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The Download Squad Brief: Apple v Psystar

The Battle of Apple vs Psystar has played out in the courts and the blogosphere over the past year and has pitted the personal computing giant against open source community and consumer advocates determined to test the boundaries of the legal protection of software.

Psystar is a Miami based company in the business of producing Apple clones by installing OS X and Snow Leopard on Intel desktops under the brand name 'Open Computers'. Unfortunately for Psystar and other potential clone manufacturers, Apple doesn't have an official clone program and last year sued Psystar, alleging that Psystar was breaching Apple's copyright in the OSX code and that it was in breach of the end-user license agreement (EULA) of the software.

In a big slap on the wrist of Psystar, last month the District Court of Northern California issued a summary judgment in the case concluding that the company was in breach of Apple's Copyrights and in violation of the Digital Millennium Copyright Act, while holding over questions regarding breach of contract and breach of trademark rights until the trial proper.

As a result of that summary judgment, Psystar has now agreed to a settlement that is reported to be in excess of $2.5 million with Apple, but has signaled that it plans to keep pressing on with its appeal and the anti-trust case that it has launched against Apple in the Florida courts. Further, Psystar's settlement is only payable in the event that Psystar can't make its appeal stick, so the company is keeping its options open for further legal action.

A Change of tack for Psystar

As a result of the legal pressure, Psystar has shifted its business mode 90 degrees and announced that it will cease selling desktops, but will continue to sell its Rebel EFI software system that allows consumers to install OS X on computers themselves.

The shift in tactics is designed to transfer responsibility for any unlawful activity onto the consumer and away from Psystar. The shift also allows Psystar and its customers to to reply on the provisions of the US Copyright Act which provides that consumers are allowed to make additional copies adaptations of software if essential as a step in the utilization of software on a computer.

The issue of clones has long been a controversial issue for Apple, its own short-lived official clone program ended with the return of Steve Jobs to the company in 1997, which also happened to mark the start of a new golden era for the computer manufacturer. Apple has shown fierce determination to protect its intellectual property rights and it seems certain that the company wants to make Psystar an example for other would-be cloners.

EULAs vs consumer rights

EULAs govern the extent of use of software for consumers and form a binding agreement between the consumer and the software manufacturer. However unlike many contracts, the terms of a EULAs are not subject to any negotiation between the parties and the terms of the EULA are usually written to be entirely favorable to the software creator. In the case of Apple software, the EULA dictates that the software can only be installed on Apple computers.

In the event that an EULA overreaches the rights of consumers then the consumer may have recourse through consumer protection regulations, anti-trust laws, or through the Copyright Act, legal challenges to EULAs are fairly infrequent.

To date the attitude of the courts to EULAs has been mixed, in some instances it has been found that EULAs are not en forcible as they bind the consumer without any opportunity for negotiation, however a substantial number of cases have found EULAs to be en forcible. As a result of such mixed decisions it is hard to draw any wider conclusions about the attitudes of the courts towards EULAs

The Psystar case raises fundamental questions about the level of control that software manufacturers can exert over the use of their product. Is it reasonable for Apple to restrict installation of its operating systems to its own hardware? The OS X EULA prohibits the installation of the operating system on any third-party hardware, which for competition advocates and open source proponents say is an unreasonable restriction on the use of commercially available software.

The future for Psystar

Psystar and other clone manufacturers undermine the carefully honed marketing message that Apple has spent millions promoting, of an exclusive, unified end-to-end proprietary platform and have drawn the ire of Apple devotees throughout the world. If OS X or Snow Leopard can be installed on just any $500 box, then clone manufacturers undermine both the finely tuned code and the exclusive cache that comes with owning a Mac.

Unfortunately for Psystar and its allies, the District Court of Northern California seems to have little interest in extending consumer rights in this case, with the interim judgment dismissing Psystar's counter allegations of trademark infringement and copyright misuse. If the interim judgment is any indication of the final judgment in this case, it's going to be a bloodbath for the Miami computing minnow.

Enforceability of EULAs is one of the more important issue to be decided in the Psystar case, after all how many other products dictate exactly how you use them when you get them home? Software a unique case in this regard and consumer advocates question why a consumer shouldn't be entitled to install an operating system on any piece of hardware that they can get it to function on.

Where next for consumers?

Despite the fact that competition and open source advocates have attached themselves to the Psystar cause, it's hard to genuinely regard Psystar as a trail-blazing pioneer. The motives behind Psystar's infringement of Apple's rights was much more to do with making a fast buck than it was to do with pushing the boundaries of software freedom or competition in the computing industry.

If Psystar can afford the cost of pursuing these cases through the appeals process the end result could be some judicial clarity about the extent and nature of protection afforded by EULAs. Given the complexity and chaotic approach of Psystar to date, a more likely result is that any judgment will only reflect the uncertainty that has characterized the dispute to the present date. While consumers should be protected from excessive and overreaching EULAs, consumer advocates may need to look further than the Psystar case to find such reassurance.

The Download Squad Brief is a regular column looking at Web 2.0 legal issues by Gordon Finlayson, a corporate media lawyer based in Dubai. Prior to life as a lawyer, Gordon worked for companies such as CNET, ZDNET and Excite@Home during the Web 1.0 era.

Tags: anti-trust, apple, apple clone, AppleClone, clone, commercial, copyright, download squad brief, DownloadSquadBrief, EULA, features, hardware, osx, psystar



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