Apple and Psystar to settle things with alternative dispute resolution, not tridents and hatchets

As much as we were hoping to see Steve Jobs and... well, anyone from Psystar settle things in the squared circle, we suppose we'll have to live with a much more peaceful end to this madness. Rather than spending wads of cash on lawyers for no good reason, the two outfits have agreed to use alternative dispute resolution in order to wrap this scuffle up and move forward. As you may know, ADR is a private process where both parties meet outside of a trial in order to reach some sort of agreement, though we imagine the outcome will be pretty public depending on Psystar's ability / inability to continue fulfilling orders. We're told that the process will get going before February of 2009, and the full fling (PDF) with the US district court in the Northern District of California is linked below if you've suddenly found yourself with entirely too much free time.

[Via The Mac Observer]

[Alexandre Emond @ Oct 19th 2008 12:17PM]

Is there any chance Psystar survive that?

[AKBlade13 @ Oct 19th 2008 12:23PM]

It would be funny, and yet interesting, if they did survive that.

It'd be even more interesting if they actually are able to sell their machines as OSX machines.

AKBlade13

[JohnTitor @ Oct 19th 2008 12:38PM]

they did hired from Carr & Ferrell who beat Apple before

also it would be cool if they won, I'd like to be able to use OS X without paying the "Apple tax"

[Andy TGD @ Oct 19th 2008 12:38PM]

Let me think about that...
No.

As a Windows/Linux based PC builder - perhaps.

[Chris @ Oct 19th 2008 3:45PM]

@JohnTitor

Nobody stopping you, go buy a Leopard disk and install away! I've done it
and it works fine.

Providing you pay for their OS I don't think Apple will come kicking in your door.
Now selling it on a new PC is a different story.

[1234321 @ Oct 19th 2008 5:55PM]

yeah except there's incompatibility everywhere, mostly wlan drivers

[ran @ Oct 19th 2008 9:29PM]

@1234321: Well that's not exactly Apple's fault is it?

[UnixSystemsEngineer @ Oct 19th 2008 10:45PM]

That's a good question.

IANAL, but it seems to me that this might be an indication that Psystar has a leg to stand on. Sure, lawyering up is expensive, but bigger companies like Apple are literally always in some kind of legal battle -- it would hurt Psystar's pocketbook a lot more than Apple's. It seems like if Apple had a strong case they'd want to make it public, and they'd want to have that legal precedent next time someone tried to do the same thing as Psystar.

But maybe precedent isn't really important in contract matters? I don't know.

[Patriks7 @ Oct 19th 2008 12:23PM]

I'm betting Engadget will make it public enough :p

[Josh Marshall @ Oct 19th 2008 2:53PM]

Sadly, the fact that the process is in arbitration versus the courts means that any result from this won't affect the interpretation of the law (or, really, anything except for Apple and/or Pystar's pocket book.) If it does continue to court (as this is non-binding) there is hope for a narrower scope of EULA restrictions... but it is unlikely.

[crescentdavid @ Oct 19th 2008 12:28PM]

Anybody have enough legal know-how to explain how/why Psystar has a leg to stand on ... as opposed to summarily losing and having to pay court costs?

[oZ @ Oct 19th 2008 12:47PM]

Probably because it's not a law violation, but terms of a EULA, which tends to always go to court.

[Dan @ Oct 19th 2008 12:52PM]

Basically, Psystar thinks Apple has a monopoly by having an x86 based computer but locking out other similar components because of it not being bought through Apple or more technically their bios which stops the installation (efi).

Best case legal win, which won't happen because they are out of court, Apple is forced to sell a generic OSX which will be installable on any computer.

The closest precedent was the EU finding WMP a monopolized program by being bundled with Windows. I know it won't work as the analogy is pretty dissimilar.

There really isn't any big loss for Psystar, they did everything legit as by no fault of their own, they did break the EULA for installing it on non Apple hardware. I think they were just trying to prove a point and trying to get some fame for it. Being a county above Miami/Dade, where they were located, we did see it on the news a few times on local stations. But I think if Apple can have XP run on their computers, why can't it be the other way around?

[Shadow08 @ Oct 23rd 2008 2:28PM]

Exactly. It is ridiculous how Apple gets away with this.
Why isn't the EU cracking down on Apple, and how iTunes and Safari come bundled with it just like IE and WMP?

[Chris @ Oct 19th 2008 3:37PM]

@Shadow08


Nothing you said made any sense.

[Tubes @ Oct 19th 2008 3:52PM]

Not sure, but I think it has something to do with the fact that Apple (according to the legal papers) licensed OS X to Pystar; and that Pystar allegedly hasn't modified the OS to run on other systems - they found a clever way to use it without cracking the code.

If that were true, then this may have actually been a pretty tough battle for Apple.

Also, expect Apple's EULA to get even stricter because of this.

[UnixSystemsEngineer @ Oct 19th 2008 10:48PM]

Shadow,

Because Microsoft is a convicted monopolist and they were using their monopoly to embrace and extinguish new markets, like the browser market. Nobody in their right mind thought IE was better than Netscape at first.

This doesn't apply to Apple because they have no such monopoly in any market. You can hate them for their business practices, but you can also buy from the competition.

[Zak @ Oct 20th 2008 11:28AM]

It's actually pretty simple. Psystar's case rests entirely on this one argument: "Apple has a monopoly on the Macintosh market." Which of course is the same thing as saying Ford has a monopoly on the Mustang market, or RIM has a monopoly on the Blackberry market. But Psystar believes that they're entitled to run OS X on any system they want because... they think they should be able to. There isn't really any logic behind it.

So Psystar stole the work that the osx86 team had done, used it without permission and tried to make a profit with it by selling systems that run OS X which both breaks Apple's EULA and cheeses off the OSX86 guys. Psystar are sleazeballs all the way around. The lawsuit is their way of trying to make more money than they ever would have made selling systems.

In order for Psystar to win that lawsuit, the judge would literally have to redefine what a monopoly is. That doesn't seem likely to happen. If it ever did happen, lawsuits would break out against every company that makes anything and calls it their own, like the aforementioned examples. In fact the same lawsuit could be brought against Microsoft for having a monopoly on Windows. Or the Zune.

[Mikey @ Oct 20th 2008 12:20PM]

@ Zak... once again, your limited knowledge shines through. Anticompetitive doesn't just mean antitrust, and (more importantly) antitrust doesn't just mean "monopoly." You can also violate antitrust laws for a tying arrangement, where you tie (i.e. require) the purchase of one product to the purchase of another. Here, that is exactly what Apple is doing, it is tying the purchase of Apple hardware to the purchase of Apple software. If that tying has an anticompetative effect (which is way too complicated to figure out without all the evidence that is before the court), then it is a violation.

Bitchy response in 3... 2... 1...

[toxicpiano @ Oct 19th 2008 12:35PM]

If they can't come to an agreement by Feb 2009, does that mean it will have to go to court?
What *likely* outcomes are there? Is it possible that Apple will by psystar or something (Although I doubt it)?

[who? @ Oct 19th 2008 5:04PM]

I get the vague feeling that Apple would sooner release the iNukes than do that. It'll be a cold day in hell when Apple lets their OS hit the 3rd party PC market.

[Jamar @ Oct 20th 2008 3:28AM]

@who?-
People once said the same thing of Apple switching to Intel.

[Zak @ Oct 20th 2008 11:44AM]

Jamar: Not exactly. People said that about letting Mac OS run on PCs - not just the Intel chipset. It was always understood that if Apple could find a way to let the Mac OS run on a non-Moto/IBM chipset *without* allowing it to be run on any PC somebody could slap together, that would work fine. It's the same thing people say now: it'll be a cold day in hell when Apple allows their OS to freely run on any computer you want. Apple makes their money on hardware, not software.

[Richard Cartwright @ Oct 19th 2008 12:39PM]

Actually I suspect that Apple is worried enough about their EULA being invalidaded to use ADR to make it easier to pay them off and seal the result, which would be impossible to do in an open trial

[Perspective @ Oct 19th 2008 12:43PM]

The fact that they've selected ADR does not mean the case will never be tried; "non-binding" arbitration is just that, non-binding, and mediation is often attempted before an actual trial, with only moderate success. That being said, it's a useful step in that the parties often become clear on just what the other would demand to settle, and even though only a fraction of cases settle at this step, it probably increases the likelihood of a pre-trial settlement.

As far as legal arguments, Psystar's best one is probably to argue that by selling OS X as a retail product, Apple should be forced to allow the end user to install on any system capable of running the OS. Apple's response would simply be that those boxes are intended for users already under agreement (from when the Mac was purchased), and thus these boxes are not really examples of "stand-alone" software but are in fact "upgrades."

[no thanks @ Oct 19th 2008 1:07PM]

actually the lawsuit from apple was because Psystar was modifying the OSX updates to allow users to install them onto their clones.

not because they were installing it on non-apple computers.

the lawsuit from Psystar against apple was because of anti-trust issues.

[mike @ Oct 19th 2008 8:44PM]

humm you dont have to modify osx at all to install on non apple pcs...

[zfurie @ Oct 19th 2008 1:08PM]

So is this a case of a staring game and Apple blinked first?

[Juxterium @ Oct 19th 2008 1:20PM]

It's odd that Apple wouldn't want this to go to court considering their track record of making examples out of these sorts of companies...

[zenstylejunglist @ Oct 19th 2008 1:43PM]

My thoughts exactly.

[KA @ Oct 19th 2008 4:20PM]

The court forced them.

http://www.internetnews.com/bus-news/article.php/3779041/Apple+Psystar+Pushed+Into+Mediation+Talks.htm

[LarryLarryLarry @ Oct 21st 2008 3:50AM]

Thanks for doing the Gadgeteers' job for them. Yet another "news item" which turns out to be a waste of bandwidth.

[Dr Zoidberg @ Oct 19th 2008 1:32PM]

Gang war?

[zenstylejunglist @ Oct 19th 2008 1:42PM]

Psystar will get owned in or out of court. What the hell is there to mediate anyways? Apple is clearly in the right. If Psystar was worried about open souceness & whatnot they wouldn't be doing this, they would want it to go to court to get a judgment saying that Apples EULA is invalid. But it's all about the money.

[Mikey @ Oct 20th 2008 8:59AM]

Perhaps it's because Apple is not so "clearly in the right."

[Mr Lizard @ Oct 19th 2008 2:12PM]

I must admit I'm slightly suprised by this.

If Apple were so confident their EULA will hold up in court, then surely they'd just go ahead a sue them.

This suggests that there may well be doubts among Apple's legal team that they would win a court case, hence their slightly less agressive 'alternative dispute resolution'.

If Apple did agree to licence OS X to Psystar, this would surely lead to a huge number of other third parties wanting a slice of the pie.

If I recall correctly, Michael Dell once suggested he'd be interested in licencing the OS for his PC range.

Personally, I'd probably stick the the Apple hardware, as I do find the design attractive. Outside of Apple and Sony, I rarely find a PC/Notebook that I find decent looking enough to my liking. OS X Leopard on a VAIO would look awesome.

But it would certainly be interesting to see what impact it would have on Apple's bottom line if OS X became as widely available as Windows.

Thoughts?

[armildarkenx @ Oct 19th 2008 2:30PM]

IMO: The fact that Apple isn't pushing this through the court means that they don't feel that they're in a strong enough posisition to win (and set a precedent for future cases) and are willing to give some ground to try and keep Apple clones from spreading.)

1. They feel they can pay off Psystar and close them down.
2. They're willing to concede something to Psystar in order to keep the Apple clones from spreading, maybe even allow Psystar to sell Mac's with branding restrictions?

With the growth apple has seen lately and their perceived/real dominance in some markets means that they're in a posisiton to have the anti-trust thing stick. (Eg. They're pushing a ton for education, it won't go over well if gov/education people are locked into products from one vendor with no competition.) There's a good argument against tying hardware and software, especially when the software can be purchased separately. Apple likes the profits on their hardware, and is probably the majority of their profit, they would have to compete on a level field with dell/etc if the judgement when the wrong way. This way, they have to compete with one startup instead of every PC manufacturer.

[Zak @ Oct 20th 2008 11:48AM]

The court is making them do this, it's not Apple's choice.

http://www.internetnews.com/bus-news/article.php/3779041/Apple+Psystar+Pushed+Into+Mediation+Talks.htm

[DBinSD @ Oct 19th 2008 3:09PM]

The premise of your article is just completely wrong. The document you post indicates they have agreed to go to a mediation. That means they might settle it out of court with a mediator, but they might not. No one caved, and no one agreed not to try the case.

[KA @ Oct 19th 2008 5:16PM]

To duplicate my above comment:

The court forced them.

http://www.internetnews.com/bus-news/article.php/3779041/Apple+Psystar+Pushed+Into+Mediation+Talks.htm

[bob sakamano @ Oct 19th 2008 9:37PM]

i miss when nilay would give us our legal briefings

[iEye @ Oct 19th 2008 11:04PM]

Apple needs to start selling OS X only on USB flash drives as part of the "Hardware" thus blocking out these types of nut-jobs looking to make a quick buck on the backs of hard working programmers...

next thing you know phone designers will start complaining that Apple should allow the iPhone version of OS X to run on other mobiles since it is so superior to other UI's or current market phones...

Microsoft should do this also... DVD needs to go.

[aMp 732 @ Oct 19th 2008 11:49PM]

I dont get where any of this Anti-Trust crap comes into play..

Apple Makes there own computers with there own os.. Just like Ford makes cars with Ford Engines and Microsoft makes Xboxs with the os that runs the Xbox..

Whats the problem? People dont have to share there products if they dont want too.

Go buy a Windows box if you want Windows and a Linux box if you want linux.

If you want a MAC buy a MAC

Apple makes there OS for there computers?

[rlynd3 @ Oct 20th 2008 12:38AM]

The difference is: I can buy a ford engine and bolt it in a Chevy frame and then sell that truck. The fact that apple sells the OS separate (engine) and doesn't allow it to be installed on any compatible PC (Chevy Frame) is where Psystar and myself have a problem...

[Sri @ Oct 20th 2008 5:35AM]

> The difference is: I can buy a ford engine and bolt it in a Chevy frame and then sell that truck.

Not on a commercial level. Try making a small mechanical shed that pumps out "Amp Trucks! Toughness of a Chevy, power of a Ford" ...

[Sri @ Oct 20th 2008 5:35AM]

Sorry that was @rlynd3 not @aMp 732

[Mikey @ Oct 20th 2008 9:03AM]

The problem is Apple is tying the sale of its hardware to the sale of its software. In other words, it is using its software to force people to buy its (overpriced) hardware. That is a no-no if it unreasonably restrains competition. What constitutes "unreasonable restraint" is very complicated, and would take too long to go into on this board, but Psystar's case is nowhere near as bad as these Macheads would have you believe.

[Zak @ Oct 20th 2008 11:58AM]

mikey: Not true at all, because it doesn't constrain competition at all, in any way, shape or form. Anybody is free to develop Mac software, anybody is free to buy a Mac or a PC if they want. The problem here, and you're taking the same misguided stance that Psystar is, is that you're attempting to define a market that consists only of Macintoshes. There is no "Macintosh market". Macs compete in the same market that PCs and Windows do, which is why their market share is 15% and not 100%. See how that works?

[Mikey @ Oct 20th 2008 12:20PM]

@ Zak. The definition of unreasonably restraining competition is a little more complicated then you saying it ain't so. The court has to look at the mountains of evidence that Apple and Psystar are generating. Apple's lower market share is only relevant to the inquiry of whether there is a monopoly, but (as I've explained to you before), "monopoly" is not the only type of antitrust violation. To say that Apple's actions have no anticompetitive effect is just naive. If a person wishes to buy Apple's OS, but does not wish to use it on Apple hardware, under Apple's EULA, they cannot do it. This prevents totally free competition in the hardware market, because people have to make the choice, Apple OS and Apple software, or non-Apple OS and non-Apple software. Free competition would mean I could buy Apple's OS and put it on my Dell... since I can't do that, there is not free competition. Whether Apple's restraint is unreasonable is a completely different question which neither you nor I are competent to answer.

[Juxterium @ Oct 20th 2008 1:42PM]

@ Zak

Seriously, do you know nothing about anti trust laws? You seem to have simply read a couple of news articles on it and believe you have a complete knowledge of it. I do not profess to be any more fluent in the law then you are, but I have done some research and I know that anti trust are not only applicable in cases of complete or near market monopolies. The bottom line is potentially Apple could be violating anti trust laws regardless of whether it has a monopoly or not, and this may very well be the reason they are attempting to settle this behind closed doors.