On September 28, 2011, the 9th Circuit Court of Appeals rejected an appeal from Psystar, which had sought to overturn a November 2009 [673 F.Supp.2d 943] verdict finding the small computer maker liable for infringing Apple’s copyright in the Mac OS X operating system. Apple filed the original lawsuit in 2008, alleging Psystar’s use of Apple software in Mac clones violated the Digital Millennium Copyright Act (“DMCA”), and constituted copyright infringement, trademark and trade dress infringement, and violations of unfair-competition laws.

Psystar had modified the Apple Mac OS X software to run non-Apple software, and it also had used the modified operating system in its Mac clones. Apple alleged that such activities constituted violations of the Mac OS software license agreement. Psystar argued that it purchased legal copies of Apple software in the open market and therefore could legally modify and sell the software.  The court rejected this claim, and also rejected the claim that Apple had misused its copyright by preventing its software from being compatible with other computers.

Nevertheless, the 9th Circuit held Psystar’s use of the software violated the DMCA and circumvented Apple’s security and protection devices to prevent unauthorized use. The court permanently enjoined Psystar from using Apple’s operating system for profit on its clone machines. Psystar indicated that it will consider an appeal to the U.S. Supreme Court.

Business start-ups whose business models rely on original, copyrighted works created by other parties neglect at their peril a thorough review of the restrictions that may apply to their use of those works. Knowledgeable legal counsel can assist greatly with that kind of analysis.