mac OS X to other hardware vendors, my bet is that a sort of grey market will emerge. You know how you can buy your favorite big brand big screen from a no-name web store based in New Jersey for a lower price than so-called “authorized” dealers? You probably don’t get the USA warranty, and might end up with a unit originally destined for another continent. The TV manufacturers have to play the grey market delicately. On one hand, their authorized dealers want price protection. On the other, a lot of merch moves through the grey market channels. So they tend to tolerate and not condone. Hence confusion over USA warranties.

I doubt Apple would lose sales to effectively grey-market clones. You have to be pretty dedicated to saving a buck to sign up with Psystar, especially when it comes to software updates. Even more dedicated to become a DIY hackintosher. Those guys clearly operate out of love. Seriously, no sound or wireless out of the box?

zewazir

I doubt Apple would lose sales to effectively grey-market clones.

First, no matter what YOU want to call it, the end result is, in fact, a theft of technology.  Apple paid untold millions of dollars developing their operating system for the expressed purpose of making Apple computers stand out uniquely from the standard PC crowd. PsyStar is STEALING that unique technology by violating Apple’s copyright.  Just because nothing concrete is stolen does not make violating copyright any less of a theft.  That is why copyright laws exist - because society recognizes that intangibles CAN be stolen, and is no different in substance than stealing something which is tangible.

Second, there is a HUGE difference between Apple protecting the Macintosh OS and RIAA protecting copyrighted materials on music CDs.  RIAA was trying to keep control (and, in light of how the original Napster was behaving, rightly so) of the medium in which music is presented. The problem with RIAAs approach is they were facing a completely new method of distributing music, and instead of accepting that digital music distribution was the future, attempted to halt the wheels of progress. They were dragged kicking and screaming into the digital music market.  Then again, I wonder if RIAA would have kicked and screamed quite so much if the digital music market did not start out as a piracy ring. Had RIAAs initial experience in the digital music market been along Apple’s market design where people still purchased their music, just using the new digital medium, instead of Napster’s design where people stole their music using the new medium, I’d bet they would not have kicked up the fuss they did.

Conversely, Apple is NOT facing a completely new distribution method, use, nor technology with respect to their OS.  What they are facing is a company that insists on the right to TAKE (ie: steal) what Apple has spent millions of dollars to develop to market Apple computers, and use it to market their own computers.

Third: (and this has been pointed out many times) Apple is obviously NOT worried about individuals creating their own hackintosh.  If they were, they would be attempting to have the courts shut down those web sites that instruct people how to make a hackintosh.  Instead Apple has only gone after PsyStar, who is the only one to date that has tried to make a profit off the hackintosh market.

AND LAST: When (or if you prefer, “if”) the court also comes out against PsyStar’s Rebel EFI, and when the decision against PsyStar is upheld in the appellate courts, then the likelyhood of someone else trying the same thing is remote indeed. Your “hit the gopher” scenario is, at best, naive wishful thinking. No one is going to throw away a bunch of money repeating a lost case. The legal fees of this case are in the millions - and PsyStar is now going to have to pay Apples legal costs as well as their own.  OTOH, Apple has a cash reserve in the billions.  They CAN afford to spend a few million quite a number of times - especially with the precedent set that they can recoup those expenses. IF (and that is a big IF) there are others out there stupid enough to retry marketing hackintoshes, they are going to be VERY few. (I personally predict no one is going to retry this case unless something changes significantly.)

Conversely, if Apple changes their licensing to openly ALLOW clones, then they WILL lose sales.  They tried the clone approach back in the late 90’s, and it DID NOT WORK.  Apple is simply NOT going to make the same mistake twice. They may be an “evil, profit chasing corporation”, but they are not stupid.

Bosco (Brad Hutchings)

Here’s the problem. If you want to call what Psystar did “theft”, then every single one of us is a thief. I don’t care how careful you think you are, you have acted like a thief at some point by making a copy of some digital good in a manner that was not explicitly authorized by the licensing scheme of a copyright holder. Copyright law, as encompassed by legislation and rulings, even accounts for that by allowing defenses such as Fair Use and First Sale in case someone decides to sue you for making a copy they did not explicitly authorize. The “copy the operating system into memory” step is the legal equivalent of you having to carry your own rope with you so that they can hang you at will. Of freaking course the operating system gets copied into memory! After initial bootstrapping, it actually does all the work for you!

Anyone remember when it was legally questionable whether you could rip a CD into iTunes for personal use? Anyone remember when Apple was running commercials encouraging people to “Rip. Mix. Burn.” when it was murky if end-users could get sued simply for ripping?

I’m not condoning theft, copyright violation, license violation. I don’t advise people to do it or knowingly do it myself, even when it would make things a hell of a lot more convenient AND everyone involved would get paid. But I am a pragmatist. Macs will continue to be cloned because it’s easy enough and the payoff (in terms of dollar savings or end-use flexibility) is high. Apple runs very high risks of alienating people who play Apple’s way by making the costs of cloning (legal, technical, etc.) higher. If Apple doesn’t recognize those areas of the market where cloning makes sense, those areas will just recognize themselves. The horses have already left the barn.

zewazir

If you want to call what Psystar did ?theft?, then every single one of us is a thief.

Yes, I make illicit backup copy of every movie DVD I purchase because with kids they are bound to get scratched over time.

There is a company that makes a device called a charcoal chimney which significantly speeds up the time it takes to get charcoal for the BBQ up to cooking temps. I make my own using old paint cans. That is not theft. (espcially since my dad was making paint-can charcoal chimneys long before anyone came out with a commercial version)  If I were to SELL my cheap copies for a profit, it WOULD be stealing, since I would be violating their patent.

PsyStar is not making hackintoses for their own use are they? They are MAKING A PROFIT (or they were until the courts finally shut them down) off their illicit use of Apple’s OS. THAT makes it theft, whether you want to call it that or not.

zewazir

Macs will continue to be cloned because it?s easy enough and the payoff (in terms of dollar savings or end-use flexibility) is high.

First of all, the payoffs are not that high or the phenomenon of hackintoshes would be a lot more prevalent. In fact, considering the annoyance of looking for - or having to create - hardware drivers for the wide variety of components out there that OS X does not support, the end-use flexibility isn’t worth a plastic dime either. Then ad to that the complete lack of any support, especially for updates, nad your “flexibility” advantage becomes non-existent. I’d be willing to bet the vast majority of clones has far more to do with people doing it just to prove they can than any monetary savings or “increased flexibility”.

But then, Apple isn’t going to great lengths to stop all hackintoshes, are they? They changed some code which temporarily stopped OS 10.6 from loading on some netbooks. (And that was rapidly bypassed, which took no one by surprise, least of all Apple.)

One more time for the slow learners: Apple is NOT trying to completely shut down the world of hackintoshes. If they were going to do that, they’d be going after the sites that provide the info and codes to make an hackintosh.  Instead the only thing they’ve done so far is go after a bunch of low lifes that tried to take a profit out of the hackintosh, and made a half-hearted attempt at limiting the scope of hackintoshes.

But that does NOT mean Apple has to “recognize” the hackintosh “market”. (Which actually does not exist as a market since, other than PsyStar who has been shut down, no one is making a profit off of making hackintoshes) There is no incentive - though you obviously want there to be - for Apple to do anything except continue the way they have been - mostly ignoring hackintoshes. Apple is a business, and their focus is - and should be - on making themselves as successful as is practical. That does not include catering to the wishes of cheap twits who want the advantages of their products without paying for them.

Bosco (Brad Hutchings)

And the software you use to make that backup copy? How is that different from Psystar’s Rebel EFI, except that it’s Apple’s ox being Al-Gore’d, not the MPAA?

Your patent example is assuredly patently B.S. I bought the Kingsford version in 1989 (first year at college), so if there were a utility patent applied for (“granted” standard kicked in 1995) that year, it would have run out this year. Quick Google search found this short pictoral history of charcoal starters. Perhaps you are confused with design patents?!? But I can’t image your charcoal chimney looks anything like Apple’s power brick, so that wouldn’t be it.

Profiteering is not the standard that defines theft. It might be the standard that attracts private legal action. And anyway, if you go look at Psystar’s website and think they were actually making money, you might need to back away from the crack pipe. See the number cited by cpndev above.

zewazir

1: because the purpose of the backup software is exactly that: to make a BACKUP of a legitimate copy.  The entire purpose of Rebel RFI is to make an illegitimate INSTALLATION of the OS X system.  There is, you know, a significant difference between a full installation of software, and a backup copy. Or are you so hopelessly confused that the two are the same thing in your mind?

2. So, my example was not the best one, but should have been good enough to illustrate the point. I guess I still over estimate some people’s reading comprehension.  The POINT is no company, including Apple, is going to go after individuals who cobble together a copy of their product for personal use.  But if said individual starts to sell those copies, then ANY company, including Apple, is compelled to put a stop to it.

Again, you are off base (actually out in the north parking lot). When it comes to IP, profiteering is EXACTLY what defines theft. You can sing “Happy Birthday” in the shower all day long without even technically violating copyright. Put together an entertainment company that makes its living off singing “Happy Birthday” at parties and you need to secure written permission first, or you are in violation of copyright, which is theft of IP.

As for PsyStar’s profits, it does not matter.  Their PURPOSE is to make a profit off of stealing Apple’s IP. Had they simply sold computers at a price higher than they paid for the components, they may have made some profit. That they were stupid enough to think they could violate Apple’s copyrights without consequences, and that they chose to spend huge amounts trying to defend their thieving actions is beside the point.

vpndev

Their PURPOSE is to make a profit off of stealing Apple?s IP. Had they simply sold computers at a price higher than they paid for the components, they may have made some profit. That they were stupid enough to think they could violate Apple?s copyrights without consequences, and that they chose to spend huge amounts trying to defend their thieving actions is beside the point.

Actually I am by no means certain about this. I strongly suspect that there is (was) a darker purpose behind it. Making money from Apple’s IP would be nice but I’m not sure it’s the real purpose.

After all, if that were the case they would have stopped now. The appeals have such a low likelihood of success that no sane businessman would now stay on this path in order to make money from OS X and Rebel EFI.

That leads inescapably to the conclusion that there is a different purpose behind this whole thing - one we haven’t seen yet. Someone is bankrolling this and presumably will make money, somehow. As they say, follow the money.

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