Apple v. Psystar

Citation
Apple, Inc. v. Psystar Corp., 673 F.Supp.2d 931 (N.D. Cal. 2009) (full-text).

Overview
Plaintiff Apple, Inc. (Apple) launched its Macintosh computer in 1984 and its Mac OS X operating system in 2001. Apple has manufactured an exclusive line of personal computers, including the Mac Pro, iMac, Mac mini, MacBook, MacBook Air and MacBook Pro. Mac computers have been sold with Mac OS X preinstalled. Mac OS X has also been sold as a DVD so customers can upgrade their Mac computers to a more recent version of the operating system.

Defendant Psystar Corporation (Psystar) made a line of computers called Open Computers (formally known as Open Mac and OpenPro). Psystar modified Mac OS X to run on its computers and sold them to the public. Psystar first bought a copy of Mac OS X and then installed it on an Apple Mac mini. Next, Psystar copied Mac OS X from the Mac mini onto a non-Apple computer. This non-Apple computer was used as an “imaging station.” Once on the imaging station, Mac OS X was modified. Psystar then replaced the Mac OS X “bootloader.” The bootloader runs when a computer first comes on and locates and loads portions of the operating system into random access memory. Without a bootloader, Mac OS X would not operate. Psystar also disabled and/or removed Mac OS X kernel extension files and replaced them with other kernel extension files. Psystar's modifications enabled Mac OS X to run on non-Apple computers. The modified copy became the “master copy” that was used for mass reproduction and installation onto other Psystar computers.

Apple also alleges that every time Psystar turned on Psystar computers running Mac OS X, another copy was made in random access memory.

Trial Court Proceedings
Apple brought a copyright infringement action against Psystar, alleging that the Psystar's reproduction, modification, and distribution of Apple’s operating system software (Mac OS X) on non-Apple computers constituted copyright infringement and a violation of the Digital Millennium Copyright Act. The parties filed cross-motions for summary judgment.

Customers were precluded from utilizing Apple’s software on any computer hardware system that was not a computer system of Apple Inc. Psystar waived any defense because neither its answer nor interrogatory responses referred to that defense. Further, Psystar’s unauthorized copying of the software precluded a fair use defense. Psystar also was not protected by the first sale doctrine because that defense did not apply to unauthorized copies. The evidence also showed as a matter of law that Psystar violated the owner's exclusive right to create derivative works because the inclusion of the copyrighted software with additions and modifications made Psystar Corp's product an infringing derivative work. Apple also showed that Psystar was liable for contributory infringement through its sale of unauthorized copies of the software to the public. The trial court also held that there was no copyright misuse because Apple simply prohibited purchasers from using its software on Psystar’s products.

The trial court granted Apple’s motion for summary judgment and denied Psystar’s motion. Apple’s following claims remained for trial: breach of contract, induced breach of contract, trademark infringement, trademark dilution; trade dress infringement, state unfair competition, and common law unfair competition.

In sum, the trial court held that Psystar’s production process and hard drive imaging did not constitute fair use of manufacturer's operating system, Psystar’s competitor infringed manufacturer's exclusive right to create derivative works, Apple’s licensing agreement was not unduly restrictive, and Psystar’s use of decryption software to obtain access to operating system violated Digital Millennium Copyright Act (DMCA).