Psystar just got what's coming to them in the California case. Here's the order [PDF]. It's a total massacre. Psystar's first-sale defense went down in flames. Apple's motion for summary judgment on copyright infringement and DMCA violation is granted. Apple prevailed also on its motion to seal.
Psystar's motion for summary judgment on trademark infringement and trade dress is denied. So is its illusory motion for copyright misuse.
There are still issues remaining for trial, despite Psystar's attempt to present everything now as being moot. Here's what's left to be decided at trial: Apple's allegations of breach of contract; induced breach of contract, trademark infringement; trademark dilution; trade dress infringement; and state unfair competition under California Business and Professions Code § 17200; and common law unfair competition. See anything on that list that will be helpful to Psystar?
So that means damages ahead for Psystar on the copyright issues just decided on summary judgment, at a minimum. The court asked for briefs on that subject. In short, Psystar is toast. Psystar's only hope now is Florida, and frankly I wouldn't bet the house on that one. Judges notice if you were just found guilty of a similar cause of action in another state.
You're surprised? I told you, I told you, I told you. So, to those who feel crushed at the moment, there could be an appeal, I suppose. And if you want freedom for your code, you certainly can find it on Planet Earth. Look in the right direction. You'll be happy you did, because you can hack away to your heart's content, and it's perfectly legal. The court's message is clear: EULAs mean what they say; if you don't want to abide by its license, leave Apple's stuff alone.
We have the order for you as text.
On the first sale defense, you'll find it in the section on distribution right and Section 109:
Apple contends that Psystar has violated its distribution right by offering and selling Mac OS X on Psystar computers to the public. Psystar admits that it has distributed Mac OS X (Chung Exh. 17 at 4). Catch that? Even if Psystar were the lawful owner of the copy, it still can't do what it did. The court quotes from Microsoft Corp. v. Software Wholesale Club, Inc.: "the first-sale doctrine does not apply to an admittedly counterfeit unit". So, no, you can't buy a copy and use it to go into a counterfeiting business, in effect. Terekhov's theory has bitten the dust and then had to eat some. Just like Daniel Wallace's anti-GPL theory did. Whoever is relying on their legal theories might want to buy a vowel and try to figure this puzzle out.
But Psystar responds that its conduct is protected by the Section 109 first-sale doctrine. Section 109 provides that "the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord." 17 U.S.C. 109. This provision is a limitation on the distribution right. It applies only to an owner of a copy.
The parties spill much ink on whether Psystar was the owner or a licensee of the copy (i.e., the tangible copy) of Mac OS X that it purchased. Even assuming arguendo that Psystar was the owner of a copy, the first-sale defense fails here. Section 109 provides immunity only when copies are "lawfully made." The copies at issue here were not lawfully manufactured with the authorization of the copyright owner. As stated, Psystar made an unauthorized copy of Mac OS X from a Mac mini that was placed onto an "imaging station" and then used a "master copy" to make many more unauthorized copies that were installed on individual Psystar computers. The first-sale defense does not apply to those unauthorized copies. See Microsoft Corp. v. Software Wholesale Club, Inc., 129 F. Supp. 2d 995, 1006 (S.D. Tex. 2000) ("the first-sale doctrine does not apply to an admittedly counterfeit unit"); see also 2-8 NIMMER ON COPYRIGHT § 8.12 ("if the manufacture of a copy or phonorecord constitutes an infringement of the reproduction or adaptation right, its distribution will infringe the distribution right, even if this is done by the owner of such copy or phonorecord").
I know. They'll say, but, but, but ... what if they hadn't used the master and just used each copy, then would it work? Sons, why do you think Psystar used the master copy? Because it's a business, and in a business, efficiency is money. That's why businesses set themselves up, to make money. The whole world is not with you on a holy war to destroy EULAs and the GPL. Even this rinkydink business wanted to make money. Theoreticals belong on message boards, not in business and definitely not in courtrooms, and even on message boards, everyone told you for years that this wouldn't work out if someone tried it. It's been tried. It didn't work out.
And to those who argue that all that matters is that open source is a better way to develop code, let this case be a warning message. Apple makes fabulous code. Of course, the BSD community did a lot of it for them, but Apple makes it all just work for end users, and they do that beautifully. So no one can argue that for end users it is not fabulous code. It is.
So here is my question: is that enough?
Or isn't the message of this case that what you really want with your fabulous code is freedom for the code? If you answer yes, I want freedom to do what I want with code on my home computer, then why use proprietary code? Proprietary vendors are happy to sell you the best code in the world, if they have it. But they won't sell you freedom to use it any way you want. That's not the business they are in.
So, if freedom matters to you, don't sell out the goal of a completely free operating system, without any proprietary blobs at all. There is a purpose to that goal, because proprietary blobs mean restrictions on use. That is a given. There are other negatives, but that one is the one this case highlights. So work for drivers that are not proprietary. Stay away from code that you believe has potential patent infringement claims. Why? Because a short-term seeming advantage can block the end result you want. It will provide a Brand X solution that takes you on a detour away from your goal.
So when folks tell you that all that matters is that the code be open source or that end users should have the right to put proprietary code together with free and open source code if they want to, or that partnering with Microsoft will work out well, or that what matters is that end users use more free software by using proprietary-free mixtures, ask yourself, is that really true? No matter who says it, is it true? Look at the Apple v. Psystar case. Freedom matters. Some things are just obvious.
Use what you want, but think it through more deeply than just thinking about what you want this minute or what's more convenient. Why do you think Stallman started trying to create Free Software? Because he knew how to fix a printer but the license wouldn't let him. He already saw what you are seeing with this Psystar case. Proprietary means restrictions on use. It does.
Here's the docket; the order is the final one on the list:
Update: When Psystar began talking to the media by means of its first law firm, Carr & Ferrell, this is what then lead counsel for Psystar, Colby Springer, said at a press conference announcing that Psystar would defend itself with antitrust counterclaims:
11/13/2009 - 207 - ORDER GRANTING REQUEST TO SEAL PORTIONS OF APPLE'S MOTION FOR SUMMARY JUDGMENT by Judge Alsup (re 178 Motion to Seal). (whalc1, COURT STAFF) (Filed on 11/13/2009) (Entered: 11/13/2009)
11/13/2009 - 208 - ORDER GRANTING REQUEST TO SEAL PSYSTAR'S OPPOSITION TO APPLE'S MOTION TO SEAL by Judge Alsup (re 186 Motion to Seal). (whalc1, COURT STAFF) (Filed on 11/13/2009) (Entered: 11/13/2009)
11/13/2009 - 209 - ORDER GRANTING REQUEST TO SEAL PORTIONS OF APPLE'S OPPOSITION TO PSYSTAR'S MOTION FOR SUMMARY JUDGMENT by Judge Alsup (re 190 Motion to Seal Document). (whalc1, COURT STAFF) (Filed on 11/13/2009) (Entered: 11/13/2009)
11/13/2009 - 210 - ORDER GRANTING REQUEST TO FILE UNDER SEAL PSYSTAR'S RESPONSE TO APPLE'S MOTION FOR SUMMARY JUDGMENT by Judge Alsup (re 193 Motion to Seal). (whalc1, COURT STAFF) (Filed on 11/13/2009) (Entered: 11/13/2009)
11/13/2009 - 211 - ORDER GRANTING REQUEST TO FILE UNDER SEAL PORTIONS OF APPLE'S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT by Judge Alsup (re 199 Motion to Seal). (whalc1, COURT STAFF) (Filed on 11/13/2009) (Entered: 11/13/2009)
11/13/2009 - 212 - ORDER GRANTING REQUEST TO SEAL PSYSTAR'S MOTION FOR ADMINISTRATIVE ACTION by Judge Alsup (re 203 Motion to Seal). (whalc1, COURT STAFF) (Filed on 11/13/2009) (Entered: 11/13/2009)
11/13/2009 - 213 - ORDER GRANTING REQUEST TO FILE UNDER SEAL PORTIONS OF PSYSTAR'S REPLY BRIEF by Judge Alsup (re 201 Motion to Seal). (whalc1, COURT STAFF) (Filed on 11/13/2009) (Entered: 11/13/2009)
11/13/2009 - 214 - ORDER RE CROSS MOTIONS FOR SUMMARY JUDGMENT by Judge Alsup (re 181 Motion for Summary Judgment and 182 Motion for Summary Judgment). (whalc1, COURT STAFF) (Filed on 11/13/2009) (Entered: 11/13/2009)
Springer took time to address both claims directly. He noted that Psystar does not make copies of the Mac OS to install on its machines. In fact, every copy installed is an individually purchased copy of the operating system from Apple or one of its authorized resellers. "There's no pirating going on," he responded. Was that true? Compare his words with what the judge wrote, that Psystar made modifications and that it certainly did not buy a copy of MacOSX for each machine. In fact, it was using a master.
On claims of code modification, Springer said that the company had not made any modifications to the operating system. Any techniques applied to make Mac OS run on Psystar, he said, can be found in already available, open source software.
Next question: Would the law firm know it was not true, as discovery eventually demonstrated to the judge? I don't know. But Psystar knew. They were the ones doing both things that Springer claimed they were not.
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
APPLE, INC., a California corporation,
PSYSTAR CORPORATION, a Florida corporation,
No. C 08-03251 WHA
ORDER RE CROSS MOTIONS
FOR SUMMARY JUDGMENT
AND RELATED COUNTERCLAIMS.
In this copyright-infringement action, plaintiff Apple, Inc. and
defendant Psystar Corporation have filed cross motions for summary
judgment. For the following reasons, Apple's motion is
GRANTED and Psystar's motion is DENIED.
Plaintiff Apple Inc. 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 another
version of the operating system.
Mac OS X on both Mac computers and the DVD are covered by
software license agreements that provided that the software is
"licensed, not sold to [the user] by Apple Inc. ("Apple") for use
only under the terms of this License" (Chung Exh. 26 at ¶ 1).
Apple's license agreements restricted the use of Mac OS X to Apple
computers, and specifically prohibited customers from installing
the operating system on non-Apple computers. The license agreement
stated (id. at ¶ 2):
2. Permitted License Uses and Restrictions.
A. Single Use. This license allows you to install, use
and run (1) copy of the Apple Software on a single Apple-labeled
computer at a time. You agree not to install, use or run the Apple
Software on any non-Apple-Labeled computer or enable another to do
* * *
C. You may make one copy of the Apple Software (excluding the
Boot ROM code and other Apple firmware that is embedded or
otherwise contained in Apple-labeled hardware) in machine-readable
form for backup purposes only . . . . Apple Boot ROM code and
firmware is provided only for use on Apple-labeled hardware and you
many not copy, modify or redistribute the Apple Boot ROM code or
firmware, or any portions thereof.
* * *
F. Except as and only to the extent permitted by applicable
licensing terms governing use of the Open Sourced Components, or by
applicable law, you may not copy, decompile, reverse engineer,
disassemble, modify or create derivative works of the Apple
Software or any part thereof.
It also restricted redistribution and modifications to the
software (id. at ¶ 3):
3. Transfer. You may not rent, lease, lend, redistribute,
or sublicense the Apple Software. Subject to the restrictions set
forth below, you may, however make a one-time permanent transfer of
all of your license rights to the Apple Software (in its original
form as provided by Apple) to another party, provided that: (a) the
transfer must include all of the Apple Software, including all its
component parts (excluding Apple Boot ROM code and firmware),
original media, printed materials and this License; (b) you do not
retain any copies of the Apple Software, full or partial, including
copies stored on a computer or other storage device; and (c) the
party receiving the Apple Software reads and agrees to accept the
terms and conditions of this License. You may not rent, lease,
redistribute, sublicense or transfer any Apple Software that has
been modified or replaced under Section 2D above.
In brief, customers were contractually precluded from utilizing
Mac OS X on any computer hardware system that was not an Apple
Besides the license agreement, Apple has obtained three
copyright registrations for Mac OS X. It has used lock-and-key
technological measures to prevent Mac OS X from operating on
non-Apple computers. This involved the use of a "kernel" extension,
which is software that is executed and becomes part of the
operating system on an Apple computer. The kernel extension would
communicate with other kernel extensions to locate the decryption
keys in the hardware, which then would unlock the encrypted
Defendant Psystar Corporation has made a line of computers
called Open Computers (formally known as Open Mac and OpenPro).
Psystar has modified Mac OS X to run on its computers and has sold
them to the public. The following briefly describes the conduct at
issue. 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 then another copy was made in random access
Apple contends that Psystar's reproduction, modification, and
distribution of Mac OS X on non-Apple computers constituted
copyright infringement under the Copyright Act and a violation of
the Digital Millennium Copyright Act. Psystar asserts a number of
defenses. Both parties now move for summary judgment.
1. LEGAL STANDARD.
Summary judgment must be granted under FRCP 56 when "the
pleadings, the discovery and disclosure materials on file, and any
affidavits show that there is no genuine issue as to any material
fact and that the movant is entitled to judgment as a matter of
law." A district court must determine, viewing the evidence in the
light most favorable to the nonmoving party, whether there is any
genuine issue of material fact. Giles v. General Motors
Acceptance Corp., 494 F.3d 865, 872 (9th Cir. 2007). A genuine
issue of fact is one that could reasonably be resolved, based on
the factual record, in favor of either party. A dispute is
"material" only if it could affect the outcome of the suit under
the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248—49 (1986).
2. COPYRIGHT INFRINGEMENT.
Apple contends that Psystar is liable for copyright
infringement. "Plaintiffs must satisfy two requirements to present
a prima facie case of direct [copyright] infringement: (1) they
must show ownership of the allegedly infringed material and (2)
they must demonstrate that the alleged infringers violate at least
one exclusive right granted to copyright holders under 17 U.S.C.
§ 106." A&M Records v. Napster, Inc., 239 F.3d
1004, 1013 (9th Cir. 2001).
Apple has two federally registered copyrights in Mac OS X. The
validity of these registered copyrights is not contested. Thus,
Apple has established ownership of Mac OS X.1
Apple asserts that Psystar has violated three of its exclusive
rights in Mac OS X: (1) its reproduction right; (2) its
distribution right; and (3) its right to create derivative works.
This order next addresses each of these.
A. Reproduction Right and Section 117.
According to Apple, Psystar has violated its exclusive right to
copy Mac OS X. Psystar admits that it has made copies of Mac OS X
and installed those copies on non-Apple computers
(Def. Opp. 10). In addition, when Psystar turns on its computers
running Mac OS X, another copy of the software is made to the
random access memory. Psystar has thus infringed Apple's
Section 117(a) permits the owner of a copy of a computer program
to copy or modify the program for limited purposes without
incurring liability for copyright infringement. See Krause v.
Titleserv, Inc., 402 F.3d 119, 121 (2nd Cir. 2005). But the
question is whether Psystar can rely on Section 117 to escape
liability. It cannot.
As Apple pointed out, Psystar waived any Section 117 essential
step defense when it failed to plead it. Psystar counters that it
has not waived Section 117 because that provision is a limitation
on a copyright owner's exclusive rights rather than an affirmative
defense. An earlier Ninth Circuit decision stated "Section 117
defines a narrow category of copying that is lawful per se"
and "Section 107, by contrast, establishes a defense to an
otherwise valid claim of copyright infringement." Sega Enters.
v. Accolade, Inc., 977 F.2d 1510, 1521 (9th Cir. 1992). Since
then, the Ninth Circuit has expressly referred to Section 117 as a
defense. See Wall Data Inc. v. L.A. County Sheriff's Dep't,
447 F.3d 769, 776 (9th Cir. 2006) (referring to Section 117 as an
affirmative defense); Asset Mktg. Sys. v. Gagnon, 542 F.3d
748, 754 (9th Cir. 2008) (referring to Section 117 as a defense).
As such, this order treats Section 117 as an affirmative
Alternatively, if Section 117 is considered an affirmative
defense, then Psystar argues it has pled it in its answer and
raised the substance of its Section 117 argument in its
interrogatory responses. Neither the answer nor interrogatory
responses, however, refer to Section 117. And Psystar has not
demonstrated any good cause for its failure to assert the defense
after a year of litigation. Also, there has been no showing that
its failure to do so will not prejudice Apple. As such, Psystar has
waived the defense. At all events, the assertion of Section 117 is
in the true context of how Psystar has used Mac OS X that a
belated attempt to amend the pleadings would not be
Psystar briefly mentions a Section 107 fair use defense but does
not even attempt to address the four factors used to determine fair
use. See 17 U.S.C. 107. Psystar nonetheless contends that
its production process and hard drive imaging are fair use. As
stated, rather than loading Mac OS X separately onto individual
computers, Psystar uses a mass production process. Arguing this is
for efficiency, Psystar contends that "[s]uch incidental
infringement is protected by the fair use doctrine to the extent
that the infringement is not part of a greater scheme of
infringement" (Def. Reply 6). To support this argument, Psystar
cites the following passage in Wall Data Inc. v. L.A. County
Sheriff's Dep't, 447 F.3d 769, 779 (9th Cir. 2006):
To be clear, we do not hold that a fair use defense is not
available simply because the infringer uses technology to make
efficient use of its licenses. The problematic aspect of the
Sheriff's Department's use is that it took in excess of what it
bargained for, not that it was technologically efficient. Thus, for
example, if the Sheriff's Department had saved time and money by
hard drive imaging RUMBA software onto the number of computers for
which it had licenses, its "efficiency" would not create a
Psystar's reliance on this quote is misplaced. In Wall
Data, the Sheriff Department purchased 3,663 licenses to
plaintiff's software, but installed the software onto 6,007
computers. To do this, the Department used hard drive imaging
— a single master hard drive containing the software was used
to copy the contents onto many other computers. The Ninth Circuit
held that this was not fair use and was in excess of the licensed
use of the copyright software bargained for. While the process used
for "efficiency" was not the problem, the Sheriff Department's
unauthorized copying of the software beyond the number of licensed
copies was problematic. Similarly, Psystar's use of Mac OS X has
been in excess and has violated Apple's copyrights.
B. Distribution Right and Section 109.
Apple contends that Psystar has violated its distribution right
by offering and selling Mac OS X on Psystar computers to the
public. Psystar admits that it has distributed Mac OS X (Chung Exh.
17 at 4).
But Psystar responds that its conduct is protected by the
Section 109 first-sale doctrine. Section 109 provides that "the
owner of a particular copy or phonorecord lawfully made under this
title, or any person authorized by such owner, is entitled, without
the authority of the copyright owner, to sell or otherwise dispose
of the possession of that copy or phonorecord." 17 U.S.C. 109. This
provision is a limitation on the distribution right. It applies
only to an owner of a copy.
The parties spill much ink on whether Psystar was the owner or a
licensee of the copy (i.e., the tangible copy) of Mac OS X
that it purchased. Even assuming arguendo that Psystar was the
owner of a copy, the first-sale defense fails here. Section 109
provides immunity only when copies are "lawfully made." The copies
at issue here were not lawfully manufactured with the authorization
of the copyright owner. As stated, Psystar made an unauthorized
copy of Mac OS X from a Mac mini that was placed onto an "imaging
station" and then used a "master copy" to make many more
unauthorized copies that were installed on individual Psystar
computers. The first-sale defense does not apply to those
unauthorized copies. See Microsoft Corp. v. Software Wholesale
Club, Inc., 129 F. Supp. 2d 995, 1006 (S.D. Tex. 2000) ("the
first-sale doctrine does not apply to an admittedly counterfeit
unit"); see also 2-8 NIMMER ON COPYRIGHT § 8.12 ("if
the manufacture of a copy or phonorecord constitutes an
infringement of the reproduction or adaptation right, its
distribution will infringe the distribution right, even if this is
done by the owner of such copy or phonorecord").
Psystar asserts on its motion that it includes a Mac OS X DVD
with every Psystar computer it sells. There is no sworn evidentiary
support for this assertion in Psystar's motion. This alone is
dispositive. It is true, as Psystar points out, that Apple's
opening brief on its own separate motion stated "Psystar includes
both a Mac OS X DVD . . . and a hard drive copy of Mac OS X on the
Psystar computer" (Pl. Br. 7). At oral argument, Psystar asserted
cited to paragraph 20 in the declaration of John Kelly, Apple's
expert, to support this proposition. Paragraph 20 merely stated
that Kelly observed Psystar's technician who did not use a Mac OS X
installation DVD for the hard drive imaging or assembly of
Psystar's Open Computer (Kelly Decl. ¶ 20). At oral argument,
Apple's counsel referred to paragraph 15 of the Kelly declaration
and a table therein. There, Kelly stated that he had examined nine
Psystar computers that had Mac OS X installed on the hard drive
(id. at ¶ 15). He further stated that the Mac OS X
software for five of those computers was not the same as the
software found on the Mac OS X DVDs shipped with the computers.
Instead, those computers had a different version of Mac OS X
actually installed on hard drive than was found on the accompanying
Mac OS X DVD. According to Table 2 in Kelly's declaration, three of
the other nine computers did not include a Mac OS X DVD at all
(ibid.). The Apple footnote invoked by Psystar at the
hearing did include citations to deposition testimony, but the
cited testimony did not support the proposition either. Finally,
for its own motion, Psystar was obligated to provide sworn support.
It may not cure evidentiary gaps for its own motion by invoking
briefs filed separately and simultaneously by its opponent. It must
lay out plainly and clearly the basis for its own summary judgment
motion at step one.
Furthermore, it is not the court's task "to scour the record in
search of a genuine issue of triable fact." Keenan v. Allan,
91 F.3d 1275, 1278 (9th Cir. 1996). Counsel have an obligation to
lay out their support clearly. In Carmen v. San Francisco School
District, 237 F.3d 1026, 1031 (9th Cir. 2001), the court
expressly held that "[t]he district court need not examine the
entire file for evidence establishing a genuine issue of fact,
where the evidence is not set forth in the opposition papers with
adequate references so that it could conveniently be found."
Even if it were the case that a DVD was included with every
computer, that did nothing to cure the infringement as to the
unauthorized copies discussed above. Besides Apple does not assert
copyright infringement with respect to the sale of the DVD that
Psystar allegedly purchased.
C. Right to Create Derivative Works.
Section 101 of the Copyright Act defines a derivative work
[A] work based upon one or more preexisting works, such as a
translation, musical arrangement, dramatization, fictionalization,
motion picture version, sound recording, art reproduction,
abridgment, condensation, or any other form in which a work may be
recast, transformed, or adapted. A work consisting of editorial
revisions, annotations, elaborations, or other modifications which,
as a whole, represent an original work of authorship, is a
17 U.S.C. 101.
Psystar infringed Apple's exclusive right to create derivative
works of Mac OS X. It did this by replacing original files in Mac
OS X with unauthorized software files. Specifically, it made three
modifications: (1) replacing the Mac OS X bootloader with a
different bootloader to enable an unauthorized copy of Mac OS X to
run on Psystar's computers; (2) disabling and removing Apple kernel
extension files; and (3) adding non-Apple kernel extensions. These
modifications enabled Mac OS X to run on a non-Apple computer. It
is undisputed that Psystar made these modifications (Def. Opp.
But Psystar contends that this did not amount to creating a
derivative work, because Apple's source code, object code, or
kernel extensions were not modified. This argument is unavailing.
Psystar admittedly replaced entire files within the software while
copying other portions. This resulted in a substantial variation
from the underlying copyrighted work. In fact, if the bootloader
and kernel extensions added by Psystar were removed, then the
operating system would not work on Psystar's computers. The
inclusion of the copyrighted Mac OS X with the above-described
additions and modifications makes Psystar's product an infringing,
Psystar cites no decisions to reasonably support its argument
that its modifications do not amount to a derivative work; whereas,
Apple points to decisions showing that such deletions,
modifications, and additions to software result in an infringing
derivative work. See, e.g., Dun & Bradstreet Software Servs.
v. Grace Consulting, Inc., 307 F.3d 197, 208 (3rd Cir. 2002)
(concluding that defendant's modification of a copy of plaintiff's
software, including fixing bugs and adding features, created an
infringing derivative work); Midway Mfg. Co. v.
Arctic International, Inc., 704 F.2d 1009, 1014 (7th Cir.
1983) (finding defendant's addition of circuit boards created a
speeded-up video game that was a substantially different product
from the original game and thus a derivative work); SAS
Institute, Inc. v. S & H Computer Systems, Inc., 605 F.
Supp. 816, 831 (M.D. Tenn. 1985) (finding defendant's duplication
and conversion of software that would run on an IBM computer to run
on a VAX computer constituted a derivative work).
In sum, Psystar has violated Apple's exclusive reproduction
right, distribution right, and right to create derivative works.
Accordingly, Apple's motion for summary judgment on copyright
infringement must be granted.
2. CONTRIBUTORY INFRINGEMENT.
Apple next asserts that Psystar is liable for contributory
infringement. Psystar offers no opposition on this issue. "One
infringes contributorily by intentionally inducing or encouraging
direct infringement." See MGM Studios Inc. v. Grokster,
Ltd., 545 U.S. 913, 930 (2005). Psystar is a contributory
infringer through its sale of unauthorized copies of Mac OS X to
the public. This is contributory infringement. Accordingly, summary
judgment must be granted for Apple on contributory
3. COPYRIGHT MISUSE.
Copyright misuse is a defense to copyright infringement. The
copyright-misuse doctrine "forbids the use of the [copyright] to
secure an exclusive right or limited monopoly not granted by the
[Copyright] Office and which is contrary to public policy to
grant." Altera Corp. v. Clear Logic, Inc., 424 F.3d 1079,
1090 (9th Cir. 2005). "The misuse defense prevents copyright
holders from leveraging their limited monopoly to allow them
control of areas outside the monopoly." A&M Records v.
Napster, Inc., 239 F.3d 1004, 1026 (9th Cir. 2001).
Psystar argues that Apple misused its copyrights by continuing
to prosecute allegedly "invalid" copyright infringement and DMCA
claims against Psystar. This argument is unavailing. This order
finds that Apple's claims are valid and has granted summary
judgment in favor of Apple on those claims.
Psystar next argues that Apple's attempt to use copyright to tie
Mac OS X to Apple hardware constituted copyright misuse. Put
differently, Psystar argues that Apple cannot extend its exclusive
rights to control the computers on which Apple's customers run Mac
OS X. Psystar's antitrust allegations were dismissed in a prior
order, and Psystar then chose not to pursue any antitrust
counterclaims. The prior order stated, "Apple asks its customers to
purchase Mac OS knowing that it is to be used only with Apple
computers. It is certainly entitled to do so" (Dkt. No. 33 at 14).
That order previously rejected Psystar's theory and this order does
Psystar rightly points out that the Ninth Circuit has stated, "a
defendant in a copyright infringement suit need not prove an
antitrust violation to prevail on a copyright misuse defense."
Practice Management Info Corp. v. American Medical Ass'n,
121 F.3d 516, 521 (9th Cir. 1997). For this principle, the Ninth
Circuit relied upon a Fourth Circuit decision, which explained,
"[t]he question is not whether the copyright is being used in a
manner violative of antitrust law (such as whether the licensing
agreement is 'reasonable'), but whether the copyright is being used
in a manner violative of the public policy embodied in the grant of
a copyright." Lasercomb America, Inc., v. Reynolds, 911 F.2d
970, 978 (4th Cir. 1990). In the present case, Apple has not
prohibited others from independently developing and using their own
operating systems. Thus, Apple did not violate the public policy
underlying copyright law or engage in copyright misuse. In this
way, Practice Management Info Corp. is distinguishable.
There, the Ninth Circuit invalidated the AMA's copyright on a
coding system of medical procedures requiring a contracting party
(HCFA) to use only the AMA's coding system and none other,
What offends the copyright misuse doctrine is not HCFA's
decision to use the AMA's coding system exclusively, but the
limitation imposed by the AMA licensing agreement on HCFA's rights
to decide whether or not to use other forms as well. Conditioning
the license on HCFA's promise not to use competitors' products
constituted a misuse of the copyright by the AMA.
Id. at 521. But Apple has not prohibited purchasers of
Mac OS X from using competitor's products. Rather, Apple has
simply prohibited purchasers from using Mac OS X on
competitor's products. The Ninth Circuit has likewise
distinguished Lasercomb America, 911 F.2d at 978—79,
on this ground. See Triad Systems Corp. v. Southeastern Express
Co., 64 F.3d 1330, 1337 (9th Cir. 1995), overruled on other
grounds by Gonzales v. Texaco Inc., No. 07-17123, 2009 U.S.
App. LEXIS 18370, at *5 (9th Cir. Aug. 17, 2009) ("[U]nlike the
case of Lasercomb America, Inc. v. Reynolds, 911 F.2d 970,
978—79 (4th Cir. 1990), Triad did not attempt to prohibit
Southeastern or any other ISO from developing its own service
software to compete with Triad").
Psystar cites In re Napster, Inc., Copyright Litigation,
191 F. Supp. 2d 1087, 1105 (N.D. Cal. 2004) (Patel, J.), for the
proposition that "unduly restrictive copyright licensing
agreements" can constitute misuse. But even Judge Patel
acknowledged that "no court has thus far articulated the boundaries
of 'unduly restrictive licensing' or when licensing or other
conduct would violate the amorphous concept of public policy."
Ibid. As explained above, Apple's licensing agreement is not
unduly restrictive. Indeed, the egregious examples of copyright
misuse in the decisions cited by Psystar provide further support
for this order's determination that Apple has not engaged in
copyright misuse. For example, in Lasercomb America, 911
F.2d at 978, the Fourth Circuit found copyright misuse in the
The language employed in the Lasercomb agreement is extremely
broad. Each time Lasercomb sells its Interact program to a company
and obtains that company's agreement to the noncompete language,
the company is required to forego utilization of the creative
abilities of all its officers, directors and employees in the area
of CAD/CAM die-making software. Of yet greater concern, these
creative abilities are withdrawn from the public. The period for
which this anticompetitive restraint exists is ninety-nine years,
which could be longer than the life of the copyright itself.
Lasercomb America likewise stated that an
anti-competitive restraint lasting even 20 years would constitute
copyright misuse. Id. at 979. Ultimately, the problem in
Lasercomb America was that the all-encompassing
anticompetitive restraint attempted to "control competition
in an area outside the copyright." Ibid. (emphasis added).
But Apple's licensing agreement is not nearly as all-encompassing
as those addressed in Lasercomb America — Apple's
agreement does not seek to control all competition in an
area outside the copyright. Rather, Apple's
agreement simply attempts to control the use of Apple's own
software — an area that is the focus of the
Therefore, Psystar's motion for summary judgment on copyright
misuse must be denied.
Apple contends that Psystar has violated the anti-circumvention
and anti-trafficking provisions of the DMCA. Apple has used a
decryption key as a technological protection measure to prevent
access to Apple's Mac OS X and to prevent Mac OS X from running on
a non-Apple computer.
Section 1201(a)(1)(A) provides that no person shall circumvent a
technological measure that effectively controls access to a work
protected under this title. Psystar has used decryption software to
obtain access to Mac OS X and to circumvent Apple's technological
measure when modifying Mac OS X in its production process. This is
a violation of the Section 1201 anti-circumvention provision of the
DMCA. 17 U.S.C. 1201(a)(1).
Section 1201(a)(2) prohibits the manufacture, importation,
offering to the public, providing, or otherwise trafficking in any
technology, product, service, device, component, or part thereof,
that meets one of three criteria, including the following:
(A) is primarily designed or produced for the purpose of
circumventing a technological measure that effectively controls
access to a work protected under this title;
(B) has only limited commercially significant purpose or use
other than to circumvent a technological measure that effectively
controls access to a work protected under this title; or
(C) is marketed by that person or another acting in concert with
that person with that person's knowledge for use in circumventing a
technological measure that effectively controls access to a work
protected under this title.
17 U.S.C. 1201(a)(2); see also 17 U.S.C. 1201(b). Section
1201(b) is very similar to Section 1201(a)(2). But (a)(2) focuses
on effectively controlling access and (b) focuses on
effectively protecting a right of a copyright owner.
Psystar's circumvention technology was installed on Psystar
computers and sold with Mac OS X. Psystar also marketed the
computers as running Mac OS X. This facilitation of circumvention
was a violation under Section 1201(a)(2).
Section 1201(b)(1) was likewise violated. When an end user
turned on a Psystar computer and ran Mac OS X, there was also an
act of circumvention, as Psystar concedes (Def. Reply 2). As
stated, running the modified Mac OS X results in an unauthorized
copy to RAM. Thus, Psystar's circumvention technology has not only
provided access but also resulted in copies in RAM. Although
Apple's technological measure may have been primarily aimed at
controlling access, it also effectively protected its right to
copy, at least for the copy made in RAM. Cf. 321 Studios v. MGM
Studios, Inc., 307 F. Supp. 2d 1085, 1097 (N.D. Cal. 2004)
(Illston, J.) (finding that Section 1201(b)(1) applied when copying
the encrypted DVDs was not particularly useful, as any copy made
without circumventing could not be accessed or viewed).
Psystar asserts, nonetheless, that it has not violated the DMCA
and provides two reasons: (1) Psystar did not facilitate
infringement; and (2) Apple's technological protection measure was
not effective. Because unauthorized copying and access have been
proven, Psystar's first argument is rejected. See Chamberlain
Group, Inc. v. Skylink Techs., Inc., 381 F.3d 1178, 1193 (Fed.
Cir. 2004). As to the second argument, Psystar contends that
Apple's anticircumvention technology was ineffective because the
decryption key for circumvention is publicly available on the
internet. This argument fails. "The fact that circumvention devices
may be widely available does not mean that a technological measure
is not, as the DMCA provides, effectively protecting the rights of
copyright owners in the ordinary course of its operation." Sony
Computer Entm't Am., Inc. v. Divineo, Inc., 457 F. Supp. 2d
957, 965 (N.D. Cal. 2006). Generally, measures based on encryption
"effectively control" access to copyrighted works. Here, when the
decryption key was not employed, the encryption effectively worked
to prevent access to Mac OS X. And that is all that is required.
See Universal City Studios v. Reimerdes, 111 F. Supp. 2d
294, 318 (S.D.N.Y. 2000) (noting that when a decryption program was
not employed, the encryption worked to control access to the
protected work). Accordingly, Psystar has violated the DMCA by
protection barrier and trafficking devices designed for
circumvention. Apple's motion for summary judgment on its DMCA
claim must be granted.4
5. TRADEMARK INFRINGEMENT AND TRADE-DRESS
The summary of argument section of Psystar's motion introduces
an argument that its use of Apple's trademarks and trade dress is a
nominative fair use. But the motion never fully addresses this
issue. For example, no evidentiary cites or legal cites are
provided. Psystar failed to even mention nominative fair use in its
reply. While nominative fair use may be asserted as a defense, the
defendant has the burden of proof. See Mattel Inc. v. Walking
Mt. Prods., 353 F.3d 792, 810 (9th Cir. 2003) (stating a
defendant must prove three elements to show nominative fair use).
The burden was not met here. Accordingly, Psystar's motion for
summary judgment on nominative fair use must be denied.
Psystar contends that Apple has waived damages on its
non-copyright claims, such as its breach-of-contract claim. Psystar
further argues that if an injunction is granted, then it should be
limited to Mac OS X Leopard (and not include Mac OS X Snow Leopard,
for example). Apple neither filed a motion on its non-copyright
claims nor for a permanent injunction. Rather, Psystar has
prematurely raised these points merely in anticipation of Apple
doing so. As such, this order will not address the relief, if any,
that Apple may be entitled to at this juncture.
For the foregoing reasons, Apple's motion is GRANTED and
Psystar's motion is DENIED.
Apple has also asserted the following claims, which remain for
trial: (1) breach of contract; (2) induced breach of contract, (3)
trademark infringement; (4) trademark dilution; (5) trade dress
infringement; and (6) state unfair competition under California
Business and Professions Code § 17200; and (7) common law
With respect to relief, formal briefing is appropriate, so:
||November 23, 2009;
||November 30, 2009; and
||December 7, 2009.
A hearing will be held on December 14, 2009, at 8 a.m.
IT IS SO ORDERED.
Dated: November 13, 2009.
UNITED STATES DISTRICT JUDGE
||Psystar also asserts that Apple claims copyright infringement
as to its decryption key. In response, Apple clarifies that it "has
never alleged that Psystar's copyright infringement is limited to
Psystar's unauthorized use of the" decryption key (Pl. Opp. 15).
Rather Apple's allegations are focused on copying of Mac OS X, not
just a decryption key. In any event, Psystar has provided little
support for this argument and its position is rejected.
||Trying to have it both ways, Psystar successfully opposed
Apple's earlier attempt to reopen discovery and extend deadlines to
add an additional product — Snow Leopard — to this
action. Psystar now seeks to add a very late affirmative defense.
This would not be fair.
||Psystar also asserts Section 117 as a defense to avoid
liability for infringement of Apple's right to create derivative
works. But as stated above, Psystar has waived this defense.
||Psystar does not rely on a reverse-engineering defense under
the DMCA, and thus this order does not address Apple's argument on