Apple, Psystar joust in court over antitrust complaint

Attorneys for Apple and Psystar sparred before a U.S. District judge Thursday on whether Psystar’s antitrust complaints against Apple should be dismissed—the latest chapter in an ongoing dispute between the two companies over Florida-based Psystar’s practice of selling PCs with Mac OS X installed.

A ruling on the motion is expected in the next two weeks, the judge presiding over the hearing told attorneys for both companies.

Thursday’s hearing focused on a motion by Apple filed in September that asks U.S. Judge William Alsup to dismiss a countersuit from Psystar that alleges Apple violates antitrust laws by blocking users from installing OS X on computers not built by Apple. Psystar had filed that countersuit in August in response to a suit from Apple, contending that Psystar violated Apple copyrights and licensing agreements when it sold the Open Computer—a low-cost PC that users could order with Mac OS X installed on it. In its original suit, Apple asked for a permanent injunction barring Psystar from selling any hardware with Apple software installed and wants Psystar to recall every Mac clone it’s sold.

During Thursday’s hearing in San Francisco, attorneys for both sides reiterated many of the same argument and counterarguments they had already submitted in writing. Representing Apple, attorney James Gilliland of Townsend and Townsend and Crew argued that the Mac OS is not a single-brand market, competing as it does against the Windows and Linux operating systems. Gilliland also told the judge that Psystar contradicted itself in its countersuit by calling the single-brand market while “admitting the existence of competition” in its filings.

Gilliland focused on two aspects of Psystar’s argument that Apple is a monopoly—the company’s ad campaigns that stress the uniqueness of the Mac and the price of Mac hardware relative to other PCs. Apple’s attorneys believe those apsects undermine Psystar’s argument. The TV ads compare the Mac experience to other brands, Gilliland noted, and the price of the hardware is irrelevant in a case focusing on the Mac OS.

“The price of licensing for a Leopard upgrade is virutally the same as a [Windows] upgrade,” Gilliland said. “That’s because they compete directly with one another.”

Psystar’s attorney, Colby Springer of Carr & Ferrell, countered that whether the Mac OS constituted a single-brand market is something that should be decided by a trial, not a hearing.

Alsup questioned Springer when the attorney cited the passion that Mac users have for the platform, noting that Ford truck owners might feel the same way about their pickup trucks in regards to ones from Chevrolet. “You wouldn’t say they have a monopoly,” the judge said. Springer responded by noting that two product lines were not necessarily comparable and presented Apple marketing materials and product reviews that support Psystar’s argument that Apple has established OS X as a unique brand separate from other operating systems.

“Apple touts the uniqueness of its operating system… and then in the context of its motion to dismiss says that [OS X] is nothing special,” Springer said. “They can’t have it both ways.”

While Alsup said he would give his ruling in the next few weeks, there is a chance that he might not wind up ultimately hearing the case. One of the Townsend and Townsend and Crew attorneys representing Apple, Megan Chung, is a former law clerk of Alsup’s—a fact that Psystar’s attorneys just became aware of. Alsup gave Psystar until Monday at noon to file a motion asking the judge to recuse himself from the case.

Alsup also set a trial date for the Apple-Psystar case during Thursday's hearing, scheduled it to begin on November 9, 2009, as both sides had previously requested. Apple and Psytar are currently in mediation on the case, a process the court expects to be concluded by the end of January. The two sides will have until August 20, 2009 to file a motion for summary judgment.

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