Apple, Inc. v. Psystar Corp.
| Decision Date | 13 November 2009 |
| Docket Number | No. C 08-03251 WHA.,C 08-03251 WHA. |
| Citation | 673 F.Supp.2d 931 |
| Parties | APPLE, INC., a California corporation, Plaintiff, v. PSYSTAR CORPORATION, a Florida corporation, Defendant. and Related Counterclaims. |
| Court | U.S. District Court — Northern District of California |
James G. Gilliland, Jeb Bacon Oblak, Megan M. Chung, Mehrnaz Boroumand Smith, Townsend and Townsend and Crew LLP, San Francisco, CA, George A. Riley, O'Melveny & Myers LLP, for Plaintiff and Counter-defendant.
Christine S. Watson, Robert Joseph Yorio, Christopher Paul Grewe, Colby B. Springer, Carr & Ferrell LLP, Palo Alto, CA, David Vernon Welker, Boise, ID, Eugene Action, Fresno, CA, Kent Radford, Kiwi Alejandro Danao Camara, Camara & Sibley LLP, Houston, TX, for Defendant and Counter-claimant.
In this copyright-infringement action, plaintiff Apple, Inc. and defendant Psystar Corporation have filed cross motions for summary judgment. For the following reasons, Apple's motion is GRANTED and Psystar's motion is DENIED.
Plaintiff Apple Inc. launched its Macintosh computer in 1984 and its Mac OS X operating system in 2001. Apple has manufactured an exclusive line of personal computers, including the Mac Pro, iMac, Mac mini, MacBook, MacBook Air, and MacBook Pro. Mac computers have been sold with Mac OS X preinstalled. Mac OS X has also been sold as a DVD so customers can upgrade their Mac computers to another version of the operating system.
Mac OS X on both Mac computers and the DVD are covered by software license agreements that provided that the software is "licensed, not sold to [the user] by Apple Inc. ("Apple") for use only under the terms of this License" (Chung Exh. 26 at ¶ 1). Apple's license agreements restricted the use of Mac OS X to Apple computers, and specifically prohibited customers from installing the operating system on non-Apple computers. The license agreement stated (id. at ¶ 2):
2. Permitted License Uses and Restrictions.
A. Single Use. This license allows you to install, use and run (1) copy of the Apple Software on a single Apple-labeled computer at a time. You agree not to install, use or run the Apple Software on any non-Apple-Labeled computer or enable another to do so.
* * *
C. You may make one copy of the Apple Software (excluding the Boot ROM code and other Apple firmware that is embedded or otherwise contained in Apple-labeled hardware) in machine-readable form for backup purposes only . . . . Apple Boot ROM code and firmware is provided only for use on Apple-labeled hardware and you many not copy, modify or redistribute the Apple Boot ROM code or firmware, or any portions thereof.
* * *
F. Except as and only to the extent permitted by applicable licensing terms governing use of the Open Sourced Components, or by applicable law, you may not copy, decompile, reverse engineer, disassemble, modify or create derivative works of the Apple Software or any part thereof.
It also restricted redistribution and modifications to the software (id. at ¶ 3):
3. Transfer. You may not rent, lease, lend, redistribute, or sublicense the Apple Software. Subject to the restrictions set forth below, you may, however make a one-time permanent transfer of all of your license rights to the Apple Software (in its original form as provided by Apple) to another party, provided that: (a) the transfer must include all of the Apple Software, including all its component parts (excluding Apple Boot ROM code and firmware), original media, printed materials and this License; (b) you do not retain any copies of the Apple Software, full or partial, including copies stored on a computer or other storage device; and (c) the party receiving the Apple Software reads and agrees to accept the terms and conditions of this License. You may not rent, lease, redistribute, sublicense or transfer any Apple Software that has been modified or replaced under Section 2D above.
In brief, customers were contractually precluded from utilizing Mac OS X on any computer hardware system that was not an Apple computer system.
Besides the license agreement, Apple has obtained three copyright registrations for Mac OS X. It has used lock-and-key technological measures to prevent Mac OS X from operating on non-Apple computers. This involved the use of a "kernel" extension, which is software that is executed and becomes part of the operating system on an Apple computer. The kernel extension would communicate with other kernel extensions to locate the decryption keys in the hardware, which then would unlock the encrypted files.
Defendant Psystar Corporation has made a line of computers called Open Computers (formally known as Open Mac and OpenPro). Psystar has modified Mac OS X to run on its computers and has sold them to the public. The following briefly describes the conduct at issue. Psystar first bought a copy of Mac OS X and then installed it on an Apple Mac mini. Next, Psystar copied Mac OS X from the Mac mini onto a non-Apple computer. This non-Apple computer was used as an "imaging station." Once on the imaging station, Mac OS X was modified. Psystar then replaced the Mac OS X "bootloader." The bootloader runs when a computer first comes on and locates and loads portions of the operating system into random access memory. Without a bootloader, Mac OS X would not operate. Psystar also disabled and/or removed Mac OS X kernel extension files and replaced them with other kernel extension files. Psystar's modifications enabled Mac OS X to run on non-Apple computers. The modified copy became the "master copy" that was used for mass reproduction and installation onto other Psystar computers. Apple also alleges that every time Psystar turned on Psystar computers running Mac OS X then another copy was made in random access memory.
Apple contends that Psystar's reproduction, modification, and distribution of Mac OS X on non-Apple computers constituted copyright infringement under the Copyright Act and a violation of the Digital Millennium Copyright Act. Psystar asserts a number of defenses. Both parties now move for summary judgment.
Summary judgment must be granted under FRCP 56 when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." A district court must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there is any genuine issue of material fact. Giles v. General Motors Acceptance Corp., 494 F.3d 865, 872 (9th Cir.2007). A genuine issue of fact is one that could reasonably be resolved, based on the factual record, in favor of either party. A dispute is "material" only if it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
Apple contends that Psystar is liable for copyright infringement. "Plaintiffs must satisfy two requirements to present a prima facie case of direct [copyright] infringement: (1) they must show ownership of the allegedly infringed material and (2) they must demonstrate that the alleged infringers violate at least one exclusive right granted to copyright holders under 17 U.S.C. § 106." A & M Records v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir.2001).
Apple has two federally registered copyrights in Mac OS X. The validity of these registered copyrights is not contested. Thus, Apple has established ownership of Mac OS X.1
Apple asserts that Psystar has violated three of its exclusive rights in Mac OS X: (1) its reproduction right; (2) its distribution right; and (3) its right to create derivative works. This order next addresses each of these.
According to Apple, Psystar has violated its exclusive right to copy Mac OS X. Psystar admits that it has made copies of Mac OS X and installed those copies on non-Apple computers (Def. Opp. 10). In addition, when Psystar turns on its computers running Mac OS X, another copy of the software is made to the random access memory. Psystar has thus infringed Apple's reproduction right.
Section 117(a) permits the owner of a copy of a computer program to copy or modify the program for limited purposes without incurring liability for copyright infringement. See Krause v. Titleserv, Inc., 402 F.3d 119, 121 (2nd Cir.2005). But the question is whether Psystar can rely on Section 117 to escape liability. It cannot.
As Apple pointed out, Psystar waived any Section 117 essential step defense when it failed to plead it. Psystar counters that it has not waived Section 117 because that provision is a limitation on a copyright owner's exclusive rights rather than an affirmative defense. An earlier Ninth Circuit decision stated "Section 117 defines a narrow category of copying that is lawful per se" and "Section 107, by contrast, establishes a defense to an otherwise valid claim of copyright infringement." Sega Enters. v. Accolade, Inc., 977 F.2d 1510, 1521 (9th Cir.1992). Since then, the Ninth Circuit has expressly referred to Section 117 as a defense. See Wall Data Inc. v. L.A. County Sheriff's Dep't, 447 F.3d 769, 776 (9th Cir.2006) (); Asset Mktg. Sys. v. Gagnon, 542 F.3d 748, 754 (9th Cir.2008) (). As such, this order treats Section 117 as an affirmative defense.
Alternatively, if Section 117 is considered an affirmative defense, then Psystar argues it has pled it in its answer and raised the substance of its Section 117 argument in its interrogatory responses. Neither the answer nor interrogatory responses, however, refer to Section 117. And Psystar has not demonstrated any good cause for its failure to assert the defense after a year of...
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