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

Posted:
in General Discussion edited January 2014
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.
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Comments

  • Reply 1 of 68
    mj webmj web Posts: 918member
    That'll teach piss-ant Psystar to rip-off AAPL's intellectual property!
  • Reply 2 of 68
    foo2foo2 Posts: 1,077member
    Oh, my.



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





  • Reply 3 of 68
    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.
  • Reply 4 of 68
    Quote:
    Originally Posted by Bowser View Post


    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....
  • Reply 5 of 68
    Quote:
    Originally Posted by AppleInsider View Post


    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.
  • Reply 6 of 68
    neilmneilm Posts: 587member
    Quote:
    Originally Posted by gto65l View Post


    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.
  • Reply 7 of 68
    Quote:
    Originally Posted by MJ Web View Post


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



    I would like to Piss on AAPL's intellectual property
  • Reply 8 of 68
    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.
  • Reply 9 of 68
    eaieai Posts: 417member
    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...
  • Reply 10 of 68
    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)
  • Reply 11 of 68
    melgrossmelgross Posts: 31,471member
    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.
  • Reply 12 of 68
    melgrossmelgross Posts: 31,471member
    Quote:
    Originally Posted by hotdiggyd View Post


    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.
  • Reply 13 of 68
    Teh Steve: "Boom!"
  • Reply 14 of 68
    dr_lhadr_lha Posts: 236member
    Quote:
    Originally Posted by hotdiggyd View Post


    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.
  • Reply 15 of 68
    Quote:
    Originally Posted by offroadering View Post


    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.
  • Reply 16 of 68
    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.
  • Reply 17 of 68
    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.
  • Reply 18 of 68
    Quote:
    Originally Posted by hotdiggyd View Post


    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.
  • Reply 19 of 68
    sflocalsflocal Posts: 4,495member
    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.
  • Reply 20 of 68
    melgrossmelgross Posts: 31,471member
    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.
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