So it looks like wannabe cloner Psystar's supposedly
hotshot law firm of Carr and Ferrell regrouped for a deep think after
pumping out some
fairly weak arguments in its case against Apple -- according to a new draft of Psystar's countersuit, the Florida-based computer reseller should be allowed to sell whitebox Mac OS X machines because it legally purchased copies of Leopard at retail. That's the first sale doctrine, if you're into copyright law -- it states that the purchaser of copyrighted materials (like a book) can sell or dispose of them however they want. Here's the thing though: a big part of Apple's case (but not
all of it) is based around the fact that consumers
license OS X under the terms of the EULA -- and courts are basically up in the air over whether the first sale doctrine should apply to software transactions. It's an interesting tactic with a ton of repercussions beyond Apple if it's successful, but we honestly can't see it working -- in the cases where first sale has been used to overcome a EULA, it's generally been for used software, not companies like Psystar, who are modifying and installing new copyrighted software sold by a first party. We'll see how Apple responds -- things just got interesting again.
Update: World Of Apple notes that this argument has been present from the outset, but it sounds like Psystar's really pushing it now. We'd say so -- we think it's the only plausible one we've heard so far.
[Thanks, iB3nji]
Disclaimer: Nilay's a lawyer and about to fall over from CES, but he's not your
lawyer, and this isn't legal advice or analysis.
Reader Comments (Page 1 of 2)
blueangel00100 @ Jan 14th 2009 3:22PM
GO APPLE!
Game_playa @ Jan 14th 2009 3:25PM
Why?
Paul Chapel @ Jan 14th 2009 4:20PM
Psystar's argument is full of crap and this is why. Yes, anyone can walk into an Apple store and buy OS X off the shelf, but that's considered a personal copy. Once you start selling hundred of copies of OS X to third parties you essentially become a reseller and you have to obtain a reseller license from Apple. Microsoft does exactly the same thing. Microsoft has sued people for selling hundreds of copies of Windows over the internet without a reseller license.
And even if Psystar wins, one of three things are likely to happen. (1) Apple will stop selling OS X off the shelf and require you to provide your serial number from your Mac in order to buy an upgrade or (2) a bunch of other companies like Dell and HP are going to start to sell Mac clones and drive Psystar, a fly-by-night operation, totally from the market or (3) Apple is forced to license OS X to third parties, thereby forcing them to raise the price to compensate for the lost of hardware margin.
No matter what, Psystar doesn't win. I don't even see why they're trying.
sacapuntas @ Jan 14th 2009 4:38PM
You know I love to use my PC to get on engadget, but I hate to see a certain PC on engadget ;-)
(wait a few minutes and you will get it...)
Fred @ Jan 14th 2009 5:02PM
@Paul: This is actually Psystar's first decent defense route. Some guy on eBay just prevailed with a similar argument against Autodesk. Autodesk tried to stop him from reselling used copies of 3D software he found at a garage sale or something, by claiming the boxes were just placeholders for a "license", based on a similar EULA to Apple's, and that they could not be resold. The courts agreed with the first sale doctrine in that case, and the eBay guy was allowed to resell, IIRC. As long as Psystar buys the OSX boxes from another retailer, they don't need to be a licensed reseller -- just like people on eBay don't have to be licensed to resell used goods.
I think the part of this case with the least precedent is defending the ability to resell a computer with pre-installed software, provided you also provide exclusive transfer of the original software "license" along with the computer. This is pretty common practice with used PC retailers, who include the OS and Office software pre-installed. They basically just hand you the software boxes, discs, and paperwork along with the PC, and promise not to use your license elsewhere. It doesn't really matter if the software and the hardware were pre-used or pre-installed, just as long as the new owner has exclusive use of all items sold. This is the same thing Psystar's trying to do, but Apple is just more angry about it than M$.
Personally, I think EULA's are pretty universally stupid, and the courts need to take them away. If you are sold a dining table, there should be nothing keeping you from using it as a workbench instead, provided you don't sue the table maker if you break it by exceeding its weight limit. Similarly, if you buy software, you should be able to use it any way you please, but the maker just doesn't have to support you if your use falls outside of their guidelines. Support limits are fine, but permitted use definitions are not. That's why these are called "sales", not "rentals"!
IANALBWGAS
Testies, Testies, 1, 2... 3? @ Jan 14th 2009 5:03PM
Interesting to learn about the "Sell or dispose of" clause...
If anyone here has ever searched ebay for a used copy of the "Rosetta Stone" language learning program, you'll find it non existent. There is a clause in their ULA that states you cannot resell the program after you have used it. ebay takes down every auction they report (and they are constantly checking)
Michael Scrip @ Jan 14th 2009 5:17PM
> "a bunch of other companies like Dell and HP are going to start to sell Mac clones and drive Psystar, a fly-by-night operation, totally from the market"
Personally, I don't even think Psystar is a company in the market. Has anyone ever bought one of their machines? Until they are in Best Buy, one aisle from the real Macs, they aren't a real computer company. Psystar is just a legal team, who pretends to sell computers. They are putting on this dog and pony show trying to prove a point. I don't see how Psystar gets funding for its legal team. It's not like they are selling a lot of computers!
I don't think HP and Dell would want to sell clones. It might damage their relationship with Microsoft, who already gives deep discounts to HP and Dell for OEM copies of Windows.
And if Apple is forced to allow OSX to be installed on HP or Dell machines... what prevents Apple from raising the price of OSX to an unobtainable price?
OSX: included free with an Apple Mac
OSX OEM Edition: $499
It would be like cell phones... $99 with a 2 year contract... $599 without a contract.
If Apple loses the case... they can still control the price of OSX... making it next to impossible for HP and Dell to sell a profitable Mac clone.
henrydhanse @ Feb 24th 2009 6:30PM
@Paul-
What if I want to upgrade from leopard to snow leopard? Do I then have to buy a new mac in order to get a liscense? What further proves that they wont do this is that they just releaed ANOTHER bundle of mac software-leopard, iLife, and iWork for like $160...I really doubt that will happen...
Jose_The_Gardener @ Jan 14th 2009 3:24PM
Disclaimer: When is Nilay going to give up writing these silly lines? Yes you studied law, but nobody is going to call you out on it given that the articles are just that - articles - not legal advice. Enough now, we know you studied law .. ooooh!
Nilay Patel @ Jan 14th 2009 3:27PM
When you start paying my malpractice insurance.
John @ Jan 14th 2009 3:41PM
Ziiiiiiiing!
MadMike @ Jan 14th 2009 3:43PM
Jose: I believe he is required by the bar association to have that disclaimer. Or else someone who is lacking in intelligence (read: people who sue McDonalds for getting fat, etc) could sue Nilay for giving them faulty legal advice.
He should just put "Nilay Patel_ IAALBNYL" as his username. ;-)
Nick J @ Jan 14th 2009 4:39PM
I, for one, enjoy the clever twist put on his disclaimer.
superhobo @ Jan 14th 2009 3:24PM
Wow, Apple is really stupid.
Since they usually reserve the right to change the EULA they should change it to "This OS can be installed only on computers sold by Apple" instead of the stupid "computers with the Apple sticker"
They're stupid to have written it like that in the first place.
Oh wait, it's Apple, never mind.
Alex @ Jan 14th 2009 3:50PM
From what I read, it said "Apple-labeled", which doesn't imply, "computers with the Apple sticker."
Because from what I see, Apple computers aren't labeled with stickers.
superhobo @ Jan 14th 2009 3:54PM
If I stick an Apple sticker on my computer, I could call it Apple labeled too.
Mike- DJ Osta @ Jan 14th 2009 4:03PM
"This License allows you to install, use and run one (1) copy of the Apple Software on a single Apple-labeled computer at a time. You agree not to install, use
or run the Apple Software on any non-Apple-labeled computer, or to enable others to do so"
This is a direct quote from Apple's EULA (End User Licensing Agreement)
This case will rest on the interpretation of "Apple Labeled computer" by the court.
I don't think Psystar has a chance honestly because of First Sale Limitations, this being a license, the Four Factors test and other issues but it really boils down to that. If Apple would have defined more clearly what "labeled" meant, this wouldn't even be going this far...Contracts people, you need well written contracts!!
brandon @ Jan 14th 2009 4:11PM
This has all become one giant pissing contest.
Fred @ Jan 14th 2009 5:11PM
Wait, "Apple-labeled" is the only requirement? I'm going to start collecting Granny Smith stickers for all my future OSX86 installs...
Eddie C @ Jan 14th 2009 8:34PM
Wow, you really know nothing about law, do you?
Mikey @ Jan 15th 2009 4:35PM
@Mike- DJ Osta "I don't think Psystar has a chance honestly because of First Sale Limitations, this being a license"
I believe you are wrong. The law does not just look at the label given to something, particularly when the label is given by one of the parties to a lawsuit. In other words, just because Apple calls it a license, doesn't mean it isn't a sale. The "licensee" pays a fee to Apple, and in exchange gets a product. At its core, this is a sale. The only people who try to argue it is a "license" are those who stand to lose a lot of money if it is found to be a "sale," and because of that, it is a little hard to trust their ability to be objective.
sean @ Jan 15th 2009 7:21PM
Yah, if a computer is apple labeled, that just means it is sold and licensed by apple, and most importantly, has their logo on it, which you can only use under their permission. it's a pretty solid argument.
Charles @ Jan 14th 2009 3:25PM
It would be great if Psystar won since it would bring a lot more competition to the market. Microsoft would have to compete directly with OSX on the same hardware and Apple would be forced to lower the cost of their hardware to complete with Mac clones. Both Apple and Microsoft would come away worse off from a Psystar victory and the real winner would be the consumer.
This new approach seems a lot more reasonable then their previous efforts and I wish Psystar the best of luck.
Alex @ Jan 14th 2009 3:44PM
Even though they're going against the EULA? Apple's whole basis is that the hardware and software are made by the same company. Everything is supposed to "just work." This guarantee, of sorts, is lost when there is a 3rd party involved. Apple isn't necessarily a software company, they are a hardware company that happens to have a highly desirable OS. If Apple sold OS X to the public for use on any computer, it would go against everything they stand for, and make them far less successful.
tom @ Jan 14th 2009 3:47PM
+1
This way, M$ would think twice before shuffing us crappy OS like Vista, especially after using Windows 7 beta. Apple would price its products competitively.
Bender Bending Rodriguez @ Jan 14th 2009 3:51PM
And the shortsided, Psystar responders chime in.
Apple wouldn't have to lower their prices on any HW. For the same tech other PC vendors charge about the same, and often more than Apple as you go up to the higher end. This has been proven time and time again.
What would happen if Psystar won would be on the SW side. OS X upgrade copies would be changed to require the original system OS to be installed before upgrading or Apple would just charge more for OS X retail copies. The former is a PITA since you'd have to install an OS 2x to get up-to-date. The latter could be offered at a higher price but with a rebate for those with bona fide Macs, not illegal clones, by proving you have a Mac that falls within the upgrade abilty of the HW.
Bender Bending Rodriguez @ Jan 14th 2009 3:57PM
@ Alex,
The EULA is not a relevant issue here since Psystar is NOT the end user.
Jason @ Jan 14th 2009 4:01PM
Hell yeah, even though they're going against the EULA!
Nilay, I know you're not my lawyer, but it seems to me that if Apple happily sells me software when I don't own a Mac, but won't let me install the software on anything but a Mac, then the EULA is void due to failure to perform. Then what?
fhlh @ Jan 14th 2009 4:10PM
agreed, but then Apple would have to support multiple hardware platforms... don't think they want to do that.
lucas @ Jan 14th 2009 5:24PM
if Psystar wins it means that the courts don't get a shit about copyright and plagarism
forget the EULA, forget the doctrine of First Sale.
The courts have already determined that the market is personal computers. There is no "macintosh computer market" so Apple is not an illegal monopoly. They have stated that Apple has all rights to restrict what hardware is used with their software. So those games are over.
Psystar is trying to claim that they bought a copy of the software for every computer they sold and that the disk was put into the box with the machine. They didn't buy one and copy it over and over so they broke no rules (trying to brush the allowed restriction under the rug). So essentially all they were doing was pre-installing it just like Apple does with their machines.
But that is not true. In order to get around the legally allowed tying they had to modify the software. They admitted as much. And that is where the trouble is. In essense by doing that modification they recreated a new OS. A PsystarMacOS. Which, although partly open source, was also partly created by in effect copying code created by Apple and under copyright with Apple as the owner. Registered properly (despite Psystar's claims) with the LOC thus allowing legal action etc.
THAT is what this is really about. And that is why Psystar should not and likely will not win. Because the US Courts don't like cheaters.
Alex @ Jan 14th 2009 4:51PM
@Bender Bending Rodriguez
Actually, it is. Because Psystar is the end user, according to Apple. If you read the EULA, it says:
3. Transfer. You may not rent, lease, lend, redistribute or sublicense the Apple Software...
So, Psystar is buying the license, making them the end user. They then redistribute it, which violates the EULA.
Even if this didn't apply, Psystar is not an Apple Authorized Reseller (one can assume), so they don't have the right to sell the software. From Apple's "Find a Reseller" page:
Please be aware that if you purchase a product over the Internet or through a Catalog from a Reseller who is not on the list, you are not buying from a reseller authorized by Apple to make Internet or catalog sales.
Jason @ Jan 14th 2009 6:56PM
Thanks but if I don't want to be aware, then I don't have to. I'm under absolutely no obligation to go online and check some list. Screw that!
Loonie @ Jan 14th 2009 7:16PM
fhlh: The "Apple would have to support multiple hardware platforms" argument has always struck me as a little odd.
The onus is upon the hardware manufacturer to support the operating system. Microsoft don't write everyone's drivers for them.
Jason @ Jan 14th 2009 7:33PM
Lucas, just because the courts made that determination doesn't mean it's even remotely accurate. Psystar, ISN'T selling apple computers, and Apple IS selling the software separately, so the statement that the market in question is personal computers is patently ridiculous. The market in question is software operating systems.
I mean if Psystar started selling some other non-pc device with osx loaded on it, they could argue on the basis of the court's statement that the injunctions don't apply because the court has already determined that the market is personal computers.
Mikey @ Jan 15th 2009 4:41PM
@ lucas
You make a good point about the modification of the software, but your statement "US Courts don't like cheaters" simply begs the question "Is Psystar a cheater here?" And the answer to that is what the whole lawsuit is about. In essence you said "Psystar is guilty of copyright infringement if they infringed Apple's copyright." A tautology like that is no argument.
Ryan Meray @ Jan 14th 2009 3:25PM
This just got interesting. Defenders of the first sale doctrine who support Apple are going to have a hard time deciding where their loyalties lie with this one.
I don't know if Psystar has any legs to stand on, but I'd love for how damaged the FSD has become to become a focalpoint of the debate.
Jason @ Jan 14th 2009 3:40PM
Are there really any defenders of first sale doctrine who would actually side with Apple?
dagixxerkid2 @ Jan 14th 2009 3:28PM
I don't even get why this is a copyright violation? They're not selling OS X as their own. They're not calling it Psystar OSX. they are simply installing it on a machine other than an apple. Does the copyright state that you can legally only install OSX on a Mac? What if Microsoft did the same petty whiney baby stuff and banned all those dual booting mac people. Apple get off your high horse and quit whining.
Jason @ Jan 14th 2009 3:41PM
Yes, it basically says exactly that.
Jason @ Jan 14th 2009 3:41PM
http://images.apple.com/legal/sla/docs/macosx105.pdf
kjb434 @ Jan 14th 2009 3:45PM
That's a good point and the reason why Microsoft has such a large market share to begin. If you can install their software on your machine, go ahead and do it. If it doesn't work, then it's your fault.
If Psystar can get OSX to run well on a no-Apple product, more power to them. Apple is still selling software licenses.
danknerd @ Jan 14th 2009 3:49PM
I hope Microsoft does that now, so Apple supporters can feel the same they dish out, although I suspect they can dish it out but can't take it. So they will whine and claim how it violates their rights on owning hardware and being able to install whatever OS they want on it.. the irony would be fun to watch.
MadMike @ Jan 14th 2009 3:48PM
From the EULA:
3. Transfer. You may not rent, lease, lend, redistribute or sublicense the Apple Software. Subject to the restrictions set forth below, you may, however, make a one-time
permanent transfer of all of your license rights to the Apple Software (in its original form as provided by Apple) to another party, provided that: (a) the transfer must
include all of the Apple Software, including all its component parts (excluding Apple Boot ROM code and firmware), original media, printed materials and this License; (b)
you do not retain any copies of the Apple Software, full or partial, including copies stored on a computer or other storage device; and (c) the party receiving the Apple
Software reads and agrees to accept the terms and conditions of this License. You may not rent, lease, lend, redistribute, sublicense or transfer any Apple Software that
has been modified or replaced under Section 2D above. All components of the Apple Software are provided as part of a bundle and may not be separated from the bundle
and distributed as standalone applications. Apple Software provided with a particular Apple-labeled hardware product may not run on other models of Apple-labeled
hardware.
Squid7085 @ Jan 14th 2009 3:49PM
Apple has never been much of a software company, they don't make much money on OS X software licences, they make the money on the machines. If that changes, then Apple will have to completely restructure how they sell OS X, namely price increase and product keys.
danknerd @ Jan 14th 2009 3:52PM
@MadMike
Just because something is in a EULA does not make it legal. If the EULA said you had to give your first born child to Apple upon installing OS X does not mean it would be legal.
Alex @ Jan 14th 2009 3:55PM
@darknerd
yeah, but you're not required to accept the license. Psystar is choosing to accept the license. And they're also choosing to go against the license.
tom @ Jan 14th 2009 4:05PM
EULA stands for End User License Agreement. This agreement applies to End user, and Psystar was just distributing the product to consumers, the end users.
Jump off the high horse Apple!
lucas @ Jan 14th 2009 5:25PM
they are using the Apple trademark on MacOS to sell the machines. that is issue number one.
and the second is that even though they don't call it the PsystarOS, they still illegally hacked the software to make it work on their machines and in effect created a new software, stolen from the non open source portions of the MacOS.
WilfordBrimley @ Jan 14th 2009 9:53PM
"Yes, it basically says exactly that."
No the copyright does not say that. The EULA says it. The EULA is not the copyright. The only rights afforded by a copyright are those that are spelled out by law.
I'd like to see Psystar prevail on this, even if it has to go to the Supreme Court, so that we can finally be rid of the silly notion of "You don't actually own a copy of the software, you only have a license to use a copy of the software" and our rights will be what the law says, not what the seller says.
Jason @ Jan 15th 2009 11:48AM
Well said, Wilford. The question then is, "Does the EULA serve as an extension of the copyright holder's rights (for restricted use) to the user, and to what extent is it reasonable to restrict the license that is being sold?" (For now, I reserve my contention that the entire business of selling licenses to use information is a shameful, tragic joke)
I believe the rulings until now are far outside the bounds of reason.