Psystar Is Swatted Down In Court In Suit Against Apple

Those in the market for a so-called “Hackintosh,” a non-Apple computer which runs Apple’s Mac OS X, will soon be out of luck, as commercial Mac clone dealer, Psystar, was recently dealt a major setback in the United States District Court for the Northern District of California.  On November 13th, the court granted Apple Inc.’s summary judgment motion on its copyright and DMCA claims against Psystar, all but foreclosing the possibility of buying a non-Apple-made computer to run the “World’s Most Advanced Operating System.”  The summary judgment order marked the beginning of the end of a lengthy litigation between the Cupertino powerhouse and Psystar. In this post we unpack the competing arguments that were before the court.

Background

Apple was not always hostile to clones. In fact, from 1995 to 1997, Apple  licensed several companies, such as Power Computing, to build and sell Mac clones. But this era came to a close when Steve Jobs returned to the company in 1997, and Apple has not granted a license to produce clones since. In April 2008, Florida-based Psystar, Inc. began selling computers on which it had installed modified copies of OS X. Apple, not surprisingly, quickly filed suit alleging a veritable laundry list of state and federal claims. Apple recently moved for summary judgment on its copyright infringement, DMCA violation, and contributory infringement claims.  The court granted Apple summary judgment on all three claims.

Copyright Infringement

Apple alleged that Psystar had infringed upon its two registered copyrights in Mac OS X by violating its reproduction right, distribution right, and right to create derivative works.

Apple’s reproduction right

Under 17 U.S.C. § 117(a), an owner of a copy of a computer program may copy or modify that program for limited purposes. Though it is doubtful that Psystar’s use was the sort covered by this exception, the court did not need to consider this because it found that Psystar waived the defense by neglecting to plead it in their answer. The court also denied Psystar the defense of “fair use” under 17 U.S.C. § 107 because Psystar failed to address the four factors used to determine fair use. (These factors are: the purpose and character of the use, the nature of the copyrighted work,  the amount and substantiality of the portion taken, and the effect of the use upon the potential market.)

Apple’s distribution right

The first sale doctrine, codified under 17 U.S.C. § 109, is the right of the purchaser of a copy of a copyrighted work to then sell that particular copy of the work without the authorization of the copyright owner. Though Apple was not willing to concede that Psystar, or anyone for that matter, could own a copy of Mac OS X rather than a license to use it, the court assumed for the sake of argument that Psystar did own the initial copy they purchased. Even under this assumption, Psystar’s use was a violation of Apple’s distribution right because it made unauthorized copies for distribution.

Apple’s right to create derivative works

Defined in 17 U.S.C. § 101, a derivative work is work based upon a preexisting work which itself represents an original work of authorship. The court found that Psystar violated Apple’s exclusive right to produce derivative works when it made modifications to Mac OS X to get it to run on non-Apple hardware.

Contributory Infringement

In addition to Psystar’s direct copyright infringement, the court found that Psystar committed “contributory infringement.” Contributory infringement occurs when an individual or entity induces or encourages others to infringe a copyright. The court found that Psystar was accomplishing this by selling machines to the public with its unauthorized copies of Mac OS X installed.

Violation of the DMCA

Section 1201(a)(1)(A) of the Digital Millennium Copyright Act makes it a violation of the act to “circumvent a technological measure that effectively controls access to a work protected under the title.” The court found that Psystar violated this section of the statute when it used decryption software to circumvent the security measures Apple built into Mac OS X to prevent it from running on non-Apple computers. Furthermore, Psystar also violated § 1201(a)(2), which prohibits trafficking in technology designed to circumvent protections on a work covered by the act, by marketing the computers featuring its hacked version of OS X. If this weren’t enough bad news for Psystar, the court also found that every time a computer with their circumvention installed was turned on they committed yet another violation of the DMCA (§1201(b)) by creating another copy of their modified OS X in the computer’s memory.

Copyright Misuse – Psystar Grabs At A Straw

In its cross-motion for summary judgment Psystar claimed that Apple was guilty of copyright misuse. Copyright misuse can be understood as a legal cousin of antitrust violation (a theory already proposed by Psystar and rejected by the court). Copyright misuse occurs when a copyright is used in a way that violates the public policy embodied in copyright law. This is a rather nebulous concept, which the court acknowledged, but the line demarcating misuse in the case law seems to be that a licensing agreement for use of a copyrighted work cannot go so far as to attempt to control competition outside the copyright. The court illustrated such an overreaching licensing agreement by citing the  Fourth Circuit case of Lasercomb America v. Reynold, Inc., 911 F.2d 970 (4th Cir. 1990). In Lasercomb America, Lasercomb sold a software program on the condition that buyers agree to noncompete language which would prohibit them from developing their own software in that area. Apple’s refusal to allow OS X to be installed on non-Apple machines is distinguishable because it seeks only to control the use of their own software and is therefore not a violation.

Moving Forward

Apple hasn’t yet filed a motion on its non-copyright claims—breach of contract, induced breach of contract, trademark infringement, trademark dilution, trade dress infringement, state unfair competition, and common law unfair competition—which remain for trial.  Additionally, Apple hasn’t asked for a permanent injunction yet, but it seems inevitable at this point.  As of November 21, 2009, “Hackintosh” computers can still be purchased on Psystar’s website.

The full text of the summary judgment order is available here.

By Ben Liebowitz and Michael Holloway

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