As you may recall, Psystar was a company that tried to make Apple Mac clones by legally purchasing Apple operating systems, and figuring out how to install them on other hardware. Apple sued the company in 2008 for violating its license. Psystar went through a variety of (often questionable) defenses before settling on the one I thought had the best chance: the first sale doctrine -- basically claiming they legally purchased the software, and that they should be able to install it wherever they want. Psystar also claimed "copyright misuse," against Apple, arguing that its EULA restricting installation to only Apple hardware was a form of copyright misuse to stifle competition. Two years ago, though, the court granted summary judgment to Apple, rejecting both arguments.

Psystar appealed, focusing on the copyright misuse argument and, while it took some time, the always slightly wacky 9th Circuit has upheld the ruling. The court, tragically in my opinion, buys Apple's argument that its EULA does not unfairly restrict competition, because Psystar could go find a different operating system, rather than Apple's. Here, the court relies on the awful Vernor v. Autodesk ruling that basically said, "as long as a software company claims it's leasing the software to you, rather than selling it to you, your first sale rights disappear." This is true even if the "sale" really is a sale rather than a lease. It all depends on what you call it.

So, in this case, the court ruled that the copyright misuse claim must fail, because it's really an attempt to create a "right of first sale" for software -- and because Apple pretends its software sales are licenses, there is no right of first sale. So, without that... no copyright misuse. If you think this logic is circular, you should see if you can become a judge on the 9th Circuit, since they appear to need help. Furthermore, it argues that since Psystar could just go write its own operating system there is no copyright misuse:

Apple’s SLA does not restrict competitor’s ability to develop their own software, nor does it preclude customers from using non-Apple components with Apple computers. Instead, Apple's SLA merely restricts the use of Apple’s own software to its own hardware. As the district court properly concluded, Apple's SLA has "not prohibited others from independently developing and using their own operating systems." Apple I, 673 F. Supp. 2d at 939. Psystar produces its own computer hardware and it is free to develop its own computer software.

As with the Vernor case, the reasoning here is convoluted. It's really just another court decision that chips away at first sale rights, which are (were?) an important part of copyright law.

Following Psystar's big loss to Apple over selling PC's with Mac OS installed on them, the company's website has gone dark. However, Psystar claims that it's going to stay in business and try to sell PCs with other operating systems and its $50 Rebel EFI software, which is what can apparently be used to allow individuals to install MacOS on their own. However, Apple still contends that even Rebel EFI is infringing. Again, this doesn't make much sense if you think about it. Why should a piece of software that lets you run another piece of legally purchased software be illegal?

When Psystar first started selling PCs with Apple OS's installed on them, we knew there would be a lawsuit -- though it took a bit more time than we expected. Originally, Psystar tried to claim that Apple was violating antitrust law, which seemed like a wasted path for exploration -- and, indeed, a court rejected that claim. Then Psystar went back to more reasonable defenses... or so we thought.

The court hearing the case didn't seem to think any of Psystar's main lines of defense had any validity at all and granted summary judgment to Apple on all of the major points, saying that a trial wasn't even necessary. The "fair use" claim was already weak, and the judge noted that Psystar didn't even try to discuss any of the four factors generally used in determining fair use. The two (I thought) stronger claims were that (a) the right of first sale applied, and once Psystar purchased OSX legally, it could resell it, provided it was only installed on that one computer, and (b) that Apple went too far in its EULA terms, which demanded that OS X could only work on a Mac. Unfortunately, the judge didn't agree to either one, though I find the judge's reasoning perplexing and hardly convincing.

On the issue of first sale, here's what the ruling said:

The copies at issue here were not lawfully manufactured with the authorization of the copyright owner. As stated, Psystar made an unauthorized copy of Mac OS X from a Mac mini that was placed onto an "imaging station" and then used a "master copy" to make many more unauthorized copies that were installed on individual Psystar computers. The first-sale defense does not apply to those unauthorized copies.

Perhaps I'm missing something here, because earlier reports had suggested that Psystar legally purchased each copy of OS X and then installed the legally purchased copy on the new machine (which it then included with the sold machine). But from the description above, it sounds like part of the problem is that a single "master copy" was used to make multiple installations. Of course, that raises a whole host of separate issues. If Psystar legally purchased a separate license for each one, but still used a single master copy, is that really infringing? After all, the code is identical, and it seems positively ridiculous to say that even though you bought, say, 20 licenses, you can't just use one master copy to install 20 times. It seems like this could use additional clarification. Because, the other way one could interpret this is that there is no right of first sale if the company says a copy is unauthorized -- which would have troubling implications.

On the EULA front, the court again basically just takes Apple's position, and insists it did nothing wrong. I'm not surprised by the outcome at all, but I would have expected at least a more complete response to the First Sale doctrine rights issues. Even ignoring that a "copy" was being made -- with the physical copy, it really is a matter of first sale. The company is selling something it legally purchased.

Psystar will likely appeal, though I still have little faith that will get anywhere.

Psystar tried and failed to pin an antitrust case on Apple in its fight over whether or not Psystar can install MacOS on non-Apple hardware. Now, it appears that the company is back to where we thought it would originally focus: on whether or not a software license agreement can preclude the first sale doctrine that allows you to resell software you legally purchased. It's still a long shot -- but a few recent rulings suggest the courts are at least more open to these discussions. Of course, if Psystar wins, it could severely limit the power of end user license agreements (EULAs) that software companies often use to limit uses of software.

The ongoing lawsuit between Apple and "MacOS on non-Apple machines" company Psystar has taken an interesting turn. Groklaw notes that in its latest filing, Apple adds a dash of conspiracy, noting that some mysterious "other persons" are behind Psystar, and it intends to figure out who they are:

On information and belief, persons other than Psystar are involved in Psystar's unlawful and improper activities described in this Amended Complaint. The true names or capacities, whether individual, corporate, or otherwise, of these persons are unknown to Apple. Consequently they are referred to herein as John Does 1 through 10 (collectively the "John Doe Defendants"). On information and belief, the John Doe Defendants are various individuals and/or corporations who have infringed Apple's intellectual property rights, breached or induced the breach of Apple's license agreements and violated state and common law unfair competition laws. Apple will seek leave to amend this complaint to show the unknown John Doe Defendants' true names and capacities when they are ascertained.

There's some speculation that this is a bit of a fishing expedition by Apple to uncover the names of various hackers who have been making it possible to run the Apple OS on generic machinery.

Back when Apple first sued Psystar, we were afraid that the smaller company wouldn't have much of a legal leg to stand on, even if it claimed antitrust violations by Apple -- which it did. However, the judge in the case is apparently unconvinced, dismissing Psystar's counterclaims, noting that Psystar did not do a very good job establishing that Apple has a monopoly, noting that the relevant market is not just the Macintosh operating system. Psystar can file an amended complaint, but it seems unlikely that the judge is going to buy any antitrust claims. That means the lawsuit, assuming it continues, will probably focus on the enforceability of certain end user license agreements, which could be more interesting anyway.

As we noted before there even was a lawsuit, a legal battle between Apple and Mac-clone maker Psystar could represent a key legal battle in determining the enforceability of certain provisions in an end user license agreement (EULA). And, indeed, the case was looking interesting, as Apple sued and Psystar hit back with antitrust charges. However, as a bunch of readers have sent in, it appears that the case has moved to "Alternative Dispute Resolution" (ADR). Basically, rather than going through a lawsuit, the two sides have agreed to first take it to an arbitrator, who may be able to work out a settlement. There are many, many good reasons to go this route (many of them have to do with saving money on the lawsuit), but the fear is that any settlement then isn't a binding legal precedent at all, and the actual results may even be kept secret. I can understand why both sides would do this, but it may deprive the world of a useful precedent.

Once "unauthorized" Apple clone maker, Psystar, was sued by Apple, we fully expected it to challenge the legality of Apple's EULA (end user license agreement) which forbade putting the software on non-Apple hardware (a provision that even Apple has been known to ignore). The comments to our post suggested that a more likely option would be for Psystar to claim that Apple was violating antitrust laws in requiring the software and hardware be bundled that way.

Indeed, it looks like both of those predictions were correct. Psystar's response is likely to focus on both the legality of the EULA and whether or not Apple violated antitrust law. As predicted, this case may be very interesting to watch -- and the end result could be very important for many other companies in the tech space.

Apple has finally sued clone maker Psystar. This was widely expected, so the most surprising part is that it took so long. Psystar, of course, is the company that came on the scene a few months back claiming to sell Apple's operating system on non-Apple hardware. At first, many people thought it was a hoax, but then Psystar actually started showing machines. Then the question turned to whether or not this is legal. While some say that this is almost certainly the end for Psystar, the company has insisted that what it's doing is perfectly legal. That may be quite debatable, but if this does go to court, it could put to the test the question of just how enforceable end user license agreements (EULAs) really are. Apple's EULA prevents buyers from putting its OS on a non-Apple machine -- but as we've pointed out, even Apple has been known to ignore this provision. While chances are Apple will prevail, if Psystar is willing to put up the fight, it has the potential to limit the power of click-through agreements. Update: This just gets better and better. Not only is Apple suing, but it's demanding that all Psystar machines that have already been sold need to be recalled.

A few weeks back, a company named Psystar made some news by offering to sell PCs with Mac OS X installed. This raised questions about how legit this offer was. After all, when Steve Jobs returned to Apple years back, he killed off all licensing deals that allowed any kind of Mac clones. However, the company has been showing off the clones it's created. Now, the questions are all about whether or not Psystar's actions are legal. The company (of course) says it is legal, and that it's buying a legal copy of the operating system and installing it on PC hardware. However, the end user license agreement (EULA) includes the following:

"This License allows you to install, use and run one (1) copy of the Apple Software on a single Apple-labeled computer at a time. You agree not to install, use or run the Apple Software on any non-Apple-labeled computer, or to enable others to do so."

That would seem to preclude what Psystar is doing. The News.com article above does an excellent job laying out the legal issues here. While the courts have found various clickthrough EULAs enforceable (even though no one -- including the companies themselves seem to read through them), it's possible that Psystar could attack the EULA from other directions. As the article notes, it could try to use the first sale doctrine (which allows you to resell copyrighted products you've bought) but that likely won't fly. What may be most effective (even if it's still a long shot under the law) is to claim that the EULA illegally "ties" the software to Apple's own hardware. However, making a claim about tying is quite complicated, and it seems unlikely that Psystar would prevail. This seems unfortunate for the market -- as getting some additional competition into the market would only help drive innovation. But, under the current law, it's difficult to see how Psystar can win.