Yesterday, Judge William Alsup, United States District Judge for the Northern District of California, dealt Psystar a crushing blow in its ongoing litigation with Apple over whether or not Psystar could market and sell non-Apple computers running modified copies of Apple's operating system. If you're not familiar with the circus case, I refer you to, well...grab a coffee and click here. The two companies, embroiled in litigation since early last year, recently completed pre-trial discovery and each filed cross motions for summary judgment.

Judge Alsup put the ultimate hurt on Psystar when it granted Apple's motion for summary judgment and denied Psystar's motion for the same. In a sweeping order (courtesy Groklaw), the court agreed with Apple's take on the case and dismissed all of Psystar's defenses, both on the merits and for having waived and failed to properly plead.

The end result was a dramatic and startling court order in an ongoing series of dramatic legal squabbles between the two companies. And at least one of Psystar's attorneys saw this coming. The litigation doesn't end here; various issues still remain for trial such as breach of contract and trademark infringement, but Psystar has been gutted. The court is clearly unsympathetic to Psystar's core position and while damages on the copyright issues falling in Apple's favor in the order have not been ruled upon, it would probably behoove Psystar to start looking under the couch cushions for spare change.

A hearing is scheduled for December 14 on the remaining issues and for damages.

Read on for a more detailed analysis of the court's order....

Apple and Psystar have been embroiled in litigation for quite a while now. At the core of the dispute: Psystar modifies Apple's operating system software so that it can run on its clone machines. It then sells its computers with Mac OS installed to, well, anybody who wants one. As you can imagine, this does not make Apple happy.

Anybody familiar with The Great Clone Crackdown of 1997 will tell you that Apple likes to keep a very tight grip on any device that presumes to run its software. Apple points out that Windows machines are a mishmash of often conflicting hardware and suffer from quirks and errors and incompatibilities that such a set up can bring.

So Apple's cadre of lawyers descended quickly on Psystar. In July of last year, the company sued Psystar for copyright and software licensing violations, quickly amending its lawsuit to additionally charge Psystar with violations of the Digital Millennium Copyright Act (DMCA).

And there was much lawyering.

More than a year later, now that discovery has been completed, the two parties have each filed for summary judgment, which, in effect, asks the judge to rule in favor of the filing party because enough evidence has been shown that either makes or breaks the lawsuit.

Psystar's argument, and the one covered in its motion, somewhat relies on the "first sale doctrine" which says that any purchaser of a copyrighted product can then take that lawfully-made copy and sell it, so long as no additional copies can be made. For its part, Apple says that when one "purchases" its OS, you are only purchasing a license to use the product. Its Software Licensing Agreement (SLA) quite clearly states [PDF link to Snow Leopard SLA] that the user cannot modify the software to run on a non-Apple system.

The idea that what you are purchasing is a license to use the product is pretty commonplace among software manufacturers, because, the argument runs, you can cut any software company's profits off at the knees if every purchaser became an owner with free rein to redistribute the software. Apple states that no software company in its right mind would put the money into research and development of any software product at all if that were the end result of bringing its product to market. Groklaw suggests this could have ramifications for FOSS and and the GPL.

Just before the release of Snow Leopard, Uncle Walt Mossberg did the unthinkable by writing that the $29 Leopard upgrade:

"will work properly on ...Tiger equipped Macs, so you can save the extra $140."

We reported that as well but didn't have all the facts verified at the time. Gizmodo likened Walt to a pirate and guessed that he'll have to apologize or at least clarify his position.

Now, after buying the family edition, I have done every sort of installation known to man and have the facts. It seems that Walt was right, but he didn't tell you the whole story. You can take the $29 upgrade disc and install it over Leopard, over Tiger, or over a freshly formatted hard drive. The disc doesn't care. Regardless of whether you pay $29, $49 or $169, you get the same disc with the same capabilities.

But just because you have a disc, if you use it for a purpose not intended upon purchase, you are breaking your agreement with Apple. The contents of the disc are the property of Apple and how that intellectual property is to be used is determined by the EULA (End User License Agreement) that you agree to before installation.

For each method of purchase the EULA is different. For the $169 package which includes iLife '09 and iWork '09 this is what you agree to:


Clear enough. You can use it on one computer. It doesn't say that you need any operating system to start with. I would assume that you can put it on as many hard disks as you want, as long as you only use those hard disks with one specified computer.

Previously in the Apple-Psystar legal battle, the clone maker amended its countersuit to charge that Apple was unfairly leveraging its copyright by binding Mac OS X to Mac hardware.

On Friday, the federal judge assigned to the case ruled that the amendment will be heard by the court, a small victory for Psystar. It's something of a reversal for the company, since they had federal antitrust allegations thrown out in November. Similarly, Psystar's assertion that Apple is in violation of California's antitrust laws was thrown out Friday as well.

Judge William Alsup said, "Psystar may well have a legitimate interest in establishing misuse [of copyright] independent of Apple's claims against it -- for example, to clarify the risks it confronts by marketing the products at issue in this case or others it may wish to develop." This isn't to say that the judge necessarily agrees with Psystar's point, but just that it's legally reasonable enough to be argued in court.

Apple has also not yet revealed its 10 "John Doe" defendants: alleged conspirators who worked on Psystar's technique for loading Mac OS X on non-Apple hardware.

The case will decide whether or not Apple can disallow other hardware makers -- including Psystar -- from including Mac OS X on computers shipped to end users. Last week, a company in Germany claimed that Mac OS X's End User License Agreement didn't apply to them, and is selling Mac clones to customers.

The case is scheduled to go to trial on November 9.

[Via Macworld.]

You have to admire Psystar's tenacity. Since Judge William Alsup's decision to disallow federal antitrust claims against Apple in Psystar's countersuit, Psystar is amending its countersuit, alleging the misuse of copyright based on different antitrust claims.

It boggles the mind.

Apple is already suing Psystar, of course, claiming that they are violating Mac OS X's End User License Agreement (EULA). Psystar, in its new set of counterclaims, says that Apple is improperly extending the scope of copyright law to include its argument that Psystar broke the EULA.

Psystar claims that -- while admitting that it can't make arguments based on federal antitrust law -- Apple has "leveraged" the power granted them by the Copyright Act and extended it to lock in users post-sale. This, Psystar says, is unlawfully monopolistic, and makes Apple's copyrights unenforceable.

Psystar is also seeking to prove that Apple's behavior is illegal under California's unfair competition statute.

The judge will decide in January if the new claims can be argued in court.

[Via Ars Technica.]

In yet another new facet to this already-draining legal battle surrounding Psystar's sales of non-Apple hardware that runs Mac OS X, Apple has amended its original suit after it discovered "additional information," according to Computerworld.

Apple now claims Psystar circumvented Apple's copyright protection code, in violation of the Digital Millennium Copyright Act. Apple said in its original filing that Psystar was in violation of the Mac OS X End-User License Agreement, but tacked on this additional charge last week.

The amendment also names 10 "John Does" -- persons who were not part of the Psystar company, but broke the copyright protection scheme. Apple doesn't know who they are yet, but plans to name names when its lawyers find out who they are.

In other Apple legal news, Apple won a trademark infringement case in China against New Apple Concept Digital Technology Co., Ltd., based in Shenzen. Judges decided that the Chinese company had a logo too similar to Apple's. New Ap -- aw, eff it -- NACDTCL was ordered to pay 400,000 yuan (≈ US$58,000) to Apple, Inc.

[Via Cult of Mac.]

Yesterday, Mike posted about the new commercial hackintosh from Psystar. Many of our readers noted that, wow, that was a lawsuit waiting to happen -- or as Fake Steve put it, Psystar is French for "We're about to go out of business". Update 11 am Tuesday: InformationWeek is reporting that Psystar believes that Apple's EULA is anticompetitive and violates US monopoly laws. Interesting.

Here are a few of the high points that TUAW is aware of:

The Mac name Using "Mac" in the product name was probably a bad idea. Psystar just re-named the platform to "Open Computer" instead.

Pre-installing Leopard It would seem that installing Leopard on non-Apple hardware is a violation of Apple's EULA. Virtualization vendors such as Parallels and VMware have already acknowledged this constraint in their product development; otherwise, both would offer VMs capable of running Leopard on any PC and not just on Mac OS X Server.

Unlicensed PC_EFI It looks like Psystar is using an EFI bootloader without properly acknowledging the actual author or receiving permission to distribute the software.

If you haven't yet checked out the discussion thread on Digg, I encourage you to do so. It's especially useful with its discussions about hardware limitations and hackintoshes.

TUAW reader Rae pointed us to this post on the Parallels Virtualization blog, which confirms details of the end user license agreement that came to light last Autumn. Microsoft's EULA specifically forbids using Vista Home Basic and Vista Home Premium with virtualization technologies.

This means that if you want to run Vista on Parallels, and want to keep within the terms of the EULA, you'll need to buy either the Business or Ultimate versions, whose EULAs allow for virtualized use. After public outcry, Microsoft did change the EULA at least once before to allow users to deinstall their version from one computer and reinstall it on another. Hopefully, a similar grass roots movement will encourage Microsoft to rethink their stance on virtualization for their lower-end Vista releases.

Quark users who upgraded to Quark 7 from Quark 4, 5 or 6 will no longer be denied the legal use of their prior versions after they've installed Quark 7. In a press release issued earlier today, Richard Pasewark, Quark Senior VP of Sales (Americas) and Marketing said "this is in response to customer feedback and is another example of how Quark has fundamentally changed its approach to doing business in the last two years. Customers are thrilled with QuarkXPress 7 and based on user feedback this policy change will help streamline and fast-track the upgrade plans for many customers."

So basically since you paid for both versions Quark will let you actually use both versions. Nice of them, eh?

Quark counts this move (which never should have been at issue to begin with) as one more feather in their oh-so-user-friendly cap, pointing to other changes they've made in the last 2 years like "Free English-speaking technical support" and "The ability to deactivate and re-activate or transfer a license of QuarkXPress 7 from one computer to another without the help of technical support." Call me old fashioned, but I kind of expect those things to begin with.

Still, I give them points for seeing the light on this one. Maybe they'll just stop making boneheaded decisions early on so they don't have to keep "changing their approach" midstream.