The unanimous three-judge ruling was handed down by California’s 9th Circuit Court of Appeals, a court that is an authority on computer and technology issues. The case was about a company called Psystar that came up with a way to provide its customers with Mac-like laptops for $699. It did this by copying Apple’s operating system onto cheaper computers.

Psystar also shipped its computers, called “OpenMacs”, with a disc containing an authorized copy of the Apple software. The point of including the disc was not for the customer’s benefit — the $699 computers already had the software installed — but an attempt to get around copyright law.

When it was sued, Psystar tried to argue that Apple was abusing copyright by refusing to let people use software that had they validly purchased. The argument was based on the legal rule that a copyright owner’s rights expire after an article has been sold (this is why you can sell a used book or CD). In the case of Psystar’s Mac clones, however, the court ruled that the principle did not apply because people did not actually own the software but instead used it subject to a license from Apple. The license amounts to a contract that limits how the software can be used.

The outcome of the appeals court decision is not a great surprise because the software license theory is a long-established part of the legal landscape. What did come as a surprise, however, is a short section at the end of the ruling that said a lower court was wrong in letting Apple seal documents related to the case. The 9th Circuit said it had joined another influential court in believing there is “a strong presumption in favor of access” when it comes to court records.

This could prove bothersome for Apple, which is known for being highly secretive, even by the standards of technology companies. In legal matters, Apple routinely tries to seal anything and everything related to the hundreds of lawsuits in which it has been involved. One prominent recent example is the case in which a patent troll called Lodsys is suing companies that develop apps for the Apple store. Apple claims that it has a license that protects the developers and has filed a copy with the court — but then convinced the court to promptly seal the license.

In its decision, the California court may be sending a message that Apple and others are going too far with their requests to conceal documents, and that iit s time for them to be more transparent in their legal proceedings.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Where new opportunity lies in the mobile operating system space
• Consumer privacy in the mobile advertising era
• Takeaways from mobile’s second quarter

Apple, however, will be very pleased with the ruling. The court granted Apple’s request for a permanent injunction, barring future sales of any machines with OS X pre-installed. It also prohibits Psystar from trying to get around Apple’s technological countermeasures put in place to prevent illegal copying and use of OS X, and from helping others try to do so.

While it sounds like this injunction might extend to the Rebel EFI software that Psystar has been selling to help users put OS X on machines themselves, it isn’t expressly forbidden. Judge William Alsup warns, though, that doesn’t necessarily mean Psystar is in the clear. Instead, he emphasizes the risks inherent in continuing to sell Rebel EFI, as reported by All Things Digital:

Rebel EFI will not be expressly excluded from the terms of the injunction. It should be clear, however, that this ruling is without prejudice to Psystar bringing a new motion before the undersigned that includes real details about Rebel EFI, and opening itself up to formal discovery thereon. This would serve the purpose — akin to a post-injunction motion vetting a “design-around” in a patent action — of potentially vetting (or not vetting) a product like Rebel EFI under this order’s decree. Moreover, Psystar may raise in such a motion any defenses it believes should apply to the factual circumstances of its new product, such as the 17 U.S.C. 117 defense raised in its opposition and at oral argument. Whether such a defense would be successful on the merits, or face preclusion or other hurdles, this order cannot predict. What is certain, however, is that until such a motion is brought, Psystar will be selling Rebel EFI at its peril, and risks finding itself held in contempt if its new venture falls within the scope of the injunction.

The injunction takes effect immediately, but Psystar has been given until Dec. 31 at the latest to cease all of its sales operations. That’s an outside limit, though, and the judge told the company to stop within the hour if at all possible.

I’m glad this thing is basically over. While I’m not sure I agree with the degree to which OS X is a closed system, all Psystar really proved was that once you take quality control and attention to detail out of the hands of Apple, things rapidly start to go downhill. Despite recent problems, it’d be a shame to see what tends to be the much more reliable Mac experience go the way of the PC, with its HPs, Compaqs, and low-end Acers.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How do developers ride the Siri wave?
• Connectivity means making the machine disappear
• Access vs. ownership: Why UltraViolet has already lost

In an unexpected twist in the drawn-out battle between Psystar and Apple, the two companies agreed Monday to a partial settlement that could end the case after 17 months of back-and-forth between them, Computerworld is reporting. Details on the settlement are sparse, but what is known is quite surprising.

The terms of the settlement would see Psystar pay Apple damages, though the amount has not yet been determined. It would also see Apple drop any and all trademark, trade-dress and state law claims, which would effectively eliminate the need for a trial. As a partial settlement, the agreement would not go into effect until Psystar has exhausted all of its appeals before the court.

It’s an interesting deal, because it looks like it wouldn’t necessarily stop Psystar from selling its Mac clones. Instead, the company would be limited to selling its “Open” line of computers without OS X preinstalled, and that responsibility would lie instead with customers. Apparently that’s a compromise Apple is willing to live with, and with good reason, since the Mac maker would have to go after many other clone makers if it wasn’t.

Here are the terms of the deal, as stated in a motion filed Monday by Psystar:

Psystar and Apple today entered into a partial settlement that is embodied in a stipulation that will be filed with the court tomorrow. Psystar has agreed on certain amounts to be awarded as statutory damages on Apple’s copyright claims in exchange for Apple’s agreement not to execute on these awards until all appeals in this matter have been concluded. Moreover, Apple has agreed to voluntarily dismiss all its trademark, trade-dress, and state-law claims. This partial settlement eliminates the need for a trial and reduces the issues before this court to the scope of any permanent injunction on Apple’s copyright claims.

That means that Apple’s permanent injunction, which it filed last week, would still be decided by the court. Psystar moved to have its software, the Rebel EFI program, to be excepted from the injunction. Rebel EFI allows users to install any OS on any hardware, but Psystar maintains that since it is entirely its own product, and is not sold together with any hardware or Mac OS X, it should be exempt from Apple’s motion. Also, Psystar goes onto note that even its customers, should they choose to use Rebel EFI to install OS X on non-authorized hardware, should also be exempt from any legal repercussions:

Psystar’s end users do not engage in commercial use of Mac OS X and their use would qualify as use for “internal purposes” even under the standards articulated by Apple in its summary-judgment briefing.

Hard to vilify this new moderate stance taken by the clone maker, which is probably why Apple seems to have agreed to the terms. Whether or not Rebel EFI will continue to be sold, however, is now up to the courts.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Connected consumer first-quarter 2013: Analysis and outlook
• Research In Motion: future scenarios for its fate
• The evolution of consumer-media cloud storage

In other words, if you desperately want that Open(7), you’d better place an order ASAP, because you might never get a chance again once the decision comes down. The complaint, is based on the premise that Psystar is now “trafficking in circumvention devices,” which is causing “unquantifiable” harm to Apple’s image.

The new motion specifically targets Psystar’s recently released software product, Rebel EFI, which bypasses the built-in prevention measures that limit the installation of OS X 10.6 to Apple-built hardware only. Using Rebel EFI, customers can supposedly install OS X on any Intel-based system, although the compatibility of individual components will vary widely.

Up till now, Apple has succeeded in dealing serious blows to Psystar, including winning a summary judgment, but it hasn’t managed to get a ruling that would shut down the company’s operation for good. The clone maker can continue doing business even if it keeps having to pay damages, since it can declare bankruptcy and reform as long as it can raise enough operating capital to stay afloat…hence the attempt by Apple to put an end to the expensive cycle.

Apple SVP of Worldwide Product Marketing Phil Schiller puts it succinctly in an affidavit for the latest claim:

So long as Psystar continues these practices, the harm to Apple and its brand will continue.  I believe Apple should not be required to file a new lawsuit to stop Psystar from infringing Apple’s intellectual property each time Apple releases a new version of Mac OS X. Requiring Apple to file multiple lawsuits to stop the same infringing conduct would be unfair, expensive, and a waste of the Court’s and the parties’ resources.

Apple also recently tried to shut down Atom support in OS X, which would seriously derail the efforts of at-home netbook hacking, so it looks like Cupertino is just generally trying to shut down any and all efforts to wrestle control of the operating system from its iron grip.

The next hearing is scheduled for December 14, and the official trial will start in January 2010. Psystar doesn’t look to be in good shape as it is, but if Apple manages to get this permanent injunction, all hope is lost for the hackintosh purveyor.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Connected consumer first-quarter 2013: Analysis and outlook
• Research In Motion: future scenarios for its fate
• The evolution of consumer-media cloud storage

No question this was a long shot and Psystar was going for the Hail Mary. Nonetheless, Apple’s arguments and victory in the case could have a chilling effect on any modification of Apple hardware and software. Will your next Mac be as locked down as the iPhone?

We euphemistically call gaining the ability to install any software on a iPhone “jailbreaking.” This allows you full administrative access to your iPhone to modify the software as necessary for your own use. You already purchased the iPhone hardware and a license for the Apple software necessary to run your iPhone–but are restricted in its use? Apple locks you out of making certain changes to your iPhone; every aspect of iPhone usage is controlled by Apple, yet Apple’s fickle and inconsistent App Store policies further complicate matters and virtually beg people to jailbreak their iPhone.

Unlike with the iPhone, we can pretty much do want we want on our Macintosh computers. Installation of hardware and software is unrestricted and Apple exercises no control over how we use our Macs. We can circumvent functions in the operating system and enhance it without a problem. We are virtually unrestricted in upgrading or enhancing our Macs. Manufacturers can write kernel extensions to modify the operating system so their hardware can work. Don’t like the Apple monitor? No problem, go out and buy your own. Apple charging too much for RAM? Go out and buy third-party RAM. Want to add new functionality to your Mac? Buy and install third-party software that enhances the operating system.

The Psystar ruling reminds us that we use our Macs only with the consent of, and the pleasure of, Apple. Even though you “own” your Mac, your ability to use it can be modified, restricted or revoked by Apple without recourse. As Macs grow in market share and more third-party developers come to the table, we’ll be presented with options for our Macs that Apple’s own team can hardly imagine. If Apple starts losing revenue due to such enhancements, Apple can simply disable it. Any attempt to circumvent Apple’s restrictions could be seen as a violation of the DMCA. For example, to increase sales on iTunes, could Hulu be disabled by a future Apple OS? Legally, yes. We are one Automatic Software Update away from an Apple Kill Switch for our Mac.

Conspiracy Theory? Think Again

Before you blow this off as a conspiracy theory, note that similar actions have happened other times in Mac history. The most memorable was back in March 2001, when Apple issued a firmware update that disabled most third-party RAM. Apple RAM worked just fine, but other RAM was suddenly considered “out of spec.” Historians will debate whether this was deliberate or accidental. Eventually it all worked out when manufacturers swapped out RAM and other users avoided the update. In 1999, Apple disabled G4 upgrade cards in Blue and White G3s via another firmware updates. The original iMac had the ability to support a floppy drive, but later Apple purposefully disabled that function. Previous versions of iLife only worked with Apple-supported optical media.

Obviously, Apple is going to vehemently fight to prevent non-licensed Apple clones, and while it may be in the right here, the arguments used could be applied to any modification to the Macintosh OS, especially those used to enable non-Apple hardware to work with OS X. While I agree that the odds are low of waking up one morning and finding your Mac unable to boot due to a “DMCA violation,” Apple consistently argues it is its right to do so and it has exercised that right in the past. How very Microsoft of Apple. Just ask XBox 360 owners.

The iPhone is proof of its desire to lock the consumer out of any unapproved modifications. What’s stopping Apple from doing this with our Macs? Financial interest? Goodwill? You tell me.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How do developers ride the Siri wave?
• Connectivity means making the machine disappear
• Access vs. ownership: Why UltraViolet has already lost

Despite the odd syntactical choice made by Psystar’s copy editor, the ramifications are clear: you should, in theory, be able to install Mac OS X on any old PC hardware. Not only that, but Rebel EFI also reportedly scans your system for compatible hardware and downloads all the appropriate drivers where they are available.

Of course, Psystar is in the business of making money (though sometimes I wonder how it thinks that’s possible when tangling with Apple in court), so Rebel EFI isn’t free. It’ll cost you $49.99 to get the full version, which ships as a direct download.

You don’t have to dive in blind, though. Anyone can download and use Rebel, but the trial version limits some hardware features and only works for two hours. To prevent piracy, you see, or the unlicensed use of Psystar’s software. Yes, the irony is delicious.

Psystar bundles the Rebel EFI with the Darwin Universal Boot Loader, or DUBL, which allows for users to install multiple operating systems on the same computer on different drives. It supports up to six, so you could have OS X, Windows, and any number of Linux builds all running on the same machine, for example.

Rebel also uses the same “Safe Update” method Psystar includes on its pre-modded hardware, which automatically screens updates from Apple and lets you know if they’re safe to install. The same tool also checks with Psystar’s servers to make sure all your hardware is using optimal drivers.

Finally, Psystar has even introduced a new “home certification program.” The program encourages users of the Rebel EFI software to send in hardware components that aren’t fully compatible with the tool, so that the clone-maker’s engineers can correct the problem for all users affected. To me, sending your own hardware components in to a company with a questionable track record which could, theoretically, close its doors any day doesn’t seem like the wisest course of action, but to each his own.

If anyone is planning on purchasing the Rebel EFI, or even just downloading and trying out the demo ISO, we’d welcome an account of your trials and tribulations in the comments.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Research In Motion: future scenarios for its fate
• The evolution of consumer-media cloud storage
• Who and what to watch in the new era of the living room

If you thought bankruptcy would keep the industrious folks at Psystar from making any more Mac clones, you were sorely mistaken. Like a zombie rising from the dead with an insatiable thirst for lawsuits, the little clone-maker that couldn’t is advertising a brand new model of its “Open” line of computers on its web site today.

Not only that, but it’s also claiming that its bankruptcy filing was an unfortunate, but necessary, step toward ensuring its continued viability as a company. Maybe so, but how many of you out there are eager to order a new computer of questionable build quality from a bankrupt company engaged in an ongoing legal battle with Apple, especially with notebook price drops in place, and similar desktop discounts rumored to be on the horizon?

If you’re willing to look past these minor superficial details, you can now order an Open(7) starting at $1,499. For as much as you’d spend on a real iMac, you’ll get a tower desktop PC with a 2.66GHz Quad-Core Intel Xeon Nehalem processor, 6GB of DDR3 RAM, a 1TB 7,200RPM SATA2 HDD, and an NVIDIA 9500GT graphics card with 512MB of onboard memory. As is standard on Psystar computers, niceties like wireless Internet and Bluetooth will cost you extra. And they’re apparently in stock right now, if you’re feeling brave.

The company’s re-emergence comes hot on the heels of news that Apple has been given the “OK” to proceed with its legal action against Psystar, which was granted last week by a Florida bankruptcy court judge. In the interim, Psystar’s Chapter 11 filing means that it has probably been able to temporarily escape its previous debts and acquired new ones through a different funding source, whose identity remains a mystery. Many hardware manufacturers would obviously benefit were OS X to be made available for any platform, so there’s probably no shortage of people interested in having a stake in Psystar’s legal case, though none would likely be very comfortable with that position being made public.

News of the new Open(7) came via Pystar’s online mailing list, in a PDF newsletter (check it out at SlashGear) sent out to subscribers detailing it, its new DUBL (Darwin Universal Boot Loader), and, in a bright red box at the bottom of the document, a rather flippant take on its recent financial and legal turmoil. Also according to the newsletter, for a limited time only, you can get free shipping on the Open(7) within the continental U.S. using a special coupon code to “Celebrate Independence.” Cheeky, Psystar. Very cheeky.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How do developers ride the Siri wave?
• Connectivity means making the machine disappear
• Access vs. ownership: Why UltraViolet has already lost

The clone maker claims that its financial troubles aren’t due to the Apple legal battle, which is still unresolved, but instead the weak economy and supplier prices. Even if that’s true, it doesn’t really paint the Mac cloning game as a very appealing one for others watching the space. Some think the bankruptcy is related to financial backers finally pulling their support out from under the beleaguered company, which doesn’t look to be in a position to become profitable anytime in the near future, even if demand was higher for its products.

Others, however, are claiming that the move by Psystar is actually a calculated legal maneuver designed to buy time for the company, since all legal actions it is involved in are automatically put on hold as a result of the bankruptcy filing. Still, it doesn’t put the company in a strong position once proceedings are resumed, which is likely to occur in a couple of months when the judge in the case ends the temporary stay.

Maybe the most interesting thing to come out of this declaration of bankruptcy will be the revelation of Psystar’s creditors. Deep pockets have been funding its ongoing court and legal costs, and so far, the identities of those involved have remained a mystery. Who knows — maybe we’ll see a certain Mr. Ballmer or Mr. Gates listed among those who’ve helped out the clone maker. Kidding.

If you’re interested in the juicy (read: dry) details contained in legal documents pertaining to the bankruptcy declaration, ZDNet.com has a veritable banquet at which you may feast.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How do developers ride the Siri wave?
• Connectivity means making the machine disappear
• Access vs. ownership: Why UltraViolet has already lost

And compete it does, when it comes to hardware specifications. The Open(3)’s base configuration includes a 2.8 GHz Core 2 Duo E7400 processor, 2GB DDR2 800 RAM, a 500GB 7200RPM SATA HD, and a GeForce 8400GS 256MB graphics card. All of which nicely one-ups the Mac mini’s specifications at the same price point of $599. Of course, you don’t get the same small form factor that you do with the mini, but you do get the ability to upgrade to a 1TB HD, add in an extra HD, and choose from a bevy of other options.

It seems like quite the package, considering the price, but if you take a closer look at what isn’t there, it starts to look a little fishy. No FireWire, no Bluetooth, and no networking (Ethernet or wireless) are included at all at the $599 price point, and all are fairly costly add-ons. Plus, integrated Bluetooth isn’t available, and instead you get a USB dongle for your extra 40 bucks.

Psystar seems to be keeping the general price tag low by nickel and diming you on basic extras that should be included to begin with. Even if you still end up getting more muscle for your money in the end, I’m not tempted in the least by this offering. How future-proof is a Psystar machine, after all, even leaving aside the issue of their legal battle with Apple? Who’s to say that Snow Leopard, when it comes out, will be completely and permanently incompatible with Psystar hardware? You get what you pay for, and I think this is especially the case with these clone machines. That said, if anyone actually takes the plunge and decides to buy one of these, I’d love to hear about your experiences.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Social Inbox vs. The Future of Email
• Who and what to watch in the new era of the living room
• New challenges for the IT organization

With all the hoopla surrounding Psystar these days, a few other companies have jumped on board the Mac clone bandwagon. In some cases they’re using somewhat, shall we say, unique, methods. Still, the intent is clear: skirt Apple’s EULA and sell a solution that allows Mac OS X to run on generic PC hardware. In other words, swipe Apple’s IP.

Wired has a piece that discusses the cloning and how Apple may be powerless to stop it. 

What bothers me most about cloning is the sheer hutzpah of those doing it. For example: 

“We certainly don’t want to get into a legal battle that’s over a couple thousand dollars,” an EFIX USA spokesman said. “Potentially Apple could have a legal issue there. They may not have a legal issue, but with all the money they have they might try to make one.”

Apple could have a legal issue? Oh please. 

Translation: We know what we’re doing is wrong, and have no legitimate defense for it in court, but we’ll try to make Apple sound like the bad guy and grab some Apple-basher press. 

And of course they bring up money. When in doubt, always bring up money. It’s a great way to obfuscate the issue; Apple is big and rich while they’re small and poor. Forget that money is one thing they’re likely in it for. Yet just as Psystar thinks their EULA is sacrosanct while Apple’s is bogus, EFIX USA thinks their money is OK and Apple’s is somehow wrong.

What’s funny is that the company making the dongle EFIX USA is selling knows it’s wrong: 

“We get somewhat mixed signals on what [Art Studios Entertainment Media] would really like to accomplish,” an EFIX USA spokesman said. “They produce the device and want to sell it, but somehow they don’t want it to come out that the primary function of the device is that it allows people to run OS X on generic Intel hardware.”

Ya think? Here’s a free tip for you: When the product you’re selling has to be all hush hush, with a kind of whispered admonition to “ixnay on the rimarypay urposepay,” something is definitely wrong. 

The Apple EULA, for all its complexity, says you’re not allowed to run the Mac OS on a non-Apple system. No matter how clever the cloners think they’re getting, or how much railing against The Man, or hand-wringing they perform, they’re nothing but a bunch of snake-oil hucksters selling what isn’t theirs. 

And spare me comments about how Apple’s business model is “wrong”, how they should allow the Mac OS to run wherever you want, how they’re forcing you to buy a Mac, etc. It. Doesn’t. Matter. I can respect your opinion, but those arguments are emotional, not legal, and a waste of time. Wishing won’t (and shouldn’t) make it so. Apple’s business model is just fine, thank you. Any glance at their quarterly reports makes that abundantly clear. 

Further, Apple forces no one to buy a Mac, they’re simply setting the conditions upon which they’ll sell their work. You don’t like it? Get a PC and run Linux or Windows. I’ve run every version of Windows (except server) from Windows 3.0 to Vista, and if Apple closed their doors tomorrow I’d be just fine. Still, the advantages of the Mac OS to me are easily enough for me to agree to Apple’s terms, just as I agree to Microsoft’s when I run their OS. 

As for how Apple can stop cloning, I see no evidence that they try to shutdown the occasional hacker. Unlike the RIAA, Apple isn’t suing grandma because she had the wherewithal to get a Hackintosh running. 

But there’s a world of difference between the average one-off geek assembling a Mac clone and a corporation (no matter how small) doing the work for you and making it widely available. The difference between the two scenarios should be obvious to anyone not shilling for the competition, or Apple-bashing, or looking for a page-hit headline. 

Clearly, Apple is going after firms with a business model that includes Apple IP the firm isn’t licensed to sell. Despite the alleged legal arguments or loopholes from closet “attorneys” on various message boards, it’s difficult to see any legal leg for these firms to stand on. I think the Psystar case makes that clearer with each passing day. 

Sadly, there’s collateral damage caused by these hucksters. While I think most customers probably should have known better, there are undoubtedly those who bought in good faith. These people don’t follow this topic like readers of this blog, and had no idea they were buying something questionable. I certainly don’t think Apple owes them anything, but I wish the legal system could stop clone sales until the question is definitively settled. Of course, that opens up another can of worms so the bottom line is these hucksters will screw over some honest people. The hucksters will tell you they’re trying to help users by making a “Mac” more affordable, but how many of you believe that when they lose in court they’ll do anything to make it right with the users they bilked? 

Finally, the Wired article concludes with the following: 

…Apple’s clone problem is unlikely to go away in the near future. As long as OS X runs on Intel hardware, and as long as the developers behind OSX86 continue their work, it will be difficult for Apple to stop cloning altogether.

I think Apple’s pursuit of cloning is right where it should be. No sense in going after the occasional user, but they should not allow any widespread business to spring up around their IP. I’m not sure any other course would make much sense.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How do developers ride the Siri wave?
• Connectivity means making the machine disappear
• Access vs. ownership: Why UltraViolet has already lost