Apple Releases the Hounds on Psystar

Nearly three months after a previously unknown company called "Psystar" began selling Intel-based computers running a pre-installed version of Apple's (Nasdaq: AAPL) OS X operating system, Apple filed a lawsuit against the computer maker alleging copyright infringement earlier this month.

In addition to the multiple claims of copyright infringement, the suit also alleges inducement of copyright infringement, trademark infringement, breach of contract and trade infringement as well as unfair competition.

Apple has requested that the court award both actual and treble damages, in effect tripling the monetary amount of the penalty. The suit also requests the court to make Psystar pay Apple any profits the startup earned from the sale of its computer systems. Apple has also sought an injunction against the sale of Psystar products and a recall of the computers that have already been sold.

"It had to happen sooner or later. This was announced in April and it took until July, so I'm not sure what took them so long to file [the lawsuit], considering that they are a closed company in the sense that they have issues of rights on everything," Zippy Aima, an ABI Research analyst, told MacNewsWorld.

MacNewsWorld contacted Apple and Psystar for comment on the legal action, but neither company responded.

Mad Scientists?

Psystar threw down the gauntlet in April when it began selling what it originally dubbed "OpenMacs." The Intel-based systems, the company said, ran a pre-installed version of the latest OS X operating system, Leopard. The computer maker also provided regular updates of the OS.

Rather than the thousands of dollars Apple charges for some of its computers, Psystar sold its machines for a mere fraction at US$399. Later, the company renamed its line of Mac clones to "OpenComputer."

The company expanded its product line over the past few months to include another desktop computer, selling for $555, again with Leopard pre-installed. In June, Psystar took its offerings a step further and began selling a clone of Apple's Xserve servers. The systems once again undercut Apple on pricing. The OpenServ 1100 was listed with a start price of $1,599, and the OpenServ 1400 started with a $1,999 price tag.

However, in the FAQ section of the company's site, Psystar states, "The idea of the Open Computers is not to pirate the Apple operating system but to allow the Apple operating system to be run on hardware of the user's choosing.

"The premise of running OS X on an Open Computer hinges around the emulation of the EFI BIOS (extensible firmware interface basic input output system) that Apple computers use. EFI was developed by Intel for heavy server platforms as an improvement over the traditional BIOS that is now approximately 365 million years old. Apple, so far, has been the only consumer hardware producer (reseller) to pick this up as the standard BIOS for their machines," the company continues.

"This is the brunt of incompatibility between Intel Macs and Intel PCs. EFI replaced Apple's OpenBIOS (we like Open things) and although everyone is ready to get on the EFI bandwagon it seems that most (i.e. Windows Vista) operating systems will not be having native EFI support for some time," it adds.

The EULA Offensive

Apple has based part of its complaint on Psystar's practice of offering the Open Computers with a pre-installed version of Mac OS X, something Apple claims is an infringement on its copyright as well as a violation of its end-user licensing agreement (EULA) and violation of copyright.

"Without authorization from Apple, and in violation of the terms of the Software License Agreement governing the use of the Mac OS X software and Apple's intellectual property, Psystar began selling in commerce a computer ... which apparently runs a modified, unauthorized version of the Leopard operating system," Apple said in court papers.

"Apple licenses the use of its Macintosh operating system software for use only on Apple-labeled hardware. Indeed, an original version of the Mac OS is available only with the purchase of a Macintosh computer," according to the filing.

Making the Point

"Apple has never been shy when it comes to protecting their IP (intellectual property), and once they actually started commercial selling of the product, Apple was obliged to move under their overall corporate fiduciary responsibility," said Tim Bajarin, president of Creative Strategies.

While Bajarin acknowledged that "it is doubtful that Psystar would ever sell a lot of these clones," if Apple had not taken steps to safeguard its intellectual property (IP), "it would have encouraged other to try and follow Psystar's example.

"And, to that end, Apple had to make sure there were no clones out in the market taking away from their own market opportunities. Ultimately, Apple has made this move to make Pystar an example and to insure that nobody else tries to illegally clone the Mac," he told MacNewsWorld.

If it had been a simple question of hardware, Psystar may not be facing a lawsuit from a multibillion-dollar company, added ABI's Aima.

"But using [Apple's] software on their hardware is a direct copyright infringement issue," she concluded.