Psystar May Still Have Some Fight Left

Psystar, the company that put itself on the tech industry's map by offering so-called "open" hardware loaded with Apple (Nasdaq: AAPL) software -- and then defended its actions in court with some audacious legal arguments -- is down but apparently not yet out.

It is appealing a summary judgment issued against it last month in spite of having agreed to pay US$2.7 million in a settlement deal resulting from Apple's claims of copyright infringement.

The fact that Psystar is preparing an appeal while also agreeing to settle is not unusual, considering how much works goes into an appeal, Timothy J. Connors, an attorney with Calfee, told MacNewsWorld. "An appeal must be filed within a specified amount of time and they can take an enormous amount of work. A company negotiating a settlement at the same time would be foolish not to begin the paperwork, at least, because if a settlement is not reached, it would have to scramble at the last minute."

Then there is this: Psystar will not have to pay the damages until the appeals process is exhausted, according to CeCe Cohen, a spokesperson for the company's counsel Camara & Sibley.

Drawn-Out Affair

"That could last years," she told MacNewsWorld.

In trying to explain Psystar's broader actions, though, lawyers are once again scratching their heads. Reading between the lines of Psystar's response to Apple's motion for a permanent injunction, it appears to want to build a new business model around a product it released earlier this year called "Rebel EFI," a $50 utility that installs and runs Apple's Snow Leopard OS on generic PCs.

Psystar did not respond to MacNewsWorld's request for comment on this story.

Judge William Alsup of San Francisco's District Court, who issued the summary judgment, has yet to rule on whether Rebel EFI will be included in any future remedies. [*Correction - Dec. 16, 2009]

Snow in Florida

Psystar tipped its hand about Rebel EFI and Snow Leopard in its documents filed with the court regarding the injunction and summary judgment, said Calfee's Connors.

"It doesn't want the injunction to be too broad-ranging and include Snow Leopard," he said.

Basically, the settlement agreement has resolved all of the issues disputed in the California case, Connors said.

Psystar "doesn't want the injunction to cover the Snow Leopard OS, which is the subject of an ongoing lawsuit between the two companies in Florida," he noted. "Psystar wants to keep the scope of the injunction in the California case limited to the earlier Leopard Mac OS that was the subject of that particular case."

Psystar may well win the day and get to fight the larger war, Connors speculated. Arguments that Psystar could have made regarding Snow Leopard and consumer fair use -- Rebel EFI is installed by consumers as opposed to the computer maker -- were not introduced during the earlier hearing.

Winning Scenario

This summer, Psystar filed a separate lawsuit against Apple in Florida claiming that Apple was violating antitrust laws by locking Snow Leopard to its own hardware.

At the end of November, Apple filed a motion with Judge William Hoeveler in U.S. District Court in southern Florida, requesting that Psystar's case be dismissed -- or transferred to Alsup's court, as the the Florida case was essentially identical to the California lawsuit.

In the Florida case, Psystar is trying to re-litigate all of the same issues that it lost in California -- but with respect to Snow Leopard, Connors said.

"They are unlikely to ultimately win on the substance of that issue, but they conceivably could win the narrow question of whether Rebel EFI should be covered by the scope of the injunction," he said.

Whether that potential victory would be enough to breathe some life into the company would remain to be seen.