Antitrust case against Apple still on, says Mac clone maker

Mediation ordered by judge a 'nonstory,' attorney says

Contrary to media and blogger reports, Apple Inc. and Mac clone maker Psystar Corp. have not suspended their legal wrestling, a lawyer for Psystar said today.

The fact that the two parties have filed documents with a federal court promising that they would take their dispute to Alternative Dispute Resolution (ADR), a legal process that can include mediation, is "a nonstory," said Colby Springer, an attorney at Palo Alto, Calif.-based Carr & Ferrell LLP, who is on the team representing Psystar.

According to court documents filed this month, lawyers for both Psystar and Apple have agreed to nonbinding mediation.

The court demanded that both parties agree to enter ADR, Springer confirmed. But he denied that anything should be read into the paperwork. "The Northern District [of California] requires you to go through ADR," he said. "It's standard practice, not for all courts, but the practice is growing. Quite frankly, all the talk about entering negotiations is really a nonstory."

ADR does not require that opponents come to an agreement, although the case's judge can order the parties to continue discussions until he believes that route will be fruitless. "The case is very much alive," Springer said.

Apple and Psystar agreed to private mediation, with a mediator to be chosen from Judicial Arbitration and Mediation Services Inc. (JAMS), a private company that provides trained mediators, arbitrators and negotiators. By ADR rules, any details of an agreement between Apple and Psystar would be kept secret.

Springer hinted that it was unlikely mediation would resolve the dispute. "This will go on a dual track now, the ADR and the case," he said, "but the real story, from our point of view, is our objection to the Apple move to dismiss."

Last Friday, Psystar filed a brief opposing Apple's earlier move to dismiss Psystar's antitrust lawsuit. Calling Apple's logic "simply wrong," Psystar said it had made a case that Apple's practice of tying its Mac OS X to the company's own hardware is a violation of several antitrust laws.

In its motion to dismiss, which it filed Sept. 30, Apple said that the Doral, Fla.-based clone maker's claim that Apple is a monopoly is "deeply flawed" and should be tossed out by U.S. District Court Judge William Alsup. Apple also asserted that it could not be compelled to license its operating system to rivals, such as Psystar. "Neither the federal nor the state antitrust laws require competitors to stop competing with, and instead to start helping, each other," the computer maker argued.

Psystar rebutted Apple's reasoning last week. "Apple is nothing if not tenacious, having previously asserted this very same argument in attempts to dismiss antitrust claims related to Apple's iPod, iTunes Music Store and iPhone ending in the Northern District of California," Psystar's lawyers said. They cited several rulings, including one by the Ninth Circuit Court of Appeals, that denied other Apple motions to dismiss antitrust cases brought against those product lines.

Apple started the legal wrangling in July when it accused Psystar of copyright and software licensing violations. Apple said that Psystar, which since April had been installing Mac OS X on Intel-based systems it built and sold, was breaking Apple's end-user licensing agreement. That agreement expressly forbids users from installing the software on hardware not sold by Apple.

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 intellectual property attorney said, Psystar would likely be forced out of business.

In August, Psystar countersued, charging Apple with restraint of trade, unfair competition and other antitrust law violations.

Apple and Psystar are currently scheduled to argue the motion to dismiss before Alsup on Nov. 6.


Copyright © 2008 IDG Communications, Inc.

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