Judge grants Apple's motion to dismiss Psystar's counterclaims

[AppleInsider]

A California judge on Tuesday granted Apple's motion to dismiss counterclaims on the part of unauthorized Mac clone maker Psystar, who charged the Mac maker with violating antitrust laws through its vigorous attempts to block third parties from selling rival Mac OS X-based computers.

Apple sued Psystar back in July, asserting that the Florida-based firm was violating both its copyright and trademarks through the sale of computers that had been designed to run a hacked version of the Mac OS X operating system without authorization. Psystar responded a month later with a countersuit that charged Apple with violating federal and state antitrust laws by attempting to squeeze potential rivals out of the market for Mac OS-based PCs.

But in a 19-page order passed down on Tuesday, Judge William Alsup largely reject Psystar's claims and granted Apple's motion to have the countersuit thrown out of court should the clone maker not better its argument through an amended complaint that can be filed no later than Monday December 8th. Should the company fail to do so, all of its claims will be dismissed without leave to amend.

Central to Psystar's complaint was that Apple’s Mac OS X operating system is not reasonably interchangeable with other operating systems such as Microsoft Windows and therefore comprises its own distinct market. The clone maker alleged that Apple has engaged in various forms of anti-competitive conduct in order to "protect its valuable monopoly in the Mac OS market" and that it has also run advertising campaigns to help define the Mac OS as a product separate and distinct from other operating systems.

Apple responded to Psystar's argument by asserting that the company's definition of a market comprised of a single brand of a product is neither legally nor factually plausible. Judge Alsup agreed, noting that the definition of an antitrust "relevant market" is typically a factual rather than a legal inquiry, but certain legal principles govern the definition.

"Whether products are part of the same or different markets under antitrust law depends on whether consumers view those products as reasonable substitutes for each other and would switch among them in response to changes in relative prices," he wrote.

As the Supreme Court has instructed, “The outer boundaries of a product market are determined by the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it.” [Brown Shoe v. United States, 370 U.S. 294, 325 (1962)]. As such, the relevant market must include “the group or groups of sellers or producers who have actual or potential ability to deprive each other of significant levels of business.” Thurman Industries, Inc. v. Pay ‘N Pak Stores, Inc., 875 F.2d 1369, 1374 (9th Cir.1989).

In theory, Judge Alsup said it may be possible that, in rare and unforeseen circumstances, a relevant market may consist of only one brand of a product, but added that Psystar's pleadings "fail to allege facts plausibly supporting the counterintuitive claim that Apple’s operating system is so unique that it suffers no actual or potential competitors."

Judge Alsup added that Psystar's pleading as a whole do not prove the Mac OS is an independent, single-product market, but instead work against the clone maker in providing several pieces of evidence to the contrary.

"The counterclaim itself explains that Mac OS performs the same functions as other operating systems," he wrote. "The counterclaim admits that market studies indicate that, although Apple computers with Mac OS enjoy strong brand recognition and loyalty, they are not wholly lacking in competition."

"Psystar also points to Apple’s extensive advertising campaigns," he continued. "Those advertising campaigns more plausibly support an inference contrary to that asserted in the counterclaim -- vigorous advertising is a sign of competition, not a lack thereof. If Mac OS simply had no reasonable substitute, Apple’s vigorous advertising would be wasted money. The advertising campaigns suggest a need to enhance brand recognition and lure consumers from a competitor."

As such, the judge concluded that Psystar's counterclaim does not plausibly allege that Mac OS is an independent market. He noted that unlike a case cited by the clone maker involving Kodak -- where customers did not knowingly bind themselves to a single brand that later prohibited them from switching among competitors in the primary market -- Apple makes it clear in courting its customers that they'll be locked into using the Mac OS only on Apple systems.

"Apple asks its customers to purchase Mac OS knowing that it is to be used only with Apple computers," he wrote. "It is certainly entitled to do so."

The judge also dismissed the remainder of Psystar's stated claims for a lack of sufficient evidence to back them up, including allegations that Apple is violating the common law of unfair competition, the Cartwright Act, and the California Business and Professions Code.

"For the above-stated reasons, Psystar’s claim that Mac OS-compatible computer hardware systems constitute a distinct submarket or aftermarket contravenes the pertinent legal standards, and Apple’s motion to dismiss Psystar’s federal counterclaims is therefore granted," he wrote.

[ View this article at AppleInsider.com ]

[MJ Web]

That'll teach piss-ant Psystar to rip-off AAPL's intellectual property!

[Foo2]

Oh, my.

Oh, my, oh, my, oh, my.

[Bowser]

No big surprise here.

Sure, it would be nice to have OS X on less expensive hardware, but I'm not willing to buy cheap hardware for it.

[_mikk]

Originally Posted by Bowser

No big surprise here.

Sure, it would be nice to have OS X on less expensive hardware, but I'm not willing to buy cheap hardware for it.

Agreed. I wonder why they don't sue IBM for z/OS or i5 or AIX. None of these will
run on non-IBM machines (except for z/OS I suppose)

They can sue HP for HP-UX/Tandem NSK/OpenVMS - those are (especially last two) extremely
proprietary.

Oh well....

[gto65l]

Originally Posted by AppleInsider

Judge Alsup added that Psystar's pleading as a whole do not prove the Mac OS is an independent, single-product market, but instead work against the clone maker in providing several pieces of evidence to the contrary.

Psystar should seriously reconsider their choice in representation.

[IrishMac]

Their representation was obviously as cheap as their hardware

[NeilM]

Originally Posted by gto65l

Psystar should seriously reconsider their choice in representation.

Psystar should seriously reconsider their choice of business activity.

They're about to move from merely wasting money on hopeless legal maneuvers to gushing it into a rat-hole of litigation. And if I were Psystar's lawyers I'd be making sure to be paid up front.

[offroadering]

Originally Posted by MJ Web

That'll teach piss-ant Psystar to rip-off AAPL's intellectual property!

I would like to Piss on AAPL's intellectual property

[Daniel001]

Psystar's claims that Macintosh computers are a self-contained market were just stupid. This whole case is simply about an Apple hater who wants to poke them in the eye; it'll serve him right when he has to pay the bill for this idiocy.

[eAi]

So, now, if Apple wins, Psystar will probably cease to exist and quite probably pay Apple damages. If Apple loses, Psystar continue as is. A better situation than before where Apple losing could have forced them to license OS X to other OEMs...

[hotdiggyd]

So if I am reading this correctly, does this mean that this judge has officially slotted OS X as a competitor for other operating systems, including Windows? If so, doesn't this blow any current and future suits concerning Microsoft monopolies out the ... window? (sorry for the unintentional bad pun)

[melgross]

Every legal expert who has written about this expected this result. The only idea they gave for a possible allowance for trial was that the judge might have wanted to be conservative. But the outcome on this was fairly obvious.

[melgross]

Originally Posted by hotdiggyd

So if I am reading this correctly, does this mean that this judge has officially slotted OS X as a competitor for other operating systems, including Windows? If so, doesn't this blow any current and future suits concerning Microsoft monopolies out the ... window? (sorry for the unintentional bad pun)

Yes to the first.No, it doesn't to the second. MS is a monopoly. Even most monopolies have competition. If Apple's worldwide sales get to 20% or higher, then, maybe that will change.

[SpamSandwich]

Teh Steve: "Boom!"

[dr_lha]

Originally Posted by hotdiggyd

So if I am reading this correctly, does this mean that this judge has officially slotted OS X as a competitor for other operating systems, including Windows? If so, doesn't this blow any current and future suits concerning Microsoft monopolies out the ... window? (sorry for the unintentional bad pun)

I think that ship has sailed a long time ago.

[echosonic]

Originally Posted by offroadering

I would like to Piss on AAPL's intellectual property

So, a copy of OSX is only $129, what's stopping you?

Go buy one and piss on it.

[fraklinc]

Psystar is so f*cked now that is not even funny, this is the part of a case when your own lawyers bankrupt you and then on top of that leave with your wife.

[waffle911]

Brace for the people who argued back and forth when Psystar openly challenged Apple's right to bind its software to its hardware.
Think game consoles. You can't legally run Halo 3 on a PS3. You can't legally run Mac OS X on a PC.
It's simple. If there were ever really a case here, then you'd be able to play any video game on any console. And that's just bad for business. The console is a hardware standard allowing for finite parameters under which a specifically developed game can run, and accounts for the quality of the experience of playing the game by limiting the circumstances the developer needs to account for and so they can focus on optimizing the game's performance for that specific instance. This excludes, of course, games that were rushed out the door to begin with because they were never optimized and likely were designed to share common elements between platforms. Hence, Windows.

[krabbelen]

Originally Posted by hotdiggyd

So if I am reading this correctly, does this mean that this judge has officially slotted OS X as a competitor for other operating systems, including Windows? If so, doesn't this blow any current and future suits concerning Microsoft monopolies out the ... window? (sorry for the unintentional bad pun)

Depends what MS continues to do. I don't think they can change their stripes. Anyway, the suits about MS are a little different than this one -- rather than trying to get in on MS products, people are trying to keep them away.

This suit was about a wholly Apple-owned vertical chain of products -- hardware and software. IN contrast, MS doesn't make PCs; yet MS has been/is guilty of calling the shots about what OSs and software a PC manufacturer can put on its own machines by leveraging their clout and using threats. Further, they are happy to make a loss in a new (for them) market in order to build share, using pressure from their de facto position in their main markets.

They have been sued, fined and vilified with good reason the world over by individuals, companies, educational institutions and whole governments because of what they do with their monopoly position -- abuse it. Its not about having 90 or 85 or even 75 percent of a definable market and a competitor's ability to compete or not compete with that. Apple's not complaining. So, no, I don't see this being relevant to MS cases. Apple isn't trying to get OS X onto PCs anyway; quite the opposite as this makes clear.

Where people may think it has the potential to bite Apple (or Apple users), is where a government or institutional site uses websites and webapps that are Windows only compatible. Can those sites claim that locked-out users chose Apple computers, so that is just too bad? I think it is a short-sited, poor, and discriminatory business choice that should be pointed out at every opportunity; but I suppose that is their prerogative.

[sflocal]

The judge's comments come to no surprise. Apple called Psystar's bluff and can now see sweat rolling down Psystar's forehead.

I really, really hope they use Psystar as a very painful and expensive example of what happens when one attempts to ride on the coattails of other people's work.

I can hear the guillotine being cranked up. Psystar, I really hope they put your head facing the blade so you can watch your pathetic life being snuffed out.

[melgross]

I wonder if they're going to appeal? On appeal, the facts are not in question. They're accepted, it's just the judges opinion that's questioned.

So it doesn't look as though they would have much chance, but you never know, they might appeal anyway.

[brlawyer]

Excellent news that should've arrived even sooner...

It's about time these ripoff criminals and hackers took a lesson. Show no mercy and bury them, Apple. They deserve it, along with all those "customers" that bought their free-riding products at the expense of Apple's R&D and IPR.

[penchanted]

Originally Posted by eAi

So, now, if Apple wins, Psystar will probably cease to exist and quite probably pay Apple damages. If Apple loses, Psystar continue as is. A better situation than before where Apple losing could have forced them to license OS X to other OEMs...

Since Pystar's dismissed counterclaim is also the basis of its defense, I doubt there is much chance of Apple losing their original suit.

[sflocal]

Originally Posted by waffle911

Brace for the people who argued back and forth when Psystar openly challenged Apple's right to bind its software to its hardware.
Think game consoles. You can't legally run Halo 3 on a PS3. You can't legally run Mac OS X on a PC.
It's simple. If there were ever really a case here, then you'd be able to play any video game on any console. And that's just bad for business. The console is a hardware standard allowing for finite parameters under which a specifically developed game can run, and accounts for the quality of the experience of playing the game by limiting the circumstances the developer needs to account for and so they can focus on optimizing the game's performance for that specific instance. This excludes, of course, games that were rushed out the door to begin with because they were never optimized and likely were designed to share common elements between platforms. Hence, Windows.

As an individual owner, if you want to hack Halo to run on a PS3, that is totally okay if you want. But the moment you try to rebrand it and sell it for profit (like what Psystar is doing with OSX), you're breaking the law.

I'm sure you've noticed the WHINERS making the case for Psystar have kept very mum about the other markets like consoles where the OS is tied to the hardware. Apparently those individuals spend far too much time locked up in their parent's basement to show any type of logic with this case.

The only thing that can be hoped for is that those parents will throw the key away and leave the whiners alone doing nothing but fantasizing about the women of Soul Calibur Beach Volleyball. Pity them for they know not what they do.

[minderbinder]

Originally Posted by hotdiggyd

So if I am reading this correctly, does this mean that this judge has officially slotted OS X as a competitor for other operating systems, including Windows? If so, doesn't this blow any current and future suits concerning Microsoft monopolies out the ... window? (sorry for the unintentional bad pun)

Not really. MS is considered a monopoly because they have such high market share, not because no alternatives exist.

[minderbinder]

Glad to hear this result and that it happened sooner rather than later.

I'd like to think that this would shut up the "apple is a monopoly!!!" idiots, but I'm not getting my hopes up. Hope you're enjoying that big fat I Told You So.

[melgross]

Originally Posted by sflocal

As an individual owner, if you want to hack Halo to run on a PS3, that is totally okay if you want. But the moment you try to rebrand it and sell it for profit (like what Psystar is doing with OSX), you're breaking the law.

You're not actually allowed to do that either. Whatever the license says you're allowed to do, you're allowed to do. Whatever it says you're not allowed to do, you're not allowed to do.

If the games you buy don't have something in the license saying that you can't run this on other systems, can't modify it, etc., then you can do so. but if it does say something like that, then you can't.

It doesn't matter if you are doing it for yourself.

[Virgil-TB2]

Originally Posted by melgross

I wonder if they're going to appeal? On appeal, the facts are not in question. They're accepted, it's just the judges opinion that's questioned ...

You are thinking of an appeal of a trial verdict. This is a judge throwing out one sides argument before the trial even begins.

This argument (the countersuit) is bound to the original suit by convention but doesn't derail the trial of the original suit by being disallowed AFAIK. I think the entire original trial has to take place first now and the countersuit, if it's raised again at all, would be a separate legal action after the fact. This is really unlikely to happen though.

Psystar is so persistent, and seems to so believe that it is in the right, that it might amend the countersuit claim by Dec 3rd and make us all wait for the judge to rule on the amended claim, but if that is also thrown out (very very likely), then the trial goes ahead.

[TBell]

Not really for a variety of different reasons. Microsoft is not a party to this litigation. The facts here only apply to the parties in the suit. Also, as someone else here stated a company can have competition and still be considered a monopoly.

Originally Posted by hotdiggyd

So if I am reading this correctly, does this mean that this judge has officially slotted OS X as a competitor for other operating systems, including Windows? If so, doesn't this blow any current and future suits concerning Microsoft monopolies out the ... window? (sorry for the unintentional bad pun)

[TBell]

Why? Psystar got itself into this mess without any help from legal counsel. Lawyers can only work with the facts they have.

Originally Posted by gto65l

Psystar should seriously reconsider their choice in representation.

[mgoodman]

Seriously? I see that you have lots and lots of posts, so obviously you just like to type, but you might want to slow down just a tad and think about what you're saying before doing so.

1) No, monopolies do not generally have competition. That makes no sense.
2) Your comment about Psystar appealing makes even less sense. The judge here found that, as a matter of law, Psystar has no case. There was no trial and hence no facts were yet established. The appeals court, therefore, will be looking at the law, just as this judge did. They will conclude, as this judge did, that Psystar has no claim on which relief can be granted; legally, they lose.

[camroidv27]

I'd like to point out something about the console argument.
Consoles have had in the past specific hardware that made it impossible to run software written for them on the other consoles. I want to see someone try to play Star Fox 64 on a PSOne. The hardware was too different to do so. Look at the Mac before the Intel switch. PowerPC architecture was too different for us to use windows on the macs, and vice versa. OS X 10.3 and prior was impossible to run on an x86 box because the instruction set and how the innards worked was too different. That type of thing makes it real easy to keep your software to yourself. We all know that the same game was released on the different consoles and the different computers. That was the game writer choice to do. Same with software. Apple chose not to write their os for more than one architecture.

Enter Emulators. Most of our consoles can now be emulated, and those from the N64/PSOne era and earlier are emulated well on the x86 architecture. Even a PPC emulator popped up (PearPC). An X86 emulator (which was then bought by MS) VirtualPC. Is it legal to own said emulators? Yes. Software that runs on them is a different issue. I'm sure its not legal to run OS X on PearPC for the same reasons as it isn't on a regular PC. But, it did show it was possible.

Now, most hardware is the same across the board... consoles included. Say what you will about Apple's products being better hardware (At my company, 8/8 Apples had to go in for service! And we treat them well!). They have the same exact internals as a PC. Same graphics card, processors, chipsets, all of it. (Except for the TPM chip and a BIOS) We can prove this by installing Windows natively on the disk. OS X is now written for the Intel arcetecture. The trick is, that people are annoyed that since its the same internals, why can't they run their copy on a basic machine they buy or build, when its the same thing? Pystar, took it too far and re-sold the machines. I won't argue that point. They did wrong against the EULA.

Even in console world, we can run Linux on the PS3 (heck, its even a legal "hack") and the XBox is a basically dumbed down regular PC. (X360 being one with none-other than a PPC chip!) But the differences about the OS and software they can run still lies in the hardware. The decoders and how the machine runs is burnt into chips. These things cannot be copied easily by a standard computer. It can be done. but its very hard to do so. Apple... there's no more hardware boundary. It is the same, just looks a lot prettier.

Glad the judge did what he did... but still a sad day for those who want to do what they want to do with what they paid for.

My mother uses our blender to blend paper... never food. That wasn't its purpose, and the blender wasn't built for paper. If it breaks, she fixes it herself knowing there is no service for using a blender for paper. Same should be for Apple. Use OS X how you want, where you want. But use it incorrectly, and you get no support at all.

Just my thoughts. Have at them.

[quinney]

Originally Posted by Virgil-TB2

Psystar is so persistent, and seems to so believe that it is in the right, that it might amend the countersuit claim by Dec 3rd and make us all wait for the judge to rule on the amended claim, but if that is also thrown out (very very likely), then the trial goes ahead.

I suspect Psystar's legal firm has been performing mainly on a contingency basis. Now that
the foundation for their action has been removed, I wonder if the legal firm will decide to
cut their losses. Amending the countersuit might be throwing good money after bad.
They certainly can't be feeling very optimistic about a lucrative settlement at the moment.

[solipsism]

Originally Posted by camroidv27

Except for the TPM chip and a BIOS

Their were some PPC Macs that had the TPM chips, but I think they were part of a chipset and never used.

Even in console world, we can run Linux on the PS3 (heck, its even a legal "hack") and the XBox is a basically dumbed down regular PC.

But that is Linux running on a console, not the console OS running on generic HW. You can install Windows and Linux on a Mac. Apple even supplies an app to simply the Windows install.

Apple... there's no more hardware boundary. It is the same, just looks a lot prettier.

The boundary is the OS. MS want's to support almost all HW with their OS, while Apple only wants to support a small amount of HW. This makes Apple a boutique vendor, not one trying to be everything to everyone.

Glad the judge did what he did... but still a sad day for those who want to do what they want to do with what they paid for.

You can. Apple has never gone after the OSc86 Project. I've used it myself for tinkering. It's fun, but their were too many quirks to be a suitable replacement. If you were bothered even remotely by the recent unibody MB trackpad issue, then an OSx86 would annoy the crap out of you. Besides the inability for Apple to actually sue someone successfully for making their own Hackintosh, no one was advertising themselves as a reseller of Mac clones. This is a major difference and something that Apple has complete control over in a free market.

Hypothetically speaking, what do you think would happen if Psystar won? Since Apple prices OS X as upgrades for those who have previously purchased a Mac they would probably raise the price to Windows Vista Ultimate Full Install prices. You can assume full install, instead of the Windows upgrade price because all OS X upgrade discs can be used for fresh installs on formatted Macs. Would having to pay $500 for OS X would now make Psystar's PCs even more overpriced than they are for the overall HW you get, a consumer would have to pay considerably more to upgrade their Macs, and Apple would lose more upgrade sales to piracy and probably have start using an authentication key å la Windows, which may hurt their brand in the long run but they won't have a choice if they are forced to be the only socialized OS in the free world. No one wins here, not even Psystar.

[sflocal]

Originally Posted by melgross

You're not actually allowed to do that either. Whatever the license says you're allowed to do, you're allowed to do. Whatever it says you're not allowed to do, you're not allowed to do.

If the games you buy don't have something in the license saying that you can't run this on other systems, can't modify it, etc., then you can do so. but if it does say something like that, then you can't.

It doesn't matter if you are doing it for yourself.

I totally agree with you. My point was that what you do in the privacy of your own home is no one's business but your own. It won't go beyond that. If I wanted to smoke pot in my own house, legal or not I would do it since it does not hurt anyone else and no one else would know. I could care less about the licensing.

[Mathue]

Originally Posted by hotdiggyd

So if I am reading this correctly, does this mean that this judge has officially slotted OS X as a competitor for other operating systems, including Windows? If so, doesn't this blow any current and future suits concerning Microsoft monopolies out the ... window? (sorry for the unintentional bad pun)

No, Microsoft at the time (I don't know if they still do) was using its market size and product control to push out competitors. Anywhere from the 'DrDOS' days to Netscape and so on, they were engaged in physically and financially making it so that users could not perform certain tasks 'reliably' or 'at all' UNLESS they used Microsoft products. It would be difficult to claim that Apple has a monopoly in the computer market just because it's OS is unique. You can certainly write an email, surf the web and even edit video on Windows, abet with less grace, but that's hardly a monopoly issue.

One might more easily be able to pin monopoly on the iPods, but iPods play many formats and don't require you purchase your music through iTunes. It's more convenient perhaps than going out and getting a CD, but Apple doesn't make it so you can't rip your CDs to the iPod. Nor do they tie the iPod to just Apple Computers, you can use them just as well with Windows, unlike lets say, the Zune.

[lkrupp]

Originally Posted by melgross

Every legal expert who has written about this expected this result. The only idea they gave for a possible allowance for trial was that the judge might have wanted to be conservative. But the outcome on this was fairly obvious.

Well the only "experts" we need to concern ourselves with right now are the screwballs who posted here about how Psystar had a case and how Apple was somehow a monopoly in their own market and how they hoped Psystar took Apple down so they could install OS X on any old piece of crap hardware and demand Apple support it.

Any bets on whether any of them will show up in this thread? Oh I hope so. I hope so.

[BuzDots]

Originally Posted by fraklinc

Psystar is so f*cked now that is not even funny, this is the part of a case when your own lawyers bankrupt you and then on top of that leave with your wife.

Naw, I think this is the one where they use the wife and then leave them with ya!

I bet the folks at Psystar have a real bad case of the trots this evening.

[lightstriker]

Originally Posted by hotdiggyd

So if I am reading this correctly, does this mean that this judge has officially slotted OS X as a competitor for other operating systems, including Windows? If so, doesn't this blow any current and future suits concerning Microsoft monopolies out the ... window? (sorry for the unintentional bad pun)

OSX and Windows has always been in competition. This is not something for the Judge to decide. This decision is merely reinforcing that OSX, Windows, Linux, BeOS, AmigaOS are all in the desktop computer market. MS doesn"t have to license Windows to Dell or anybody. Apple can ask for a Windows license for its hardware(if Apple kills OSX). Apple can license OSX to Psystar if it wanted to do so.