Judge Dismisses Psystar Bankruptcy, Blocks Stays Against Apple

| TMO Scoop

Psystar, the company Apple is suing for allegedly building and selling Mac clones without authorization, has been granted its motion to dismiss its Chapter 11 bankruptcy case in Florida. The Judge overseeing the case, however, included the stipulation that if Psystar files for Chapter 7 bankruptcy protection Apple's case against the company in California will not be subject to an automatic stay.

According to the court order, Psystar has also been blocked from filing for Chapter 11 bankruptcy protection for six months, and Judge Mark, the Judge overseeing the company's bankruptcy case, is maintaining jurisdiction over the case so he can enforce the terms of his order.

An attorney familiar with this type of case told The Mac Observer "What this means is that Psystar won't be able to use either Chapters 11 or 7 of the Bankruptcy Code to avoid trial in Judge Alsup's court, for if at the conclusion of six months proceedings are still going forward in Judge Alsup's court, I am certain that Judge Mark will not allow Psystar the protection of the Automatic Stay, should it file another Chapter 11 case."

Judge Alsup is the Judge hearing the suit Apple filed against Psystar in northern California alleging the company was violating the Mac OS X licensing agreement with end users, as well as 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.

That case stalled temporarily when Psystar filed for bankruptcy protection in Florida due in part to its extensive legal bills. According to Psystar's filing the company owed Carr & Farrell, its legal team at the time, over $88,000.

The Florida court ultimately granted Apple's request to lift the automatic stay on its case, and shortly after Psystar moved to drop the bankruptcy saying it couldn't deal with the two cases at the same time.

Psystar has since hired Camara & Sibley -- the legal firm known for defending Jamie Thomas-Rasset against the RIAA in a trial that went poorly for her since she was ultimately hit with a US$1.92 million judgement -- to replace Carr & Farrell.

Psystar's posturing makes it sound as if the company has the ammunition to take down Apple thanks to its claims that it plans to show up in court with "guns blazin'."

Psystar better be prepared to reload a lot since Judge Mark's order to dismiss the bankruptcy filing also lifts any protection the company had against creditors, which means companies still waiting for payment are free to file their own cases for financial relief.

"All of Psystar's creditors are now free to sue in any court of competent jurisdiction to get their debts paid," the attorney said. "I wouldn't be surprised to see Apple institute such a law suit to recover the money that Psystar owes to it, and of course, Apple needn't sell shrink wrapped copies of OS X to a company that is in arrears on its debts to Apple."

While Psystar gears up for potential law suits from creditors, it is also dealing additional depositions for discover in Apple's case. According to Psystar's company blog, Apple lawyers had the opportunity to watch and record the installation of Mac OS X on a PC clone.

"They will observe the building process from start to finish, including the installation of OS X on our machines. We believe the only thing they will discover is what we have been open about from the start, and of course the scorching Florida heat," the company said on its blog.

While Apple's legal team was subjected to the "scorching Florida heat," Psystar is still potentially facing a scorching of its own at the hands of Apple's lawyers. The two companies are scheduled for trial on January 11, 2010, and unless a settlement or summary judgement is reached before that date, Apple looks ready to defend its copyright on Mac OS X in court.

Comments

geoduck

IMO the judge is saying to Psystar “I know what you AH tried to do and while I’m granting your motion to dismiss, I am going to make damn sure you don’t pull this BS again.”

But then IANAL so I may be wrong.

jameskatt

If Psystar’s new lawyer’s trackrecord is repeated in Psystar’s trial, Psystar is going to lose and will owe Apple a huge sum of money.

B9robot

Psystar will lose and not owe any money because they will be out of business.

Lee Dronick

Psystar will lose and not owe any money because they will be out of business.

You maybe right about that. Are any of the company officers personally liable for damages?

Mike Williamson

Using bankruptcy will prevent Apple from recovering any costs.  The officers of Psystar will not be liable.

gnasher729

Using bankruptcy will prevent Apple from recovering any costs.? The officers of Psystar will not be liable.

I am not completely sure about that. It seems to me that these guys started with a plan that was based on making money by infringing on Apple’s copyright. It is hard to imagine that one woman should be convicted to pay $1.92 million for uploading 24 songs, while these people should get away with it just because they started a company as an in-between. And I think Apple will _try_ to hold them personally responsible, to avoid copycats.

What if a car thief started a company with the purpose of stealing cars and selling them at a profit? I can’t see the police closing down his business but leaving the thief alone otherwise.

Joe

well I think apple is a shit comoany that was cool about 6 years ago but now you really have to question where or not it is ok for them to not allow someone to install their OS on other computers… It will all end soon hopefully with the google os?  and hopefully the future of computing won’t suffer the same capitalist-induced fate…

soulcapn

The owners of Pystar should be protected by the incorporation of the company.  Usually incorporating protects the owners from personal liability.  Apple can sue the company for everything it has, but if the company has nothing, well then Apple gets nothing but a court precedent that says they have the right to restrict who installs their Operating System and they can restrict the type of computer that it can be installed on.  That alone is probably more valuable to Apple’s business model than the money.

I say usually protected because there are some ways around that.  Proving that the owners were knowingly acting in bad faith against the law might make them personally liable.  If they guaranteed corporate debt with personal assets, then they could be held personally liable.

Basically, this is why you incorporate a business.  It allows you to separate your personal assets from the business, and puts up a firewall between you and your business to protect you personally from litigation. corporation

J Blow

[quote author=“Joe”]well I think apple is a shit comoany that was cool about 6 years ago but now you really have to question where or not it is ok for them to not allow someone to install their OS on other computers? It will all end soon hopefully with the google os?  and hopefully the future of computing won?t suffer the same capitalist-induced fate?.

Good to see the syntactically adept intellectuals chiming in!

deasys

well I think apple is a shit comoany that was cool about 6 years ago but now you really have to question where or not it is ok for them to not allow someone to install their OS on other computers? It will all end soon hopefully with the google os?? and hopefully the future of computing won?t suffer the same capitalist-induced fate

Good one, Joe.

So, why do you think Apple is a “shit comoany?” Was Apple only good back when it wasn’t so successful? Google is successful. Is it evil now too?

And Joe: If you should ever create something worthwhile through your investment of your own time and money, let me know about it. I will come and take it from you.

Lee Dronick

What is a comoany? Is it like a funky cold medina?

xmattingly

IMO the judge is saying to Psystar ?I know what you AH tried to do and while I?m granting your motion to dismiss, I am going to make damn sure you don?t pull this BS again.?

But then IANAL so I may be wrong.

Even so, I like your take on this.

Joe

So, why do you think Apple is a ?shit comoany?? Was Apple only good back when it wasn?t so successful? Google is successful. Is it evil now too?

deasys, my dear DUM DUM! Google has contributed to open source and the only thing they took from open source was .... ummm… python. A freakin language!

On the other hand, Apple took the whole god damn operating system and gave back what?.. umm… iPhone? iPod? iBook? WRONG! Nothing ... nada! Apple didn’t give anything back to open source.

Truth is, Apple is a company ran by a psychopath who cares about controlling the company and crushing anything that remotely says “Openness”. Can’t you see Google have contributed more to open source in the last ten years then Apple has in its entire existence! Apple bluntly copied Chrome’s design! And the code! Creativity??? my ass! Apple is a rip off machine! Go read up, safari has actually copied the JavaScript engine from Google Chrome! But then again its nothing new for Apple!


oh and don’t forget to be creative! have you had your creative pill?

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