Apple Inc. v. Psystar Corporation

Filing 235

Memorandum of Points and Authorities in Support of 231 MOTION for Permanent Injunction Statutory Damages and Reasonable Attorneys' Fees and Costs filed by Apple Inc.. Motion Hearing set for 12/14/2009 08:00 AM in Courtroom 9, 19th Floor, San Francisco. (Attachments: # 1 Affidavit Declaration of Philip Schiller, # 2 Proposed Order)(Gilliland, James) (Filed on 11/23/2009) Modified on 11/24/2009 (sis, COURT STAFF).

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TOWNSEND AND TOWNSEND AND CREW LLP JAMES G. GILLILAND, JR. (State Bar No. 107988) MEHRNAZ BOROUMAND SMITH (State Bar No. 197271) MEGAN M. CHUNG (State Bar No. 232044) J. JEB B. OBLAK (State Bar No. 241384) Two Embarcadero Center Eighth Floor San Francisco, CA 94111 Telephone: [phone] Facsimile: [phone] Email: [e-mail] [e-mail] [e-mail] [e-mail] O'MELVENY & MYERS LLP GEORGE RILEY (State Bar No. 118304) Two Embarcadero Center, 28th Floor San Francisco, CA 94111 Telephone: [phone] Facsimile: [phone] Email: [e-mail] Attorneys for Plaintiff and Counterdefendant APPLE INC. UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

APPLE INC., Plaintiff, v. PSYSTAR CORPORATION, a Florida corporation, Defendant. AND RELATED COUNTERCLAIMS.

Case No. 08-3251 WHA DECLARATION OF PROFESSOR CAROL A. SCOTT PH.D IN SUPPORT OF APPLE'S MOTION FOR PERMANENT INJUNCTION, STATUTORY DAMAGES AND REASONABLE ATTORNEYS' FEES AND COSTS Date: Time: Courtroom: Judge: Trial Date: December 14, 2009 8:00 a.m. 9 Hon. William Alsup January 11, 2010

I, Carol A. Scott, Ph.D., declare as follows: 1. I am a Professor of Marketing at the Anderson Graduate School of Management at

DECLARATION OF PROFESSOR CAROL A. SCOTT PH.D IN SUPPORT OF APPLE INC.'S MOTION FOR PERMANENT INJUNCTION, STATUTORY DAMAGES AND REASONABLE ATTORNEYS' FEES AND COSTS CASE NO. 08-3251 WHA

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the University of California, Los Angeles ("UCLA"). I have been retained by the law firm of Townsend and Townsend and Crew LLP on behalf of Apple Inc. ("Apple") to provide testimony and expert opinion in the above captioned matter concerning branding and the likelihood that consumers would be confused by Psystar Corporation's ("Psystar") use of the Mac OS X operating system on its computers and by Psystar's offer on its website to sell computers that purportedly run Mac OS X. I have submitted three expert reports that I understand have been served on Psystar's counsel. Psystar did not take my deposition. I make this declaration on personal knowledge unless otherwise indicated, and if called as a witness I am able to testify with respect to the matters stated herein. 2. I hold a Ph.D. in Marketing from Northwestern University, where my minor field of

study was Social Psychology. I also received a Master of Science in Management from Northwestern University and a Bachelor of Science in Business and History Education from the University of Texas at Austin. I have served variously as the Chairman of the Faculty, Associate Dean, and Assistant Dean of the Anderson Graduate School of Management from 1985 through 1994. I am currently the faculty director of the Anderson School Executive Program. Over the past thirty years, I have taught courses on Marketing Strategy and Management, Consumer Behavior, Advertising, Distribution Strategy, and International Marketing to students in undergraduate and graduate education programs at UCLA, Stanford Business School, Harvard Business School, and Ohio State University. I also have published numerous journal articles, research reports, and book chapters on Consumer Behavior and have served on the editorial boards of the Journal of Marketing, Journal of Marketing Research, and Journal of Consumer Research. Over the past 26 years, I have served as a consultant and testifying expert for a variety of issues. 3. In preparation for my testimony in this case, between July and August 2009, I

conducted three surveys of approximately 300 respondents each in order to determine, among other things, the likelihood of confusion as to the relationship between Psystar and Apple. Based on a survey of consumers who viewed Psystar's website, I concluded that consumers are highly likely to be confused and wrongly believe that there must be some relationship between Psystar and Apple.

DECLARATION OF PROFESSOR CAROL A. SCOTT PH.D IN SUPPORT OF APPLE INC.'S MOTION FOR PERMANENT INJUNCTION, STATUTORY DAMAGES AND REASONABLE ATTORNEYS' FEES AND COSTS CASE NO. 08-3251 WHA

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The survey indicated, among other things, that (1) consumers are likely to believe that Psystar received permission from Apple to offer Mac OS X® on Psystar computers; (2) consumers who experience problems when using Psystar computers are likely to believe they are entitled to technical service and support from Apple; and (3) to the extent that consumers experience problems with Psystar computers, they are likely to blame those problems on Apple regardless of the true source of the problems. 4. In one survey, I tested whether consumers would blame problems with Psystar

computers running Mac OS X on Psystar or Apple. This survey asked respondents to imagine that they had purchased a Psystar computer and experienced the following four types of computer problems: (1) some of the software programs designed for Mac OS X would not work; (2) the computer froze or crashed often; (3) the computer ran very slowly; and (4) the computer would not turn on. For each of these problems, respondents were asked whether they thought the problem was due to Psystar's hardware, Mac OS X or both. For the first three problems, a majority of the respondents blamed either Mac OS X, or both Mac OS X and the Psystar hardware. For the fourth problem, where the computer simply would not turn on, 53.1% of consumers blamed Psystar and not Mac OS X. Nonetheless, 28.4% of the respondents thought that the problem resulted from both Psystar hardware and Mac OS X. 5. Apple has established one of the world's most famous brands through substantial and

consistent brand-building activities that have been studied in university classrooms, including mine, as a textbook example of how to create a strong reputation that resonates with customers. Apple has built a reputation for the highest level of customer satisfaction, innovative and high quality products, and excellent customer service and support. As shown by my study, problems with Psystar computers likely will be associated with Mac OS X and Apple. Technical problems with Psystar computers therefore will undermine the reputations of both Apple and its products and, as a result, have an adverse effect on Apple's brand and goodwill. For example, Apple produced records of telephone calls and written requests consumers made to Apple's customer support group, AppleCare®, regarding problems with Psystar computers and/or Mac OS X on those computers.

DECLARATION OF PROFESSOR CAROL A. SCOTT PH.D IN SUPPORT OF APPLE INC.'S MOTION FOR PERMANENT INJUNCTION, STATUTORY DAMAGES AND REASONABLE ATTORNEYS' FEES AND COSTS CASE NO. 08-3251 WHA

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