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Apple v. Psystar Hearing is Today; Apple Allowed to Reply to Psystar's Supplemental Briefing, Despite Psystar Opposition
Friday, September 04 2009 @ 07:25 AM EDT

The hearing is today in the Apple v. Psystar discovery dispute and status hearing.

You can tell what they will be talking about even if you can't be there in person by reading all the filings. Apple has been given permission [PDF] to file its Reply Memorandum [PDF] to Psystar's Supplemental Briefing on the discovery issues, despite opposition from Psystar [PDF]. If you recall, Apple told the court that Psystar raised new arguments for the first time in that supplemental briefing, and Apple wanted a chance to reply, and they have been given permission to do that. And the judge decided [PDF], due to a cancellation, to open today's hearing and status conference an hour earlier, at 10 AM.

Apple in its Reply Memorandum listed two -- or three depending on how you group them -- new arguments Psystar raised in its supplemental briefing, but Psystar chose to respond to only one of them in its opposition, so of course Apple prevailed on this motion. I suspect Psystar knew Apple would be given an opportunity to respond, which is why it didn't answer all the points. What Psystar's attorney does respond to is the Nesson confidentiality issue regarding his and Psystar's emails showing up on Charles Nesson's blog, saying he only discussed legal issues with him, which he has a right to do, he writes, and says he didn't violate the protective order and won't. But that left Apple with the last word on the question of whether Apple's profit margins are relevant, and that's what today's hearing is principally about.

Here are all the documents, and as far as I can tell, #124 and #122 are the same document:

08/19/2009 - 117 - FILED UNDER SEAL Letter Brief dated 08/18/09 filed by Psystar Corporation. (sis, COURT STAFF) (Filed on 8/19/2009) (Entered: 09/02/2009)

09/02/2009 - 119 - Memorandum in Opposition re 118 MOTION for Leave to File APPLE INC.'S REPLY TO PSYSTAR CORPORATION'S SUPPLEMENTAL BRIEFING ON THE RELEVANCE OF TOPIC 3 TESTIMONY, DEFENDANT'S MOTION TO COMPEL AND PLAINTIFF'S CROSS-MOTION FOR A PROTECTIVE ORDER filed byPsystar Corporation. (Attachments: # 1 Exhibit Blog Post)(Camara, Kiwi) (Filed on 9/2/2009) (Entered: 09/02/2009)

08/28/2009 - 120 - FILED UNDER SEAL-EXHIBIT B re 84 Declaration in Support, filed by Apple Inc.(a California corporation). (Related document(s) 84 ) (sis, COURT STAFF) (Filed on 8/28/2009) (Entered: 09/03/2009)

09/03/2009 - 121 - ORDER GRANTING REQUEST FOR AN ORDER PERMITTING APPLE TO FILE REPLY TO PSYSTAR'S SUPPLEMENTAL BRIEFING by Judge Alsup [re 118 Motion for Leave to File]. (whalc1, COURT STAFF) (Filed on 9/3/2009) (Entered: 09/03/2009)

09/03/2009 - 122 - Reply Memorandum to Psystar Corporation's Supplemental Briefing on the Relevance of Topic 3 Testimony, Defendant's Motion to Compel and Plaintiff's Cross-Motion for a Protective Order filed by Apple Inc.. (Attachments: # 1 Exhibit A)(Gilliland, James) (Filed on 9/3/2009) (Entered: 09/03/2009)

09/03/2009 - 123 - AMENDED ORDER RE DEFENDANTS LETTER OF 8/31/2009 RE DISCOVERY DISPUTE: STATUS CONFERENCE NOW SET FOR 10:00 A.M., SEPTEMBER 4, 2009. HEARING RE DISCOVERY DISPUTE FOLLOWS CONFERENCE. Signed by Judge William Alsup on 9/3/2009. (whasec, COURT STAFF) (Filed on 9/3/2009) (Entered: 09/03/2009)

09/03/2009 - 124 - Reply Memorandum APPLE INC.'S REPLY TO PSYSTAR CORPORATION'S SUPPLEMENTAL BRIEFING ON THE RELEVANCE OF TOPIC 3 TESTIMONY, DEFENDANT'S MOTION TO COMPEL, AND PLAINTIFF'S CROSS-MOTION FOR A PROTECTIVE ORDER filed byApple Inc.. (Attachments: # 1 Exhibit A)(Gilliland, James) (Filed on 9/3/2009) (Entered: 09/03/2009)

Psystar's attorney opens his Memorandum in Opposition to Apple's motion for leave to file a reply like this:
The second supplemental brief that Apple seeks leave to file contributes only one thing worth responding to: an entirely unprofessional personal attack on lead counsel for Psystar, K.A.D. Camara of Camara & Sibley LLP — that is, a personal attack on me. Apple accuses me of disclosing information in violation of the protective order to Professor Charles R. Nesson of Harvard. I have done no such thing. Neither has anyone at my firm or at Psystar. If anyone at our firm or at Psystar ever violated the protective order, we would, of course, be subject to contempt proceedings in this Court. The accusation that I have somehow violated the protective order is nothing more than an attempt to distract this Court from what is at issue in this round of supplemental briefing — namely, Apple’s complete failure to provide testimony from a corporate representative on damages.
He goes on to explain his relationship with Professor Charles Nesson -- he was his professor -- and says that while he did discuss with him some legal issues, like first sale, he "did not disclose to him or to anyone else any information covered by the protective order in this case, such as the substance of deposition testimony designated confidential or the contents of any document designated confidential." He shows the blog post again as an exhibit, and tries to explain it, but there it is. Psystar has a right, a Constitutional right, to try to clear up in the media some negativity about this case, he adds:
Apple has attempted to draw a veil of secrecy over this litigation and over the conduct at issue in this litigation that, in my view, goes well beyond what is warranted. That is why so many documents of interest to the computer industry have had to be filed under seal and made available only in heavily redacted form, despite the widespread interest in the case among members of the public and the media that a simple Google search reveals.

There is no secret about the fact that since our firm’s engagement, a part of Psystar’s strategy has been to engage with the press and attempt to clear up some of the very negative and, in our view, mistaken coverage that has appeared about Psystar’s business and this litigation. Engaging with the press in this way is Psystar’s right, both under the protective order and as a constitutional matter. Neither Psystar nor I plan to violate the protective order; neither Psystar nor I have violated the protective order; and Apple’s suggestion to the contrary is unprofessional in the extreme.

Take a look at all the filings in this case. Who is redacting more heavily? But deeper, which side has something to lose by public leaks of information? Is Psystar's reputation equivalent to the decades of brand building by Apple? It's just not the same at all, in my eyes, so I suspect this is more a strategic argument, to paint Apple as a control freak. Lawyers do what they do. Judges have seen it all before, though.

So, the judge allowed Apple to file its reply. We have yet to see his decision about a further protective order, which I think will be one topic at today's status conference. If you raise a new issue in a filing that normally doesn't allow the other side to respond, the other side can ask for an opportunity to do so, and that's what happened. The judge had asked for supplemental briefs from both sides, so Apple filed its brief, then Psystar did, but then the new arguments showed up, so Apple got a chance to respond just to those new arguments. Apple in its opening to its reply lists three issues it wanted to respond to, which I'll highlight:

Psystar Corporation (“Psystar”) contends for the first time in its supplemental briefing that Apple’s product line profit margins are relevant to Apple’s trademark infringement claim, the injunctive relief that Apple is seeking and to Psystar’s copyright misuse counterclaim. Despite Psystar’s assertions to the contrary, product line profits margins are not relevant to any of the claims or defenses in this case. Moreover, Psystar and its counsel have affirmatively stated their intent to involve “the public” in this litigation, and have even chosen to disclose otherwise privileged information. Thus, Apple’s concerns about protecting the confidentiality of its most sensitive financial information are well-founded.
Psystar's opening states that there is only one thing Apple raises worth responding to, the "attack" on lead counsel. But that leaves Apple's other issue unanswered, the argument on whether or not Apple’s product line profit margins are relevant to Apple’s claims, and that's the heart of the discovery dispute.

Probably Psystar knew Apple would be allowed to file its reply anyway, no matter what it said. It's a matter of simple fairness, which is what the courts are supposed to be about, to let a party respond to any substantive new issue or argument. You are not supposed to raise new arguments in such a filing, so if you do it, you know the consequence will likely be that the other side will get another chance to reply. That's another chance to persuade the judge, so it's costly.

And the judge has also allocated more time to the status conference and discovery dispute on September 4th, due to a cancellation, after he moved up the start time to 10 AM, with the lawyers meeting at 9, which I suspect will not be either side's favorite part of the day:

The status conference set for SEPTEMBER 4, 2009, is moved up to 10:00 a.m. The Court shall hear defendant’s discovery dispute following the status conference. Plaintiff’s response is due by 9:00 a.m. on September 4, 2009. An evidentiary hearing in another matter that had been set for 9:00 a.m. has now been vacated. This will allow the Court more time to hear the parties’ discovery dispute. The parties need to further meet-and-confer in the Court’s jury room at 9:00 a.m. that same day. Only those counsel who participate in the meet-and-confer in the jury room may argue at the discovery hearing.
So, today. 10 AM. I really wish I could be there. Maybe one of the lawyers will post an account on his blog.

Kidding. Relax. Just kidding. Here's the Psystar Opposition as text, to give you a taste of the flavor of the day, minus the header, which is always the same:

***************************************

CAMARA & SIBLEY LLP
K.A.D. CAMARA (admitted pro hac vice)
[address, phone, fax, email]

WELKER & ROSARIO LLP
DAVID VERNON WELKER (SBN 252658)
[address, phone, fax, email]

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

APPLE INC., a California corporation,

Plaintiff,

v.

PSYSTAR CORPORATION,

Defendants.

_______
AND RELATED COUNTERCLAIMS

_______________

CASE NO. CV-08-03251-WHA

PSYSTAR’S RESPONSE IN
OPPOSITION TO APPLE’S
ADMINISTRATIVE MOTION
SEEKING LEAVE OF COURT TO
FILE A REPLY TO PSYSTAR
CORPORATION’S
SUPPLEMENTAL BRIEFING ON
THE RELEVANCE OF TOPIC 3
TESTIMONY

_____________________

RESPONSE

The second supplemental brief that Apple seeks leave to file contributes only one thing worth responding to: an entirely unprofessional personal attack on lead counsel for Psystar, K.A.D. Camara of Camara & Sibley LLP — that is, a personal attack on me. Apple accuses me of disclosing information in violation of the protective order to Professor Charles R. Nesson of Harvard. I have done no such thing. Neither has anyone at my firm or at Psystar. If anyone at our firm or at Psystar ever violated the protective order, we would, of course, be subject to contempt proceedings in this Court. The accusation that I have somehow violated the protective order is nothing more than an attempt to distract this Court from what is at issue in this round of supplemental briefing — namely,

1

Apple’s complete failure to provide testimony from a corporate representative on damages.

Professor Nesson is the William F. Weld Professor of Law at Harvard Law School. He was my torts professor at Harvard, where he also teaches classes on evidence and the American jury, and is now co-counsel with me in several ongoing cases against the recording industry and Google. We are friends and colleagues. Professor Nesson has particular expertise in the public aspects of litigating high-profile cases, having been counsel, for example, in the defense of Daniel Ellsberg in connection with the release of the Pentagon Papers and in the toxic-tort litigation later described in the book and movie A Civil Action. I told Professor Nesson about our engagement in Apple v. Psystar, just as I have told him about many other cases on which our firm is working. I described for him the allegations leveled by Apple against Psystar and some of the legal issues involved in this case, including important legal questions about the first-sale doctrine, § 117 of the Copyright Act, and the enforceability of the Apple EULA. I did not disclose to him or to anyone else any information covered by the protective order in this case, such as the substance of deposition testimony designated confidential or the contents of any document designated confidential.

Apple’s only evidence that I violated the protective order is a post on Professor Nesson’s blog. A true and correct copy of this blog post is attached as Exhibit A. The blog post consists of an email exchange between me and Rudy Pedraza. In the first message, Mr. Pedraza suggests having a public event showcasing Psystar’s products at the same time as Apple’s then-upcoming inspection of Psystar’s premises. I replied to Mr. Pedraza’s email and copied Professor Nesson on my reply. In my reply, I describe certain aspects of our public-relations strategy in this case: how we should “start explaining the dispositive motions arguments to the world — first sale and 117 non-infringement, nominative use of trademarks, preemption, and copyright misuse”; and how I think that the idea of the public exhibition is good, but that “[w]e need to make sure that our circus day doesn’t vary in

2

any material way from how we do business ordinarily.” I also describe how we are negotiating with Apple over deposition dates and suggest that “[a] nice follow-up post [to the Psystar blog] might be the roster of Apple people being deposed — we can invite the world to send us questions.” Finally, I say that I am copying Professor Nesson “who I told about the case, who likes our side and story, and who is expert in public litigation.”

Nothing in this email exchange is protected by the protective order in this case. Even the identity of the deponents, which was later published on Psystar’s blog, is not protected by the protective order in this case. With respect to depositions, only the substance of the witnesses’ testimony (and summaries of it) is protected by the protective order. I disclosed nothing like this to Professor Nesson or to anyone else. And, of course, I am permitted to describe to Professor Nesson or to anyone else the legal issues involved in this case and the nature of the allegations leveled by Apple against Psystar — information that is available from the publicly filed pleadings and motions.

Apple has attempted to draw a veil of secrecy over this litigation and over the conduct at issue in this litigation that, in my view, goes well beyond what is warranted. That is why so many documents of interest to the computer industry have had to be filed under seal and made available only in heavily redacted form, despite the widespread interest in the case among members of the public and the media that a simple Google search reveals. There is no secret about the fact that since our firm’s engagement, a part of Psystar’s strategy has been to engage with the press and attempt to clear up some of the very negative and, in our view, mistaken coverage that has appeared about Psystar’s business and this litigation. Engaging with the press in this way is Psystar’s right, both under the protective order and as a constitutional matter. Neither Psystar nor I plan to violate the protective order; neither Psystar nor I have violated the protective order; and Apple’s suggestion to the contrary is unprofessional in the extreme.

3

Dated: September 2, 2009

CAMARA & SIBLEY LLP

By: _/s__ K. A. D. Camara
K.A.D. CAMARA

Attorney for Defendant / Counterclaimant
Psystar Corporation

4


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