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What's the Latest in the Psystar Appeal?
Wednesday, July 28 2010 @ 02:16 AM EDT

Let's catch up quickly in the Psystar/Apple situation, so we don't miss any of the action. When I read the new DMCA exemptions EFF won, I immediately started to think about Psystar, so I wanted to see what's new. Maybe you did too. So here's the latest I could find. The appeal is going forward. Presumably the next step in the appeal will be oral argument, although I can't swear to it, since Psystar filed its brief under seal with the Ninth Circuit Court of Appeals back in May, so we can't read it, and that's when they would have made the request or not. I can't believe the entire document needed to be sealed, but that is what happened. Perhaps they'd prefer we not get a chance to analyze it? Apple has now filed its answering brief [PDF], along with a request [PDF] that the court take judicial notice of the Florida litigation, and Psystar has just filed its reply brief [PDF], and these documents are not sealed, so we finally get to find out what it's all about.

What Psystar wants is nothing less than to overturn copyright law as we know it and create a new doctrine of per se copyright misuse any time a copyright owner restricts use of its software to particular hardware.

Wait. Isn't that kind of what TurboHercules is whining about too? Here's what TurboHercules told us it wants: "We simply want IBM to agree to allow legitimate paying customers of its z/OS mainframe operating system to deploy that software on the hardware platforms of their choice – including, should they so choose, on low-cost servers using Intel or AMD microprocessors and Hercules." Psystar and TurboHercules are going after different software, but they want exactly the same thing, to force the software creator to let them use it on hardware the owner doesn't want it used on. And of course, they are two noble hearts with no interest in the buckets of money they'd thereby gain, without having to do the hard work of actually creating their own software. Let Apple and IBM pay for all that, and then they swoop in and make sure the creators don't benefit from their labor, so that Psystar and TurboHercules can.

You know what I find so striking? This is just one of four cases trying to grab some measure of control or use of other people's software against the owners' will, starting with the SCO v. IBM case.

All four cases wish to make it impossible for software creators to control their work, so that others can financially benefit from it. Let's itemize:

  • First there was the SCO v. IBM case, wanting Linux users to have to pay SCO a toll, in violation of the terms of the GPL, the license Linux comes with. SCO tried to argue that the GPL was unConstitutional, so as to deep six it, until we all laughed so hard they withdrew that claim. But they tried.

  • Then IBM v. Platform Solutions, Inc. and T3 Technologies came along, which involved complaints by T3 about IBM's refusal to deal, an antitrust case IBM won, with T3's complaint dismissed on summary judgment.

  • Then Apple v. Psystar, with Psystar arguing that writing an operating system was too hard, so Apple should be forced to let Psystar use Apple's software on Psystar hardware, in violation of the EULA.

  • And recently TurboHercules stirring things up against IBM again with antitrust complaints about tying software and hardware with respect to services, with IBM saying "there is no merit to the claims being made by Microsoft and its satellite proxies.”
    And these are very strange cases. SCO and Psystar... well, their legal positions are ... um... other-worldly, as in alternate universe-y odd. Yet they persist, through rainstorm, wind, hail and snow. Here's what I notice. Three of the cases are targeting IBM, which endorses Linux, and Microsoft's shadow is in those three pictures for sure, via support to a proxy. The fourth targets another major competitor of Microsoft's. I mean, what are the odds? Slim? Or none?

    If any of these four cases were successful, a Microsoft competitor's business would be significantly altered, from their standpoint harmed, and it would be easier for Microsoft to compete. They aren't in the integrated hardware/software products business, other than the X-box, which hasn't been a money-maker for them. That's what I notice. But if you wanted to persuade me that some foreign hostile government was trying to destroy the US economy, I'd actually listen. It's just that destructive. And the simple truth is, while none of these cases seem likely to be successful, just having to deal with the litigation is hurtful, even if in the end, IBM and Apple continue to win.

    Here's the per se thing Psystar is shooting for, as Apple explains it in its brief:

    Because Psystar has no proof that Apple has inhibited competition or suppressed creativity, Psystar urges this Court to abandon long-standing precedent and create a new doctrine of per se copyright misuse. Under this doctrine, any license agreement—such as Apple’s SLA—that restricts the use of copyrighted software to particular hardware is per se copyright misuse. Alternatively, Psystar insists that Apple’s successful copyright infringement claims were a baseless sham constituting copyright misuse. Neither argument has any merit.

    Psystar’s grossly overbroad per se theory of copyright misuse would eliminate fundamental rights guaranteed by the Copyright Act—the rights to control the reproduction, modification, and distribution of copyrighted works. The protection of such rights has fostered pro-competitive activities, such as the massive investments required to create high-quality products that tightly integrate software and hardware. If Psystar’s position were adopted, copiers would be free to ignore license terms, circumvent TPMs, extract software from a variety of products—from cell phones to computer systems—and modify it for use in other products.

    Here's another major point from Apple:
    Apple’s success results in large measure from its unique ability to design and develop fully integrated products combining Apple’s Mac OS X operating system, hardware, application software, and services.
    So that is where Apple is planting its flag. And having used their products myself, I can say this isn't just an empty legal argument. It's true.

    Here's a good explanation of Apple's brief from another paralegal who is following the litigation also, dizzle on World of Apple:

    Unlike the other early filings in the Appeal, this item was not filed under seal. It is broken into three primary categories which I will follow in digesting the Brief. I remind the readers that Appeals are limited to mistakes of law or fact and thus are usually much more narrow than the issues in the underlying suit. For example, Psystar did not appeal the dismissal of its antitrust counterclaims that were originally alleged in the California case. Nor did it ever supply the California Court with the requested information for a determination to be made on the Rebel EFI product which was enjoined until Psystar could prove that its operation was substantially different from the issues ruled upon. Based upon this latter fact, Apple argues that Psystar has waived its right to ask the Appellate Court to remove Rebel EFI from the Injunction.

    We do learn some details about Psystar’s sealed Opening Brief. Apple alleges:

    Nonetheless, on the pretext of educating the Court regarding the technology at issue in this case, Psystar supplies a “Technical Addendum” with its opening brief. This document appears to be a veiled attempt to revive factual claims the district court has rejected and Psystar has abandoned on appeal. (Page 11 of Answering Brief)
    Psystar has more veils than a harem girl.
    Psystar now asserts that installation of Psystar’s bootloader and numerous kernel extensions is unnecessary to run Mac OS X on Psystar computers absent the existence of Apple’s TPM [technological protection measure]. Opening Br. At 27. But this claim is contrary to the unchallenged factual record. For example, even if Apple did not implement its TPM, Psystar would still be required to modify Mac OS X by replacing the bootloder and modifying certain Mac OS X kernel extension files to force the operating system to run on non-Apple hardware. (Page 15 of Answering Brief)
    Next Psystar will build a phone, and tell the Florida court the Copyright Office told them jailbreaking is legal, harmless and possibly useful. You think I jest.

    But ah! The EULA! Don't forget the EULA. Here's Jennifer Granick of EFF on the impact of the new rules, interviewed for an article by Erica Ogg and Declan McCullagh, which explains what the changes mean:

    We asked Jennifer Granick, an attorney with the Electronic Frontier Foundation, the San Francisco-based civil liberties group that successfully petitioned the Copyright Office for the exception. "Apple's never sued jailbreakers, but they claim it violates the DMCA, and thus there's a legal cloud. If they were right, they could stop people from jailbreaking the phones, i.e. get an injunction. Now, they can't. Even if it violates contract law, they'd have to sue, and all they could get would be a tiny bit of money. It greatly decreases any incentive they might have or develop to sue. And it takes injunction off the table. Which means that the law will not, in the next three years, prevent people from jailbreaking their phones."

    In addition, the possibility of punitive damages has been eliminated.

    So, what she is saying is that Apple can still sue you over the EULA, but it's not cost effective to do so, and that probably means they won't. But she also admits Apple has never sued someone for jailbreaking a phone. So. What. Does. That. Tell. You? Here's what EFF is interested in, by the way, trimming back some of the harm the DMCA has done. I don't believe Psystar's goals are so elevated.

    Granick is also saying that if you are sued, your damages will be less. But they can still sue you, as the article goes on to explain, under contract law, meaning the EULA:

    What that means is that Apple can still legally -- if it chooses -- protect its phones from jailbreaking. The contract formed between the user and Apple (and the user and the wireless carrier) when the iPhone owner agrees to the user licensing agreement is binding, says Tom Sydnor, a senior fellow with the Progress and Freedom Foundation who takes an expansive view of copyright law.

    Just because the DMCA allows individuals an exemption to jailbreak their own phones, "it doesn't mean Apple or a carrier can't protect contractual restrictions to deal with it," Sydnor said. "Essentially the exemption says this is the sort of thing that falls in bounds of contracts."

    Apple could pursue breach of contract if someone jailbreaks their phone, or they could sue a person or company that creates jailbreak software for inducing someone to breach their contract with Apple. In other words, Sydnor said, "even if there was no DMCA, you could still be bound not to circumvent that technological protection."

    And Apple can even argue in court that the US Copyright Office is wrong, by the way. Also, keep in mind one of the reasons the Copyright Office thought it would be OK to let people jailbreak phones doesn't apply to folks like Psystar:
    It said, for instance, that "the amount of copyrighted work modified in a typical jailbreaking scenario is fewer than 50 bytes of code out of more than 8 million bytes, or approximately 1/160,000 of the copyrighted work as a whole."
    Obviously, taking the entire Mac OSX operating system as your own is not equivalent to jailbreaking 50 bytes of code. Also, the goal being supported by the change is interoperability. EFF:
    "Copyright law has long held that making programs interoperable is fair use," confirmed Corynne McSherry, EFF's Senior Staff Attorney. "It's gratifying that the Copyright Office acknowledges this right and agrees that the anticircumvention laws should not interfere with interoperability."
    Psystar did kind of try that argument once, IIRC. Perhaps it will recycle in Florida. And we might see this one in Florida too, depending on how the appeal goes. So, while I'm not saying this new jailbreaking issue *should* come into this litigation, it's been so weird so far, I'm just thinking we should be alert for anything.

    Meanwhile, in the appeal they argue copyright misuse. Because the EULA continues to stand in the way of Psystar's dreams of selling their competing hardware with Apple's operating system on it. So like SCO trying to destroy the GPL, Psystar now tries to get Apple's license cast overboard so it can do what it pleases.

    Now to the documents themselves, so you can read for yourself and make up your own minds. The Florida District Court has granted the joint motion to stay the Psystar v. Apple litigation there, pending the appeal of the Apple v Psystar decision in the California litigation. No surprise there. It means maybe Florida will die aborning, depending on what happens in the appeal. Here's the docket:

    07/23/2010 - 14 - ORDER granting 13 Joint Motion to Stay. Counsel shall file a brief status report within (90) days from the date of this order advising whether this matter should remain stayed or resolution of the appeal. (see further details in order). Signed by Senior Judge William M. Hoeveler on 7/23/2010. (ag) (Entered: 07/23/2010)

    And in the Ninth Circuit, here are the filings:

    06/15/2010 - 15 - Filed clerk order (Deputy Clerk:CAG): The appellee's motion for an extension of time in which to file the answering brief is granted. The answering brief is due July 8, 2010. The optional reply brief is due 14 days after service of the answering brief. [7372209] (AF)

    07/08/2010 - 16 - Submitted (ECF) Answering brief for review. Submitted by Appellee Apple Inc.. Date of service: 07/08/2010. [7398321] (JGG)

    07/08/2010 - 17 - Filed (ECF) Appellee Apple Inc. Motion to take judicial notice of Information of Related Cases in Florida. Date of service: 07/08/2010. [7398322] (JGG)

    07/09/2010 - 19 - ENTRY UPDATED. [Edited 07/12/2010 by WP] Filed Appellee Apple Inc. excerpts of record in 2 volumes. Served on 07/08/2010. [7400279] (WP)

    07/12/2010 - 18 - Filed clerk order: The answering brief [16] submitted by Apple Inc. is filed. Within 7 days of the filing of this order, filer is ordered to file 7 copies of the brief in paper format, with a red cover, accompanied by certification, attached to the end of each copy of the brief, that the brief is identical to the version submitted electronically. [7400249] (WP)

    07/13/2010 - 20 - Received 7 paper copies of Answering brief [16] filed by Apple Inc.. One copy to Case Files, the remainder to Records. [7404979] (YA)

    07/26/2010 - 21 - Submitted (ECF) Reply brief for review. Submitted by Appellant Psystar Corporation. Date of service: 07/26/2010. [7418271] (KDC)

    We learn from Apple's answering brief what the main issues are on appeal:
    STATEMENT OF ISSUES

    1. Whether the district court, after finding that Psystar infringed Apple’s copyrights and violated the DMCA, correctly rejected Psystar’s defense of copyright misuse where (a) Apple’s software licensing agreement imposes only reasonable restrictions on licensees, and (b) Psystar made no showing that Apple wielded its copyrights to undermine the public policy of promoting invention and creative expression.

    2. Whether the district court correctly enjoined Psystar from infringing Apple’s copyrights in all versions of Mac OS X—including Snow Leopard, the latest version (and a derivative work) of Mac OS X—when the evidence demonstrated Psystar’s consistent pattern of deliberate infringement and the clear threat of future infringement.

    3. Whether the district court correctly refused to exclude from its injunction Psystar’s allegedly new product, Rebel EFI, when Psystar failed to present evidence regarding Rebel EFI sufficient to enable the court to determine whether Rebel EFI differed from Psystar’s past infringement and declined the district court’s invitation to move to exclude Rebel EFI from the injunction.

    4. Whether the district court properly sealed those portions of the summary judgment record that reveal the trade secret details of Apple’s proprietary lock-and-key encryption technology and Psystar’s method of circumventing that technology, because there is no legitimate public interest in disclosing this type of information.

    Methinks Psystar sealed overmuch, m'lords. They surely could have told us that much. Apple, early in its Introduction says:
    As found by the district court, and not disputed in this appeal, appellant Psystar Corporation (“Psystar”) is a “hardcore” copyright infringer....The trial court’s decision was correct in every respect and should be affirmed.
    Here's the Apple EFI argument from their brief:
    The court stated that the record presented by Psystar was “so sketchy, I can’t tell” (ER 85:1) and that “Psystar’s opposition brief appears to purposefully avoid providing a straightforward description of what Rebel EFI actually does” (SER 69- 70) (italics in original). The court invited Psystar to file
    a new motion before the undersigned that includes real details about Rebel EFI, and [to] open[] itself up to formal discovery thereon. This would serve the purpose — akin to post-injunction motion vetting a ‘design-around’ in a patent action — of potentially vetting (or not vetting) a product like Rebel EFI under this order’s decree. Moreover, Psystar may raise in such a motion any defenses it believes should apply to the factual circumstances of its new product, such as the 17 U.S.C. 117 defense raised in its opposition and at oral argument.
    Apple v. Psystar, 673 F.Supp. 2d at 955 (SER 70).

    Psystar chose not to file such a motion presumably because, as its opening brief concedes, Rebel EFI was a clear continuation of Psystar’s past infringing activity. Psystar thus deprived the district court of the evidence it needed to address this issue and abandoned the request for a carve-out of Rebel EFI. By doing so, Psystar waived its right to appeal this issue. See Foti v. City of Menlo Park, 146 F.3d 629, 638 (9th Cir. 1998) (appellant picketers waived their right to a preliminary injunction since they failed to provide additional briefing the district court requested because it needed a fuller explanation of the issues).

    So that's Apple's position. What about Psystar? Its Reply Brief isn't sealed, so we get to know.

    The Psystar table of contents in its reply has only three items, 1) copyright misuse, 2) scope of the injunction, and 3) sealing orders.

    In contrast, here's Apple's table of contents:

    TABLE OF CONTENTS

    STATEMENT OF ISSUES ......................................................................................1

    I. INTRODUCTION................................................................................2

    II. STATEMENT OF THE CASE ............................................................3

    III. STATEMENT OF FACTS...................................................................7

    A. Apple And Its Integrated Products.............................................7

    B. Apple's Registered Copyrights In Mac OS X .........................10

    C. Psystar's Infringement Of Apple's Copyrights .......................10

    1. Psystar's Unauthorized Reproduction Of Mac OS X ..............................................................................11

    2. Psystar's Unauthorized Distribution Of Mac OS X ......13

    3. Psystar's Unauthorized Modification Of Mac OS X ..............................................................................14

    D. Psystar's Circumvention Of Apple's Technological Protection Measure ..................................................................15

    E. The District Court's Injunction................................................17

    IV. SUMMARY OF THE ARGUMENT.................................................18

    V. STANDARDS OF REVIEW .............................................................21

    ARGUMENT ..........................................................................................................21

    I. THE DISTRICT COURT CORRECTLY REJECTED PSYSTAR'S AFFIRMATIVE DEFENSE OF COPYRIGHT MISUSE .............................................................................................21

    A. Courts Have Rejected Psystar's Per Se Theory.......................23

    B. Copyright Misuse Requires Proof That The Copyright Owner Has Exceeded Its Rights And Injured Competition Or Inhibited Creativity .............................................................27

    1. A Misuse Defense Based On Harm To Competition From A Tying Arrangement Requires At Least A Showing Of Abuse Of Power In The Market For The Copyrighted Work...............................28

    2. Alternatively, The Misuse Defense Requires Proof That The Owner's Actions Have Suppressed Creativity In The Independent Development Of Other Works...................................................................31

    C. Apple's Software License Does Not Constitute Copyright Misuse Because It Does Not Restrain Competition Or Inhibit Creativity ......................................................................32

    D. Psystar's Authorities Do Not Support A Finding Of Misuse ......................................................................................34

    E. There Was No Copyright Misuse Based On "Sham" Litigation ..................................................................................37

    2. It Is Not An Abuse Of Process To Assert Valid Copyrights......................................................................39
    II. THE DISTRICT COURT CORRECTLY ENJOINED PSYSTAR'S CONTINUING INFRINGEMENT AND DMCA VIOLATIONS....................................................................................43
    A. The District Court Did Not Abuse Its Discretion By Enjoining Psystar's Unlawful Acts..........................................45
    1. AMC Entertainment Does Not Preclude A Nationwide Injunction To Prohibit Psystar's Pattern Of Unlawful Conduct ........................................46

    2. The District Court Did Not Abuse Its Discretion By Refusing A Carve-Out For Mac OS X Snow Leopard And Rebel EFI.................................................48

    a. Mac OS X Version 10.6 Snow Leopard..............50

    b. Rebel EFI.............................................................51

    B. Psystar Forfeited Its Opportunity To Limit The Scope Of The Injunction ..........................................................................52
    III. THE SEALING ORDERS SHOULD NOT BE VACATED ............55
    A. Apple Has A Compelling Interest In Keeping Its Technological Protection Measure Confidential .....................55

    B. The District Court's Sealing Orders Were Based on Adequate Proof of Trade Secret Content.................................57

    CONCLUSION.......................................................................................................60

    STATEMENT OF RELATED CASES ..................................................................61

    See how you can tell what Psystar's arguments were by reading Apple's response? Psystar wants to be able to reveal how Apple protects its copyrighted works, so you and I can do what they did, I suppose. From Apple's brief, page 4:
    The order dismissing Psystar’s antitrust counterclaims permitted Psystar to move for leave to amend, but the order required Psystar to explain how it would remedy the deficiencies in its original pleading through amendment. Apple Inc. v. Psystar Corp., 586 F. Supp. 2d 1190, 1204 (N.D. Cal. 2008) (SER 16). Psystar sought leave to amend but did not attempt to reassert the antitrust counterclaims. Instead, Psystar alleged counterclaims for declaratory relief of copyright misuse and for unfair competition. The district court allowed the copyright misuse claim, reasoning that it already existed as an affirmative defense in the case. But the court dismissed Psystar’s unfair competition claims because those allegations (a) conflicted with Psystar’s already-rejected single-product market theory, and (b) failed to identify any actual or incipient violation of antitrust laws. SER 24. Psystar also does not appeal from this order.
    But let's let Psystar speak for itself. First on copyright misuse, its main defense:
    This case is about Apple’s attempt to control, through copyright, how purchasers of copies of OS X use their copies of OS X. Apple is free to — and does — do this by contract. The question is whether Apple’s attempt to do this by copyright too, and thereby gain access to the threat of statutory damages, constitutes copyright misuse...

    Apple must admit that the Fifth Circuit held that it was misuse to use a copyright to prevent a competitor from offering compatible, cheaper hardware for use with a copyrighted operating system. Alcatel, 166 F.3d at 792–93....

    If the right to make use of a copyrighted work exclusive is not granted by the Copyright Act then, a fortiori, the right to make use of an adjunct to the copyrighted work — here, the physical computer hardware — exclusive is not granted by the Copyright Act.

    Apple says that its restriction fosters competition and does not limit creativity. R. at 33–34. Not so. If Psystar is allowed to sell its competing hardware for use with OS X, then customers can choose between Apple’s integrated product, OS X on a Macintosh, and Psystar’s cheaper, unintegrated product, OS X on an Open Computer. And further creativity and competition can be expected as other companies, like Dell and Lenovo, compete to offer the best hardware platform for different users.

    So are Dell and Lenovo behind this? I can't help but wonder. Someone bigger than Psystar seems to want to use Apple software on their own hardware and make buckets of money from software they didn't write.

    I have a question for Psystar, something I don't yet fully understand. How is it using copyright when it's the EULA doing the restriction, and the restriction is on how you can use the software, not the hardware? I mean, I can put Linux on an iMac if I want to, or Microsoft Windows. And EULAs are used precisely to take away rights that otherwise copyright gives you. It's not copyright law blocking Psystar, as far as I can understand; it's the EULA. Psystar acknowledges that a copyright owner has the right to refuse to sell you its copyrighted work. It has the right to restrict you by contract, it even says. The part it can't seem to figure out is that the copyright owner can also say you can buy it but only on certain terms. Then you get to decide if you like the terms or not. I gather Psystar still wants this to be about the EULA.

    Finally, here's Apple's answer to the Alcatel reference:

    In Triad Systems Corp. v. Southeastern Express Co., 64 F.3d at 1337 (9th Cir. 1995), the Ninth Circuit squarely rejected this per se theory. There, this Court held that the copyright owner’s requirement that its software be used exclusively with its hardware and services was not copyright misuse. Psystar ignored this key authority in briefing below, and it does so again on appeal.

    Triad licensed its copyrighted operating and diagnostic software for use by its licensees in the operation of computers sold and maintained by Triad. Id. at 1333. Triad’s software licenses strictly prohibited any other use. Id. Triad alleged that Southeastern, an independent service organization, infringed Triad’s copyrights when Southeastern technicians serviced a licensee’s computer because copies of Triad’s operating and service software were loaded into memory when the computer was being serviced. Id. Southeastern asserted a copyright misuse defense, claiming “that Triad ha[d] used its intellectual property monopoly over Triad software to leverage its position in the Triad computer maintenance market.” Triad Sys. Corp. v. Southeastern. Exp. Co., 1994 WL 446049, at *13-14 (N.D. Cal. Mar. 18, 1994). The district court rejected this argument because “Southeastern failed to demonstrate that Triad’s practices are anticompetitive” and “cannot dispute that copyright owners like Triad are within their rights in using and enforcing restrictive license agreements.” Id.

    On appeal, the Ninth Circuit affirmed. This Court held that Southeastern could not prove copyright misuse because “Triad did not attempt to prohibit Southeastern or any other ISO [independent service operator] from developing its own service software to compete with Triad.” Triad, 64 F.3d at 1337. This Court also explained that Triad’s copyright fairly extended into the service market: “Triad invented, developed, and marketed its software to enable its customers and its own technicians to service Triad computers. Southeastern is getting a free ride when it uses that software to perform precisely the same service.” Id.

    Other courts also have rejected copyright misuse claims based on licenses restricting use of copyrighted software to particular hardware. In Service & Training, Inc. v. Data General Corp., 963 F.2d 680 (4th Cir. 1992), the Fourth Circuit upheld the copyright owner’s right to specify the computer hardware on which its proprietary software could be run. The court found that there could be no copyright misuse where “appellants [] offered no evidence that Data General did anything beyond limiting the use of the software to repair and maintenance of specific computer hardware, activity that is protected as an exclusive right of a copyright owner.”Id. at 690.

    Numerous district courts also have adopted similar reasoning to reject misuse defenses based on “leveraging” or “tying” the use of copyrighted software to specified services or hardware. See Atari Games v. Nintendo of Am., Inc., Nos. 88-4805, 89-0027, slip op. at 5-6 (N.D. Cal. Mar. 5, 1991) (no misuse where no proof that license “restrictions restrain[ed] the creativity of Nintendo licensees and thereby thwart[ed] the intent of the patent and copyright laws”), aff’d on other grounds, Atari Games Corp. v. Nintendo of Am., Inc., 975 F.2d 832, 846 (Fed. Cir. 1992); In re Indep. Serv. Orgs. Antitrust Litig., 910 F. Supp. 1537, 1542 (D. Kan. 1995) (no misuse where there was “no evidence that Xerox’s licensing agreement prohibit[ed] CSU from developing its own diagnostic software for Xerox copiers”); Advanced Computer Servs. of Mich., Inc. v. MAI Sys. Corp., 845 F. Supp. 356 (E.D. Va. 1994) (no copyright misuse where MAI’s license restrictions were not designed to prevent infringer from developing competing software); Microsoft Corp. v. BEC Computer Co., 818 F. Supp. 1313, 1316-17 (C.D. Cal. 1992) (rejecting copyright misuse defense where “Microsoft’s License Agreements do not prohibit defendants from independently implementing programs similar to MS-DOS and WINDOWS” or “selling their computers without accompanying software operating system”).

    Psystar’s per se theory of copyright misuse is a far more radical and sweeping attack on the rights guaranteed by copyright than the misuse defenses soundly rejected by other courts. By urging this theory, Psystar asks this Court to compel Apple to license its proprietary software to competitors for use on their own computer hardware. Such a compulsory license is contrary to the constitutional and statutory framework for copyrights, which explicitly grants copyright owners the right to exclude others as an incentive to create new works. 17 U.S.C. § 106; Stewart v. Abend, 495 U.S. 207, 228-29 (1990) (“[N]othing in the copyright statutes would prevent an author from hoarding all of his works during the term of the copyright.”); Fox Film Corp. v. Doyal, 286 U.S. 123, 127 (1932) (“The owner of the copyright, if he pleases, may refrain from vending or licensing and content himself with simply exercising the right to exclude others from using his property.”). Like the defendant in Triad, Psystar is seeking a “free ride” on the extraordinary investments Apple has made in the development of Mac OS X, investments encouraged and protected by copyright. This Court should affirm the rule in Triad and reject Psystar’s per se theory....

    Nor does Alcatel establish the per se rule—“using a copyright in operating-system software to mandate the use of particular hardware is copyright misuse” (Opening Br. at 22)—that Psystar advocates. There, the plaintiff (formerly known as “DSC”) manufactured telephone switching systems comprising numerous components, including so-called “microprocessor cards”—physical cards containing microprocessors and other electronics. If an owner of an Alcatel switching system sought to expand the system’s capacity, the owner had to obtain additional microprocessor cards for insertion into the system. Alcatel, 166 F.3d at 777-78.

    The Alcatel switching systems ran Alcatel’s copyrighted operating system software. Based on the particular operational characteristics of Alcatel’s switching systems, the court found that any microprocessor card added to a switching system would necessarily infringe Alcatel’s copyright in its operating system software. This was true even for third party cards created without the slightest infringement of Alcatel’s rights. As a result, Alcatel’s copyright was expanded beyond controlling the use of its software on systems manufactured and sold by Alcatel and impeded independent creativity in a secondary market for expansion microprocessor cards.

    By contrast, Apple’s license agreement does not directly or indirectly preclude the owner of an Apple computer from purchasing and using non-Apple components with that Apple computer—e.g., additional memory, a different hard disk drive, or a replacement microprocessor. Aftermarket components used to expand an Apple computer are the proper analog to the microprocessor cards in Alcatel—i.e., these are components used to expand the system rather than replacements for the entire system. Alcatel never holds, or even implies, that Alcatel could not limit the use of its operating system to Alcatel’s switching system. Nor does Alcatel suggest that Alcatel’s competitors could copy Alcatel’s operating system to create competing switching systems.

    Even assuming that Apple computers were, as Psystar would have it, analogous to the microprocessor cards in Alcatel, Apple’s license restrictions have not provided any “patent-like” control or monopoly over the manufacture of competing computers. Apple’s SLA does not have the effect of precluding others from making competing computer hardware or operating system software. ER 669-670. Indeed, Psystar competed with Apple by selling Psystar computers that ran Linux and Windows operating systems.10 ER 894; Apple v. Psystar, 586 F. Supp. 2d at 1193 (SER 4-5).

    Finally, to the extent that Alcatel suggests that limiting the use of a copyrighted work to the copyright owner’s product is per se copyright misuse, the case must be considered wrongly decided and contrary to this Circuit’s decision in Triad. Alcatel was decided prior to the abrogation of Morton Salt by Illinois Tool Works, moreover, so the Fifth Circuit did not have the benefit of the Supreme Court’s extensive discussion, described supra, of the contemporary approach to tying arrangements in the patent misuse and antitrust contexts.

    Are you thinking about TurboHercules? Well, I am too. And why do I care about Psystar, when I prefer to use Linux now? Because the GPL is a copyright license. It is enforced by copyright law. And because although I prefer not to use proprietary software, given a choice, I still believe in simple fairness.

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