Psystar Agrees to Pay Apple Millions Over Lawsuit

Mac clone maker Psystar is to pay Apple $2.7 million in damages and legal fees, after it lost the court case over it selling “open computers”, i.e. PCs preloaded with Mac OS X Leopard.

Psystar’s website currently lists all Mac-loaded computers as “out of stock,” but the legal wrangle is set to gone on as Psystar continues its countersuit, alleging Apple’s lawsuit does not cover its operating system, Snow Leopard.

“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,” said Psystar in a company announcement, which was posted on legal blog Groklaw.

“Moreover, Apple has agreed to voluntarily dismiss all its trademark, trade-dress, and state-law claims,” the company said. “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.”

However Psystar’s chief attorney K.A.D. Camera of the Houston-based law firm Camera & Sibley LLP told ComputerWorld the battle is not over, and said he believed the summary judgement from federal Judge William Alsup was incorrect. “We will take this case up with the Ninth Circuit,” he said.

In mid-November Alsup ruled Apple’s copyright infringement claim was valid and rejected the basis of Psystar’s countersuit: that Apple was misusing its copyright claims. The full ruling was posted on Groklaw. “We’ve agreed that Apple will not collect these damages until all appeals have been heard,” Camera said. “Until then, we have no liability.”

Apple claimed Psystar violated three of its exclusive rights in Mac OS X: Its reproduction right, its distribution right and its right to create derivative works. In November 2008, Psystar’s countersuit, claiming monopolistic practices and copyright misuse, was dismissed. However, in December of 2008 Psystar charged that Apple was prohibited from bringing action against Psystar due to a failure to register certain copyrights, and claimed their actions did not amount to creating a derivative work because of modifications made to the source code and kernel extensions.

Psystar is now hoping for a more favourable outcome in a pending parallel case in Florida, where the company will argue that any injunction from the court should not extend to Rebel EFI, a Psystar product that has not been litigated in the previous case. A hearing on remedies has been set for 14 December in California.

“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,” documents filed by the company’s legal team argue. “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.”