Business

Analysis: What’s at stake in the Apple-Psystar case

Apple and Mac clone maker Psystar spent much of 2008 trading allegations in court filings. And with the companies’ ongoing legal dispute not slated to go to trial until November, count on 2009 to feature more legal jousting over Psystar’s efforts to sell computers running the Mac operating system.

Psystar began selling a Mac clone last spring, despite the fact that the Mac OS X licensing agreement forbids people from installing the operating system on anything other than an Apple-branded machine. That prompted a copyright infringement lawsuit from Apple, which not only wants Psystar to stop selling its Open Computer but to recall every Mac clone it has sold. Psystar countered with a suit of its own, accusing Apple of violating antitrust laws. While U.S. District Judge William Alsup dismissed Psystar’s suit in November, the clone maker has since amended its complaint against Apple. In the new filing, Psystar contends that Apple is misusing copyright by tying OS X to Mac computers.

Psystar’s latest filing sets the stage for what figures to be a protracted legal battle. And while it’s easy to grasp what’s at stake for Psystar—an Apple victory would mean the end of Psystar’s Mac cloning efforts and quite possibly the end of the company itself—it’s less clear what the implications of a Psystar victory would be.

According to one copyright lawyer, a Psystar victory wouldn’t exactly throw the software industry into immediate chaos, leaving companies wondering how they are going to stop lawsuits against their own End User License Agreements.

Charles Baker, a partner at the Houston-based Porter & Hedges law firm said that software companies are not waiting with bated breath for the outcome of the trial. “I don’t see this as an industry wide issue at this point,” Baker said.

Baker, who has argued in front of the U.S. Supreme Court, said that even if Psystar did win, the case would be limited to a certain extent to the OS X license agreement. That means that none of Apple’s other license agreements would be affected, let alone the license agreements from other companies in the industry.

That would be good news for Apple. The Mac operating system and hardware are not the only products Apple links together. Its iPod and iPhone products are tied to iTunes to update software, and to download movies, music, and television shows. However, a Psystar victory in this case wouldn’t even affect the way Apple does business in the iPod division.

“Certainly, Apple has the right to say what you can do with their software, but each one of those license agreements would have to be challenged individually,” said Baker.

The basis of the copyright misuse claim brought by Psystar is that Apple is extending the enforceability of the copyright beyond the protection allowed under the law by illegally tying the operating system and hardware together.

Mark Bartholomew, an associate law professor at State University of New York, Buffalo, points out that antitrust laws and copyright misuse laws are very similar in nature, and that Alsup has already dismissed the antitrust claims.

“From a legal perspective, it’s all just posturing,” said Jonathan Blinderman, head of the new media department at Los Angeles-based law firm Glaser, Weil, Fink, Jacobs & Shapiro. “The perception is important, even though things can turn around so quickly.”

What some saw as a Psystar legal victory earlier this month when a judge said that Psystar could refile its case charging copyright misuse, is in reality just part of the legal process.

“You’ve got one district court that has said they could file a counterclaim—he [the judge] hasn’t ruled they are valid at all,” said Peter Strand, a lawyer and chairman of the intellectual property subcommittee for DRI, an international organization of attorneys defending business and individuals in civil litigation.

For that reason, many of the legal experts Macworld spoke to for this article don’t rate Psystar’s chances for a legal victory very highly.

“Copyright misuse is rarely applied and there isn’t much case law for it,” SUNY-Buffalo’s Bartholomew said. “It’s very unlikely Psystar is going to win.”

Still, expect many legal maneuvers in the months ahead. For instance, Apple could apply for a summary judgement, and ask the judge to dismiss the case outright. Glaser’s Blinderman feels that Apple may not have sought a summary judgement already only because if it lost, it would give Psystar momentum.

All of the lawyers agree that the case probably isn’t going away anytime soon. The trial is set for November 9, 2009. Strand expects the trial could take about a month to complete, with a decision coming in late December. Typically, the parties will have 12 to 18 months to appeal the decision and then we are in for another round of legal wrangling.

“It has every potential to take a long time,” said Strand.

Subscribe to the Apple @ Work Newsletter

Comments