Apple attacks Psystar's antitrust claim

Clone maker's argument ignores 'realities of the marketplace,' Apple says

Apple Inc. has asked a federal judge to dismiss the countersuit of Mac clone maker Psystar Corp., saying that the company's claim that Apple is a monopoly is "deeply flawed," according to court documents made public today.

The motion, filed under deadline yesterday, asked U.S. District Court Judge William Alsup to dismiss the lawsuit Psystar submitted in late August that charged Apple with restraint of trade, unfair competition and other violations of antitrust law.

Key to Psystar's argument was its contention that Apple enjoys "monopoly power" from the licensing link it has created between its Mac hardware and Mac OS X operating system.

Apple's lawyers scoffed at the idea. "In an obvious attempt to divert attention from its unlawful actions, Psystar asserts deeply flawed antitrust counterclaims designed to have this Court force Apple to license its software to Psystar, a direct competitor," Apple said in the motion filed Tuesday.

"Ignoring fundamental principles of antitrust law, and the realities of the marketplace, Psystar contends that Apple has unlawfully monopolized an alleged market that consists of only one product, the Macintosh computer," Apple said.

The motion repeatedly hammered the point that companies cannot be forced to help rivals, as it said Psystar had demanded.

"The ultimate goal of Psystar's Counterclaims is an order from this Court compelling Apple to help competitors, like Psystar, by forcing Apple to license its proprietary software to those competitors for use on their own computer hardware," said Apple. "Neither the federal nor the state antitrust laws require competitors to stop competing with, and instead to start helping, each other."

Later in the motion, Apple returned to that theme. "Psystar seeks to force Apple to license its software to competitors, like Psystar, so they can use Mac OS to create Mac 'clones'," Apple said. "However, one of the bedrock principles of antitrust law is that a manufacturer's unilateral decision concerning how to distribute its product and with whom it will deal cannot violate the Sherman [Antitrust] Act."

Apple also argued that it does not have a monopoly, and instead cast rival Microsoft Corp. as the big gorilla. "Psystar cannot allege Apple has monopoly power in either a PC operating systems market or a personal computer market since Microsoft's Windows has market power in those markets," said Apple.

This week's motion to dismiss stemmed from the lawsuit Apple filed in July accusing Doral, Fla.-based Psystar with copyright and software licensing violations. Apple said that Psystar, which had been installing Mac OS X since April, was breaking Apple's end-user licensing agreement (EULA). That agreement expressly forbids users from installing the software on hardware not sold by Apple. "You agree not to install, use or run the Apple software on any non-Apple-labeled computer, or to enable others to do so," Apple's EULA reads.

In its July lawsuit, Apple demanded that Psystar stop the practice and be forced to recall all Mac OS X-powered machines it had already sold. If it lost the case, one noted intellectual property attorney said, Psystar would likely be run out of business.

When Psystar first started selling clones, it struck a combative tone, promising to go the legal mat if necessary to defend its right to sell systems with Mac OS X 10.5, or Leopard, preinstalled.

Psystar continues to sell Mac clone desktop and server systems at prices starting at $554.99. In August, when his lawyers announced the countersuit, Rudy Pedraza, president and co-founder of Psystar, also said the company was working on a notebook that would run Mac OS X.

Apple's motion is scheduled to be heard by Judge Alsup on or after Nov. 6.

Copyright © 2008 IDG Communications, Inc.

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