Psystar Stares Down Apple With Antitrust Suit

Psystar has turned up the heat in its legal battle with Apple (Nasdaq: AAPL).

The small computer vendor first burst on the scene several months ago by audaciously offering for sale a line of Mac computer clones called "OpenComputer." After a few weeks of silence, Apple unleashed its legal hounds on the startup, seeking to shut it down for good. Since then, Psystar has shown little sign of backing down from Apple -- a company that's seldom shy about using the legal system to protect its intellectual property.

Psystar has announced it is counter-suing Apple on the grounds that the company is violating anti-trust regulations and creating restraint of trade by linking its operating system (OS) with its branded hardware. The suit is being filed in the U.S. District Court for Northern California.

Going on the Offensive

Last month, Apple filed suit against Psystar, alleging copyright infringement, inducement of copyright infringement, trademark infringement, breach of contract and trade infringement as well as unfair competition.

Psystar's owner, Rudy Pedraza, has reportedly expressed a desire to make the Apple OS available on less expensive machines. Pystar is not violating Apple's intellectual property, he maintained, because the company is using open source technology to run the software. Psystar is asking for Apple's EULA (end-user licensing agreement) to be voided as well as unspecified damages.

Psystar did not return a request for comment from MacNewsWorld in time for publication. Apple spokesperson Susan Lundgren told MacNewsWorld she had no comment on the case.

Raising the Ante

Lest anyone doubt that Psystar is serious about this fight, it has retained Carr and Ferrell, a firm that has gone up against Apple before, when Burst.com sued over patent infringement. Apple reportedly settled the case for US$10 million.

Hiring that firm was a wise decision, Tim Connors, a partner at the Cleveland-based law firm of Calfee, told MacNewsWorld.

"In Robert Yorio and Cory Springer, they've got the same team that sued both Microsoft (Nasdaq: MSFT) and Apple for copyright infringement on behalf of Burst.com, and reportedly extracted significant settlements from both." Retaining this firm may be the first smart move Psystar has made so far, he added.

It appears Psystar is facing an uphill battle at best. What's unclear is how Psystar might argue that antitrust rights have been violated. Though Apple is seeing growing sales figures, and though it insists its software is only allowed to run on its computers, its overall market share in both hardware and software is far from all-controlling.

"It is not generally unfair for a company to keep their product private," Raymond Van Dyke, a technology attorney based in Washington, D.C., told MacNewsWorld.

Psystar has now raised the ante with Apple by adding various antitrust claims to Apple's charges of copyright infringement, he continued. "The antitrust laws are geared to encouraging competition. Antitrust violations generally concern business behavior that is deemed societally unfair and anticompetitive."

A High Hurdle

"Apple, like IBM (NYSE: IBM) and Microsoft before, faces situations where others desire to compete with them," he continued. "With the Mac, Apple has for decades chosen to not travel the open code road, and kept their technology proprietary. This strategy has kept their market share small, making an antitrust charge problematic in view of alternatives being readily available."

Psystar's best bet, he concluded, is to somehow demonstrate sufficient unfairness -- a high hurdle.

Psystar can only succeed if it can persuade the court that Apple has a monopoly on the Apple operating system, as opposed to about 10 percent of the market of all operating systems -- Windows, Linux and the Mac OS -- Connors agreed.

"Given the stakes for Apple -- whether they should be compelled to license their operating system -- you can expect them to fight hard," he continued. "They're going to argue, 'Why would anyone devote all this effort and expense to developing an operating system if a court can force them to license that operating system to someone else who did nothing?'

"It's a fair question."