Apple's lawsuit against Psystar examined

So we just got our hands on the complaint Apple filed against Psystar for building off-label Mac clones, and as expected, Steve and friends aren't pulling any punches -- in addition to the eight total claims, request for a permanent injunction, and money damages, Apple wants a recall of every Psystar machine ever sold. That's harsh, but it's not like Apple to take this lightly. Like we've been saying all along, the suit is more about copyright infringement than EULA violations, since Psystar was distributing a modified version of Apple's copyrighted code outside the terms of the EULA. Grab the complaint here [PDF], and then head after the break for a quick breakdown of what Apple says Psystar is liable for.

PS. - Somewhat charmingly, we're quoted in the factual allegations section as calling the Psystar machine we reviewed "crazy loud" -- aww, you shouldn't have, guys. Maybe you want to throw in a citation next time, though? Just a thought.

  • Copyright infringement: According to Apple, Psystar modified and redistributed OS X without a license, so straight copyright law applies. This is probably a winning argument -- even if the EULA (which forbids modification and redistribution) is held invalid, redistributing a modified copyrighted work is a big no-no.

  • Contributory and induced copyright infringement: As we pointed out a while back, by building a business model around the knowing copyright infringement of its customers, Psystar is probably liable for contributory copyright infringement -- this is the same principle that MGM v. Grokster was decided upon back in 2005.

  • Breach of contract: This is the EULA violation claim. Contrary to what you may have read elsewhere, EULAs in general have been tested in courts many times and have been held enforceable in several states, including Florida, where Psystar is located. In addition, EULAs are currently valid in the federal Ninth circuit, where Apple's brought suit. It's true that there are some cases holding that EULAs are unenforceable and the Apple's Leopard EULA has never been litigated specifically, but this claim isn't nearly as shaky as it's been made out to be -- it's just not a big money-winner like a copyright claim.

  • Inducing breach of contract: Apple says Psystar "advised, encouraged, and assisted others" in violating the EULA. Considering that's the heart of Psystar's business, we'd say this one lives and dies with the main EULA claim.

  • Trademark infringement: Apple has registered trademarks on both "Mac OS" and "Leopard," and it says that Psystar infringed those marks when it advertised that the Open Computer could run "Mac OS Leopard" in a way that made it seem like it was an official product. We're not convinced that this is the strongest claim -- Psystar was basically marketing itself on defiance of Apple, not any kind of official support -- but we can see how a court would buy it, especially since Apple makes a big deal of how Psystar's subpar machines were causing harm to the OS X brand.

  • Trade dress infringement: This one is pretty interesting, actually -- Apple says that the Mac OS X user interface is well known to consumers and has become associated with Apple to the point where it is protectable trade dress -- and that Psystar infringed on Apple's trade dress rights when it shipped Open Computers that contained OS X. It's around this point where you get the sense that Apple's going for the jugular -- there's no way that any damages Apple gets from Psystar are going to cover the additional cost of litigating a claim like this.

  • Trademark dilution: Dilution is a special trademark protection reserved for "famous" brands -- Apple undoubtedly qualifies. It's a complicated doctrine, but basically Apple says that by using its trademarks, Psystar caused damage to its brand.

  • State unfair competition: Apple says Psystar violated California law by infringing its copyrighted works, specifically the California Business and Professions Code. We're not up on our California law -- any readers want to flesh this out for us? We'd say it's just a failsafe claim to at least get an injunction in case everything else gets thrown out.

  • Common law unfair competition: This is basically the same as the state unfair competition claim, only based on a different set of doctrines.

That's quite a set of claims -- and it's probably enough to at least get an initial injunction against Psystar while the case heads to court. In the end, though, Apple wants an injunction against the further sale of Psystar boxes in addition to asking for the recall of every Psystar machine sold (which would be fairly unusual if granted), a dizzying array of monetary damages, and its attorney's fees and costs -- which alone would probably bankrupt Psystar. For its part, Psystar has been saying all along that Apple's refusal to allow OS X to run on non-Apple hardware is a violation of antitrust laws and that it's got a "team" of lawyers at the ready, so it should be interesting to see how this all plays out.

[Special thanks to Matt Gavronski of Michael Best & Friedrich in Chicago for his help with this post]

Disclaimer: Nilay's a lawyer and a rockstar, but he's not your lawyer, and none of this is legal advice or analysis.