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Can Apple stop Psystar from selling Mac clone?

By | April 15, 2008, 8:39am PDT

Summary: To hear Psystar tell it, they can install MacOS on their own hardware, despits Apple’s end user license agreement to the contrary, because said EULA is an illegal “monopoly.” “What if Honda said that, after you buy their car, you could only drive it on the roads they said you could?” But of course, that is no [...]

To hear Psystar tell it, they can install MacOS on their own hardware, despits Apple’s end user license agreement to the contrary, because said EULA is an illegal “monopoly.”

“What if Honda said that, after you buy their car, you could only drive it on the roads they said you could?”

But of course, that is no comparison at all, because software is sold under a license (the EULA). Apple’s specifically limits your ability to run MacOS to “Apple-branded computers.”

“What if Microsoft said you could only install Windows on Dell (Dell) computers?” said a Psystar employee.

Well, then, you could only install on Dell, it seems to me. (Although such an requirement would raise antitrust problems. Here, there is only one company, thus no antitrust issue.)

But, it seems, the enforceability of EULAs has never clearly been established. EULAs are essentially a workaround of the first-sale doctrine, which limits copyright protections to the initial transfer from copyright owner to purchaser. Once purchashed, an item is the property of the buyer who can resell as he wishes.

A typical case is found in SoftMan v Adobe (2001) 171 F.Supp.2d 1075 where a company bought one of those bundled software packages and tried to sell the individual software boxes. Adobe argued first-sale didn’t apply because it didn’t sell the package but merely licensed it under an EULA.

But in 1990 Congress gave software publishers relief from the first-sale doctrine, giving copyright owners the right to enforce copyright violations in subsequent sales. Thus under federal law, copyright owners may enforce copyright when you rent or lend software you buy (there’s an exception for libraries and schools.)

In this case, Psystar is reselling Apple’s software. Assuming they are paying Apple for each copy they sell, it’s not clear that Apple can stop them from selling it on hardware as opposed to it a box. “A purchaser of a copy of a copyrighted computer program may still sell his copy to another without the consent of the copyright holder.” (Step-Saver v. Wise (3d Cir, 1991) 939 F.2d 91, 96, n.7.)

In the Adobe case, the district court held that the distinction between sale and license is anachronistic: “software is sold and not licensed.”

So … can Apple control how Psystar distributes its software? Or if they only sell the machine, can they stop users from installing it on their hardware?

It seems that they should be able to … but legally it’s not completely clear to me.

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Richard Koman

http://government.zdnet.com/?page_id=3731

Biography

Richard Koman

Richard Koman is an attorney admitted to practice in California. As a technology writer since the mid-1980s, Richard Koman has documented the role of computing in the transformation of the graphic arts, the growth of the Web and the birth of the peer-to-peer phenomenon. He worked as a book and web editor for O'Reilly Media throughout the 1990s, editing several influential websites and numerous best-sellers. As a lawyer, as well as a tech writer, he brings a unique perspective to the blog's intersection of law, government and technology.
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Read the EULA
aoresteen 17th Apr 2008
Rick_R,

The Apple OSX EULA applies to the end-user of the software. PsyStar is not the end-user. They are a system integrator. But even if he were the end user, the EULA alows the tranfer of the software. See paragraph 3.

http://images.apple.com/legal/sla/docs/macosx105.pdf
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Assumptions
Harry Bardal 15th Apr 2008
"Assuming they pay Apple for every copy they sell..."

D'ya think this may be the little hitch in your argument? By
what mechanism exactly do you see Apple accepting
money from a company that is aggressively violating their
license? This improbability can only occur if the other
improbability occurs first, that is, they choose to pay,
which also isn't going to happen.

Pystar claims they can do this because of Apple monopoly
status?. That's the first I've heard of Apple's monopoly
status. Were you aware of antitrust action against Apple?

What kind of bunk is this from ZDNet?

I think I know. The PC ecosystem that has owed IT a living
for all these years is starting to dissolve and the
alternatives are not amenable to another open architecture
circle jerk. But hope springs eternal right?

The Mac clone business had been allowed to happen under
Amelio. It was summarily shut down by Jobs. If it couldn't
have been shut down, it wouldn't have been then. All this
coy talk about legal ambiguity is nothing but a
manifestation of wishful thinking by the IT industry and a
cheap Chinese motherboard maker. Get a grip.
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umm, Harry, is that really you?
Badgered 15th Apr 2008
You don't seem to be the same eloquent, calm, person typing today.
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He seems furious about this!!
NonZealot 15th Apr 2008
I wonder why he would care if some company dared do something that may, possibly, anger Apple? If they are in the wrong, then Apple will succeed in suing this company out of existence. If they are in the right, then no one has any right to be upset over anything. I truly have to wonder why Harry has had such an emotional outburst over something that in no way affects him personally?
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Pot calling the kettle black
ThinkFair 16th Apr 2008
You should ask yourself the same question. Why is it whenever there is an articale on Apple, you will "have such an emotional outburst that in no way affects you personally ?"
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Message and the messenger
rkoman@... 16th Apr 2008
"Pystar claims they can do this because of Apple monopoly
status?. That's the first I've heard of Apple's monopoly
status. Were you aware of antitrust action against Apple?

What kind of bunk is this from ZDNet? "

So, reporting what someone claims is actually different from claiming it yourself. Did you ever notice that? Did you notice the quote marks around the word "monopoly"? That means I'm not necessarily buying into the claim, just telling you what they said.

This is what newspapers have been doing since the Chinese invented printing, OK?
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I think the answer to this is obvious as Apple's ability to
shutdown cloning in the past and successfully preventing OS
X to officially run on the PC's out there. Not only can Apple
stop Psystar and others like them; they have.
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It may see a courtroom
Ken_z 15th Apr 2008
If Pystar has very deep pockets -
because they will need them to pay the
legal fees.

The simple fact is that if Pystar can
legally sell a PC with OS X installed then
every computer company could. Apple
is not going to let that happen.

The argument that Apple is a monopoly
is a joke - how can a company with
such a small market share be a
monopoly?

Apple invests in development of OS X in
order to sell their computers. It's that
simple. To believe that Apple is not
going to protect their investment and
their business is dumb. It's like
believing that MS is going to turn all of
their apps into shareware, with
donations accepted.
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"The argument that Apple is a monopoly is a joke - how can a company with such a small market share be a monopoly?"

Remember, MS's market was defined as the "x86 desktop computer market". It would be entirely consistent for the DOJ to define a market as "x86 hardware which can run OS X".

Apple *is* producing a monopoly operating system--it only runs (legally?) on Apple hardware. The fact the produce the OS makes no difference to the definition of the market--after all MS made the OS and the DOJ promptly defined a market that specifically (and artificially) excluded Apple from the the marketplace.

This was bogus--a cheap legal maneuver to nail MS.

But consider that Apple *has* destroyed the marketplace for Mac-compatible hardware. They are the only players in the OS X hardware market.

Legal battles don't have to agree with reality--just with the law. And that, as anyone who's been on the wrong end of the stick can tell you--is a whole 'nother kettle of fish!
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Not up to the DOJ
John L. Ries 15th Apr 2008
Chances are, the DOJ would not even be involved in a lawsuit over this; more likely, Pystar would sue Apple directly. Even if the DOJ was involved, litigants can allege anything they want; it's up to a court to decide whether or not the allegations have any merit.

The DOJ alleged that x86-based personal computers were a distinct market, but it didn't mean a thing until the court agreed.
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Apple would sue Pystar
rkoman@... 16th Apr 2008
Actually, wouldn't Apple sue Psystar -- and this would be Psystar's defense? I think yes. By the way, it now appears that Psystar is literally a joke?

http://blogs.guardian.co.uk/technology/2008/04/15/so_exactly_who_or_what_is_psystar_we_dig_a_little.html
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Didn't same thing happen to IBM
tbuccelli 15th Apr 2008
Didn't IBM have an issue with its whole mainframe business and cloning? Would that case be a precident, or were laws changed, or am I missing something?
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and it was in the position that MS, not Apple, is in
now. It would be very difficult for anyone to
compare Apple's current situation (and market share)
to IBMs in the 70s.
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It should see a courtroom
John L. Ries 15th Apr 2008
And you're right, deep pockets are likely to be required. Seems to me that copyright holders, including Apple are asserting far more control over what users do with their software than the law *should* allow; whether it actually does, of course, is something a judge needs to decide. Once that is done, Congress may actually be motivated enough to determine whether or not they agree (but maybe not).

Book, magazine, and newspaper buyers wouldn't tolerate for ten seconds the sorts of restrictions routinely imposed by software vendors (or sheet music vendors for that matter).
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Pystar can certainly sell their Hardware without an installed OS. They can sell there scripted install which in the presence of an OS X CD will install and configure the Hardware. The result of that script may even be to make the legitimate back up copy of the OSX configuration.

They can resell sealed copies of OS X.

During the first America Prohibition the Maker of Budwieser sold Bevo Malt Sugar with the explicit instructions not to dissolve the product with a list of ingredients, strain the results bottle and observe for 14 days since this would result a prohibited substance. If the ATF couldnt get AB for violating the law for packaging a kit. I hope that Apple will have no more success in controlling this derivative inovator.
I'm guessing if you had a problem and called 1-800-APPLE (or wherever), you wouldn't get very far at all.

And I doubt Pystar has the resources to support an Operating System.
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Would be Pystar's responsibility
John L. Ries 15th Apr 2008
Whether or not they'd have the resources to do it without Apple's help is unclear.
A buyer cannot transfer rights greater than those he himself owns. Apple sells/licenses the RIGHT to use their software ON APPLE-BRANDED computers. It's like deed restrictions on a house, that say I can't install a stockade fence more than 8 feet tall. I can't transfer the land to a subsequent purchaser with the right to build a fence of any height, because I don't own such a right.
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re: Apple Branded
Badgered 15th Apr 2008
Apple sells/licenses the RIGHT to use their software ON APPLE-BRANDED computers.

Actually it says You agree not to install, use or run the Apple Software on any non-Apple-labeled computer, or to enable others to do so.

Anyone can print a label that says "Apple" and slap it on a computer. LOL
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Read the EULA
aoresteen 17th Apr 2008
Rick_R,

The Apple OSX EULA applies to the end-user of the software. PsyStar is not the end-user. They are a system integrator. But even if he were the end user, the EULA alows the tranfer of the software. See paragraph 3.

http://images.apple.com/legal/sla/docs/macosx105.pdf
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how is this different from the old days when Amdahl sold plug compatible mainframes into the IBM world?

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