decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books
Your contributions keep Groklaw going.
To donate to Groklaw 2.0:

Groklaw Gear

Click here to send an email to the editor of this weblog.


To read comments to this article, go here
Psystar Tries to Wriggle Around Any Permanent Injunction; Partial Settlement Filed; Hearing 12/14 UPDATE
Tuesday, December 01 2009 @ 01:51 PM EST

[ Update 2, Dec. 2: Psystar has stopped selling everything but Rebel EFI, according to AppleInsider. - end update]

Psystar has filed its response in opposition to Apple's Motion for a Permanent Injunction. In it, it claims a partial agreement has been reached with Apple. I, however, will wait until I hear Apple confirm the terms, not relying on Pystar's representations alone. The response says the partial settlement will be filed with the court tomorrow. This is not the first time Psystar has tried to argue that there is no need for a trial, but the parties keep moving toward one inexorably anyway.

According to Psystar, it has agreed to pay statutory damages for infringing Leopard, and Apple has agreed not to make them pay it until after the appeals. Psystar claims that Apple will drop its trademark and state-law claims. We'll see. But Psystar still asks the court to leave Snow Leopard and Rebel EFI -- its new do-hickey that helps *you* infringe Apple's copyrights and violate its EULA and the DMCA -- out of this injunction, and that tells me that despite the spin Psystar is putting on this agreement, there is no deal as far as the big picture is concerned. This is just telling us that the parties have figured out a sum certain for how much Psystar owes Apple *so far*. This case is not over by a mile. Now Psystar is trying to argue that you and I have the right to use Rebel EFI because we are not commercial users. As you can see, Psystar is still angling to stay in business some way, somehow. Here's their argument:

In particular, whether sales of Rebel EFI are lawful or not depends on whether Psystar’s end users have a defense under 17 U.S.C. § 117. This issue has not been litigated in this case at all. Psystar’s end users do not engage in commercial use of Mac OS X and their use would qualify as use for “internal purposes” even under the standards articulated by Apple in its summary-judgment briefing. If Psystar’s end users are protected by § 117, then Psystar cannot be violating the DMCA by selling Rebel EFI because Rebel EFI, as used by the end users, does not facilitate infringement. Apple correctly explains that this Court has power “to restrain acts which are the same type or class as unlawful acts which the court has found to have been committed.” M. at 9. But Rebel EFI is a different kind of act altogether.
More cuteness. The end users are not commercial users, but the seller of Rebel EFI is, and he knows exactly what they'll be doing with it, so it's amazing they'd even try this after Grokster, but somebody behind all this nonsense seems to wants to destroy the US tech market leaders, invalidate the enforceability of licenses on software, and then make a bundle on other people's code. I don't believe for one second that Psystar is about two guys in a basement. I have come to suspect that someone, somewhere behind all this is trying to destroy Apple's business, for personal profit, nothing less, just as SCO has been trying to destroy IBM's and Red Hat's business and Linux, for personal profit. Two strange cases, each threatening damage to major players in the US technology sector -- the two major competitors of Microsoft, actually now that I think of it, Linux and Apple -- and it's all happening at once.

[Note Update: the agreement itself is now filed.]

If you think of it in those terms, then don't some of the otherwise odd elements makes sense? How else to explain dragging the cases out time after time, when the ultimate conclusions seem fairly obvious even if you are not Clarence Darrow, unless the the goal is just to inflict damage? I have so far been unable to come up with a better theory to explain such peculiar litigation. Psystar isn't making money, according to its filings, not enough to feed the dogs. So why stretch it out? Does it make any sense at all to you? If not, then one has to look deeper and ask, who does benefit from all this? What is it really all about, if it can't be about what it says it's about?

That doesn't mean I think Microsoft is necessarily behind it. It could be coincidental, but it does seem to mean that someone has figured out how to be what I'd call a "copyright troll", or, more accurately probably, how to use them as throwaway litigation proxies.

Here's the filing:

11/30/2009 - 237 - Memorandum in Opposition to Apple's Motion for a Permanent Injunction filed byPsystar Corporation. (Attachments: # 1 Proposed Order)(Camara, Kiwi) (Filed on 11/30/2009) (Entered: 11/30/2009)

Here's how Psystar phrases it:
Psystar and Apple today entered into a partial settlement that is embodied in a stipulation that will be filed with the Court tomorrow. Psystar has agreed on certain amounts to be awarded as statutory damages on Apple’s copyright claims in exchange for Apple’s agreement not to execute on these awards until all appeals in this matter have been concluded. Moreover, Apple has agreed to voluntarily dismiss all its trademark, trade-dress, and state-law claims. This partial settlement eliminates the need for a trial and reduces the issues before this Court to the scope of any permanent injunction on Apple’s copyright claims. Psystar’s argument with respect to the scope of a permanent injunction is very limited. Psystar argues only that any injunction from this Court should not extend to Rebel EFI, a Psystar product that has not been litigated in this case, that has not been the subject of discovery in this case, that is presently the subject of litigation in the Florida case, that is composed exclusively of Psystar software, that is not sold in conjunction with any hardware, and that is sold entirely apart from any copy of Mac OS X or any computer running Mac OS X....

If this Court were to grant an injunction broad enough to cover Mac OS X Snow Leopard, it would be undoing its earlier decision not to allow Apple to introduce Snow Leopard into this case after maintaining that discovery about Snow Leopard was irrelevant. Indeed, Apple asks this Court to go one step further and enjoin not only Psystar computers running Mac OS X Snow Leopard, but also an entirely new software-only product, Rebel EFI, that has not been the subject of any discovery at all in this action....

Apple has filed a motion to transfer the Florida action to this Court. If that motion is granted, then this Court can properly determine the preclusive effect of its summary-judgment order, if any, and, upon a judgment on liability, issue an appropriate injunction with respect to Rebel EFI. Until then, however, whether Rebel EFI is legal or not remains within the jurisdiction of the United States District Court for the Southern District of Florida, the first court in which a case concerning Rebel EFI was filed.

If you recall, Psystar once before argued that a trial was moot, because it would accept a permanent injunction on just Leopard, but Apple was not interested in that offer unless it went further:
Despite its insistence that it has not infringed Apple's rights, Psystar nevertheless states that it will stipulate to a permanent injunction and an award of nominal damages against it, and then contends that the remainder of Apple's claims against it are moot. The relief that Psystar proposes is insufficient. While Psystar's infringement should be enjoined, any injunction must be broad enough to prohibit Psystar's continued unlawful conduct and protect Apple against the recurrence of such conduct. Furthermore, a trier of fact must determine whether Psystar must disgorge its sales revenue, whether Psystar's infringement has been willful, and whether punitive damages are appropriate.
After winning so powerfully against Psystar, Apple is hardly likely to agree to less now. So, I take this filing as Psystar being Psystar, still trying to get the court to agree that a trial is moot. I seriously doubt Apple will concur.

And Psystar is still claiming that Snow Leopard, as well as Rebel EFI, is excluded from this case, in other words angling to keep selling it until there is some ruling from the Florida court. See what I mean? This leopard has not changed its spots. All that has happened is the parties have agreed on how much Psystar owes so far. The rest absolutely will be going to trial, whatever there is left after Apple's summary judgment motion is decided. There is a hearing set for December 14 [PDF] at 2 PM, and I hope some of you in California will be able to attend.

Update: Here's the agreement:

12/01/2009 - 238 - STIPULATION REGARDING DISPOSITION OF CLAIMS by Apple Inc.. (Gilliland, James) (Filed on 12/1/2009) (Entered: 12/01/2009)

Update 2: And the judge has now signed off on it:

12/01/2009 - 239 - STIPULATION AND ORDER REGARDING DISPOSITION OF CLAIMS. Signed by Judge Alsup on December 1, 2009. (whalc1, COURT STAFF) (Filed on 12/1/2009) (Entered: 12/01/2009)

As you can see, Apple didn't drop its trademark and state-based claims. It dropped them for now. That is what "dismiss without prejudice" means, that for now it's dropped, but the party does not give up its right to reintroduce, and the end of the paragraph about it tells you why: because at this point, no one knows what will happen to the Florida case, so no one knows where the matter will be tried. It's not dropped at all.

The parties have agreed that Psystar will pay Apple $1,337,550 twice, first for Apple's First through Fifth Claims, which would be copyright infringement, contributory and induced infringement, violation of the DMCA, and breach of contract and inducing breach of contract, and the second payment would be extra on the First, Second, and Third Claims, again the copyright and DMCA claims.

Now to help you to figure out Psystar's new claim that Rebel EFI is totally different, let me show you what Psystar has just stipulated as to a judgment against it being filed on this claim, Apple's claim for inducing breach of contract:

FIFTH CLAIM FOR RELIEF
(Inducing Breach of Contract)

60. Plaintiff incorporates herein by reference each and every allegation in the preceding paragraphs.

61. The owners and managers of Psystar have admitted in public statements their knowledge of the existence of the License Agreement governing the use of Mac OS X software and of its terms and conditions.

62. Apple is informed and believes, and on that basis alleges, that notwithstanding its knowledge of the existence and terms of the License Agreement, Psystar has advised, encouraged and assisted others to breach the License Agreement by, among other things, encouraging those consumers to acquire Mac OS X software and then assisting them to install, use and run it on non-Apple-labeled computers. In so doing Psystar has unlawfully induced breach of the License Agreement by others.

63. As a direct and proximate result of Psystar's actions to induce others to breach the License Agreement, Apple has suffered economic injury and damages in an amount to be proven at trial in excess of $75,000. Apple further seeks punitive damages and injunctive relief as a result of Psystar's inducement of others to breach Apple's License Agreement.

This is what Psystar agrees it is guilty of having done. And now it wants to sell you Rebel EFI. Do you see a difference? I would talk to my lawyer before I bought anything like that. I seriously doubt the court will see any difference between what Psystar has just agreed it did and what it proposes to do in the future with Rebel EFI. Note that this is a contract issue, not a copyright infringement issue. I don't understand Psystar arguing that there is no DMCA violation if there is an equally untenable contract breach still on the table. You still know the terms of the Apple license, do you not? Does Psystar? There will be arguments perhaps about its new theory of how to violate the license and get away with it, but it's essentially the same goal, just a different approach, as I see it.

Here's the Psytar filing, minus the header and the certificate at the end, just for time, but the meat of it is here, so you can form your own opinions:

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

PSYSTAR'S RESPONSE IN OPPOSITION TO APPLE'S MOTION FOR A PERMANENT INJUNCTION

Psystar and Apple today entered into a partial settlement that is embodied in a stipulation that will be filed with the Court tomorrow. Psystar has agreed on certain amounts to be awarded as statutory damages on Apple's copyright claims in exchange for Apple's agreement not to execute on

1

these awards until all appeals in this matter have been concluded. Moreover, Apple has agreed to voluntarily dismiss all its trademark, trade-dress, and state-law claims. This partial settlement eliminates the need for a trial and reduces the issues before this Court to the scope of any permanent injunction on Apple's copyright claims.

Psystar's argument with respect to the scope of a permanent injunction is very limited. Psystar argues only that any injunction from this Court should not extend to Rebel EFI, a Psystar product that has not been litigated in this case, that has not been the subject of discovery in this case, that is presently the subject of litigation in the Florida case, that is composed exclusively of Psystar software, that is not sold in conjunction with any hardware, and that is sold entirely apart from any copy of Mac OS X or any computer running Mac OS X.

I. An injunction covering Rebel EFI is foreclosed by this Court's order denying Apple's motion to dismiss the Florida action

This case concerns Psystar's Open Computers, computers that come with Mac OS X installed, along with Psystar software that makes Mac OS X compatible with non-Apple hardware.

This case also concerns a particular version of Mac OS X, the version known as Mac OS X Leopard. When Apple sought to expand the scope of discovery in this case to litigate new Psystar products that relate to the next version of Mac OS X, known as Mac OS X Snow Leopard, this Court held that Apple was barred from so expanding the litigation. See Docket No. 152 (Order Denying Apple's Motion to Enjoin Florida Action).

If this Court were to grant an injunction broad enough to cover Mac OS X Snow Leopard, it would be undoing its earlier decision not to allow Apple to introduce Snow Leopard into this case after maintaining that discovery about Snow Leopard was irrelevant. Indeed, Apple asks this Court to go one step further and enjoin not only Psystar computers running Mac OS X Snow Leopard, but also an entirely new software-only product, Rebel EFI, that has not been the subject of any discovery

2

at all in this action.

This Court should not give Apple an injunction covering a software product the legality of which Apple has yet to litigate anywhere. Such an injunction would give Apple relief on the very issues that it decided not to include in this case. If this limitation prejudices Apple, "The problem is one largely of Apple's own making." Docket No. 152 at 2 (Order Denying Apple's Motion to Enjoin Florida Action). If Apple needed an injunction broad enough to cover Psystar's new products, it should have welcomed discovery on Snow Leopard and sought to timely amend its complaint.

II. An injunction covering Rebel EFI is inappropriate because Rebel EFI is currently the subject of litigation in the United States District Court for the Southern District of Florida.

An injunction covering Rebel EFI would invade the jurisdiction of Judge Hoeveler of the United States District Court for the Southern District of Florida. As the Ninth Circuit announced last year:

[W]hen exercising its equitable powers to issue an injunction, a court must be mindful of any effect its decision might have outside its jurisdiction. Courts ordinarily should not award injunctive relief that would cause substantial interference with another court's sovereignty.
United States v. AMC Entertainment, 549 F.3d 760, 770 (9th Cir. 2008) (emphasis added). Because an injunction preventing Psystar from using or selling Rebel EFI would effectively decide the case currently pending before Judge Hoeveler, it would be a gross interference with the "sovereignty," or jurisdiction, of his court.

Apple has filed a motion to transfer the Florida action to this Court. If that motion is granted, then this Court can properly determine the preclusive effect of its summary-judgment order, if any, and, upon a judgment on liability, issue an appropriate injunction with respect to Rebel EFI. Until then, however, whether Rebel EFI is legal or not remains within the jurisdiction of the United States District Court for the Southern District of Florida, the first court in which a case concerning Rebel

3

EFI was filed.

III. An injunction covering Rebel EFI is inappropriate because Psystar's conduct in selling Rebel EFI involves entirely different factual and legal questions from those that the parties have litigated in this case.

The summary judgment in this case turned on the manner in which Psystar assembled its Open Computers. It turned on such things as the use of the Psystar imaging station and what this Court found to be the creation of multiple copies and derivative works of Mac OS X along the way. See Docket No. 214 (Order on Cross-Motions for Summary Judgment). None of these same facts is involved in Rebel EFI. Rebel EFI is entirely a software product. It does not involve the assembly by Psystar of any computers. Cf. id. at 13 (finding a DMCA violation because Psystar "obtain[ed] access to Mac OS X and . . . circumvent[ed] Apple's technological measure when modifying Mac OS X in its production process"). Nor does Rebel EFI contain or include Mac OS X. A Mac OS X DVD does not even accompany sales of Rebel EFI. Rebel EFI consists solely of Psystar software available for sale and download through Psystar's website.

In particular, whether sales of Rebel EFI are lawful or not depends on whether Psystar's end users have a defense under 17 U.S.C. § 117. This issue has not been litigated in this case at all. Psystar's end users do not engage in commercial use of Mac OS X and their use would qualify as use for "internal purposes" even under the standards articulated by Apple in its summary-judgment briefing. If Psystar's end users are protected by § 117, then Psystar cannot be violating the DMCA by selling Rebel EFI because Rebel EFI, as used by the end users, does not facilitate infringement.

Apple correctly explains that this Court has power "to restrain acts which are the same type or class as unlawful acts which the court has found to have been committed." M. at 9. But Rebel EFI is a different kind of act altogether.

Apple's injunction briefing does not address Rebel EFI by name. Apple only addresses Snow Leopard. And the cases that Apple cites in its argument about Snow Leopard, M. at 1113,

4

although they hold that an injunction may sweep broader than the specific conduct that gave rise to the litigation, concern only cases where the additional, non-litigated conduct was the same in all legally relevant respects to the actually litigated conduct. See, e.g., Walt Disney Co. v. Powell, 897 F.2d 565, 566 (D.C. Cir. 1990) (different Disney characters being printed on t-shirts).

These cases do not justify an injunction that extends to Rebel EFI because Rebel EFI differs from the conduct that was litigated in this case in the critical respect that the legality of Rebel EFI depends, as the legality of the conduct in this case did not, on whether end users have a § 117 right to run Mac OS X on their own computers for personal use. If so, then Rebel EFI does not facilitate infringement and does not violate the DMCA.

IV. Relief Requested

Psystar respectfully requests that any injunction expressly exclude from its coverage "any conduct that is the subject of litigation in Psystar Corp. v. Apple Inc., No. 09-22535, in the United States District Court for the Southern District of Florida, assigned to Judge Hoeveler." This will guarantee that so long as that case is ongoing, this Court does not invade the judicial province of Judge Hoeveler by issuing an injunction that enters upon matters that this Court has already ruled were not part of this action and were, instead, properly filed in Florida.

Dated: November 30, 2009

CAMARA & SIBLEY LLP
By: /s K. A. D. Camara
K.A.D. CAMARA

Attorney for Defendant / Counterclaimant

5


  View Printable Version


Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )