Apple Inc. vs. Psystar Corp; Apple’s Achilles heel
Colm MacKernan is the Director of Origin Ltd, an Intellectual Property Consulting Firm in London. He represents high-tech companies based in Europe, North America and Asia on complex international matters.
“Apple is in a tricky position,” he says. “The core of its problem is that it sells OS X Leopard as a separate item from an Apple Computer ($129 on the Apple site.) This gives rise to an argument that Apple is engaging in “tying,” a practice that is often held illegal under many antitrust or competition laws, that involves requiring a purchaser (or licensee) to buy a product that purchaser may not want as a condition of obtaining the product it does want, i.e., if you want A, you must take B as well, or in this case if you want OS X you must buy an Apple computer. In effect this is similar to the problems Microsoft had when it sold Internet Explorer in combination with Windows and Media Player — although in that case Microsoft had the added handicap of being dominant, which subjected it to stricter scrutiny. That Apple is not dominant does not mean that Apple would not be subject to scrutiny, just that the “market power” leg of an illegal-tying case is weaker.
“Students of competition law will note that Patent and Copyright “misuse” in the US refers to commercial strategies that seek to extend the economic benefits of an item of intellectual property beyond is lawful scope. Typically misuse involves a violation of antitrust or competition law, most commonly illegal tying. The most common penalty in US law is to block enforcement of the relevant patents and copyrights. The other problem for Apple is that tying is specifically addressed in the European Licensing Guidelines, the Technology Transfer Block Exemption, the US Antitrust Guidelines for Licensing Intellectual Property as well as the Japanese and Korean guidelines. None “smile” on tying, although the US does say that it will not be treated as automatically illegal and quality-control cases can be made under the others. Now this does not mean that Apple would lose a case of copyright and patent infringement (many aspects of OS X Leopard are also subject to patent protection), but it does mean that they have a complicated case.”
Still NO shipped computers from Psystar. Anyone who gets burned on this shady offering, deserves it.
Disagree on the strength of Apple’s EULA. I have a feeling it’s pretty solid in this instance.
Bob Revoux
April 23, 2008 at 2:22 pm
Apple does not have to win or loose this. All they have to do is lower their prices across the board and offer a mid-entry Tower.
If the MacMini becomes available with the same specs as Psystar’s specs and at a $499 price, Apple would not have to worry about the clones. It’s the 80% margins that have Apple in hot water.
If they produce a Mid-Tower with similar specs with a $1600 price tag, they would also put that to rest.
So instead of spending $ in Lawyers, Apple needs to spend the $ in creating computers that users want at a reasonable price.
and for that, I thank Psystar’s move.
Dorian
April 23, 2008 at 6:49 pm
I agree with MacKerman. I think Apple might risk setting up a big precedent if it takes Psystar to court and something goes wrong. But I don’t think Psystar will get away with it. I agree with your previous post.. Apple will definitely brick the fake Macs in the future.
Jason C.
April 23, 2008 at 7:34 pm
What about video games? If I want Super Mario Galaxy (A), then don’t I have to buy the Wii (B)? I’m not a lawyer, but based on the above text, wouldn’t that qualify as “tying” as Mr. Abhyankar states? And if so, why are there no complaints about it?
Faisal Ali
April 23, 2008 at 8:59 pm
Faisal,
You are, of course, correct. But that very reasonable opinion wouldn’t get people to come visit this blog, which isn’t actually meant to be meaningful legal discussion. Its just a ploy to increase hit rate.
Byron
April 24, 2008 at 4:19 am
Det er en stor forskjell faktisk, fordi det er faktisk ikke noe i veien for at Os X kan kjøre på en helt vanlig maskin, mens nintendo spill blir programmert for en nintendo, og derfor kommer det ikke til andre. Ikke fordi de ikke vil at det skal kjøre der.
Torger
May 15, 2008 at 10:14 pm
Haha, I screwd up, I wrote in norwegian:P Lets try english. The difference is that Os X can run on a PC just fine, the thing is that Apple wont let them. In console games the thing is how they are programmed, you programme a game different for a ps3 xbox and a nintendo. Therefore, you dont have to buy a nintendo to play super mario galaxy just cuz nintendo dont want you to play it other places, but they are programmed for that, and therefore cant run on other consoles. I dont think there is an agreement that claimes you only can play super mario galaxy on a nintendo, but a nintendo is the only place you can play it. That is a legal copy. and not a downloadable version online for an emulation. Cuz Nintendo lets the game out on disc only.
Torger
May 15, 2008 at 10:18 pm
Faisal,
The difference is that Nintendo isn’t forcing you to use a Wii to play Galaxy. There is nothing preventing you from buying Galaxy, ripping it to a CD image, and then playing it on a Wii emulator… Although you can’t exactly wave your computer around to play the games (like with the Wii-motes), you can still play the game.
Aaron
May 27, 2008 at 11:43 pm
Sure Microsoft is behind Psystar.
Apple will just win because they are developing a new, custom Apple CPU.
So psystar will have to close. HAHAHAHAHAHAHAHAHA
John Hope
August 31, 2008 at 6:04 pm
Thanks for the information. Added you to bookmark))
Your new reader.
Alex
October 3, 2008 at 6:37 pm
It’s simple.
Apple is designing a custom CPU and will win this battle agains (who knows who is behind psystar)
John Hope
December 10, 2008 at 9:33 pm