After more than a year of legal wrangling, Apple has come to terms with its Mac cloning nemesis Psystar. On Monday, Apple at least partially settled its copyright lawsuit against the Doral, Fla.-based company that has been building hardware that runs Mac OS X.
The Wall Street Journal reports Apple will dismiss all its trademark, trade-dress and state-law claims against Psystar in exchange for unspecified damages. Other reports set the damages at $2.7 million.
Despite the settlement, Psystar, which previously filed for Chapter 11 bankruptcy protection, appeared to still be selling cloned Macs. Apple and Psystar were not immediately available for comment, but Psystar's web site continued to offer hardware and software on Tuesday. By Tuesday afternoon, the hardware was still displayed but marked "Out of stock."
A Stubborn Cloner
The settlement comes just days after Apple asked a federal judge to close Psystar's Mac clone operation and ante up $2.1 million in damages. In late November, Apple filed a permanent injunction to ban Psystar from using, selling or owning software that makes it possible to crack Apple's OS encryption key and run Mac OS X on Psystar's hardware.
On Nov. 14, U.S. District Court Judge William Alsup ruled in favor of Apple in the copyright suit. Alsup also ruled that Psystar violated the Digital Millennium Copyright Act by installing Apple's Mac OS X on the hardware it sold. But Psystar didn't stop selling cloned Macs. Apple insisted a permanent injunction was its only option in the face of Psystar's continued copyright violations.
Psystar had previously sued Apple in a Florida federal court, claiming Apple was running a monopoly. Psystar accused Apple of forcing a tie between the Mac OS X operating system and Apple's hardware in the end-user licensing agreement. Psystar argued that Apple's EULA unlawfully restrained trade by barring users from installing its operating system on non-Apple hardware. The judge dismissed those charges.
Psystar Hits Apple's Antitrust Nerve
Psystar wasn't the first to cite potential antitrust issues with Apple. The Federal Trade Commission investigated whether Google and Apple were violating antitrust laws last summer and Apple was accused of maintaining a monopoly in the online music, video and MP3 player market in 2008.
"The Psystar issue is an annoyance for Apple because this case places the company in an antitrust light, and that's a light they can ill-afford at the moment. Apple does have exposure, though mostly on the MP3 player side," said Rob Enderle, principal analyst at the Enderle Group.
Much the same way opponents argued against Microsoft during the antitrust suit against it, Enderle said, some argue that if the market is subdivided, Apple has a monopoly with its iTunes and iPods. Apple doesn't want any company making antitrust claims against it, which may have spurred the settlement.
"Clearly, Psystar was in the process of going out of business, so that meant a settlement was at least possible," Enderle said. "Apparently, they have found some common ground and have been able to reach some kind of agreement. But we still don't know what Psystar is allowed to do under this agreement."
Mike Kent also contributed to this story.