Apple Inc. v. Psystar Corporation

Filing 244

Transcript of Proceedings held on December 14, 2009, before Judge William H. Alsup. Court Reporter/Transcriber Joan Marie Columbini, Telephone number 415-255-6842. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerks Office public terminal or may be purchased through the Court Reporter/Transcriber until the deadline for the Release of Transcript Restriction.After that date it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this filing. Release of Transcript Restriction set for 3/15/2010. (Columbini, Joan) (Filed on 12/16/2009)

PAGES 1 - 21 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BEFORE THE HONORABLE WILLIAM H. ALSUP APPLE, INC., A CALIFORNIA CORPORATION, ) ) ) PLAINTIFF, ) ) VS. ) NO. C 08-0325 WHA ) PSYSTAR CORPORATION, ) ) SAN FRANCISCO, CALIFORNIA DEFENDANT. ) MONDAY ) DECEMBER 14, 2009 ___________________________________) AND RELATED COUNTERCLAIMS. ) ___________________________________

TRANSCRIPT OF PROCEEDINGS APPEARANCES: FOR PLAINTIFF BY: CAMARA & SIBLEY, LLP 2339 UNIVERSITY BOULEVARD HOUSTON, TEXAS 77005 K.A.D. CAMARA, ESQUIRE NOAH D. RADBIL

FOR DEFENDANT BY:

TOWNSEND AND TOWNSEND AND CREW, LLP TWO EMBARCADERO CENTER, EIGHTH FLOOR SAN FRANCISCO, CALIFORNIA 94111 JAMES G. GILLILAND, JR., ESQUIRE MEHRNAZ BOROUMAND SMITH, ESQUIRE

(FURTHER APPEARANCE ON FOLLOWING PAGE) REPORTED BY: JOAN MARIE COLUMBINI, CSR #5435, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT

APPEARANCES (CONTINUED) FOR DEFENDANT: BY: APPLE 1 INFINITE LOOP, MS 301-4GC CUPERTINO, CALIFORNIA 95014 BRUCE SEWELL, ESQUIRE

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PROCEEDINGS; MONDAY, DECEMBER 14, 2009

THE COURT: HAVE A SEAT. THE CLERK: VERSUS PSYSTAR.

WELCOME, EVERYONE.

WELCOME BACK.

PLEASE

CALLING CIVIL ACTION C08-3251, APPLE

COUNSEL, CAN YOU PLEASE STATE YOUR APPEARANCES FOR THE RECORD? MR. GILLILAND: GOOD AFTERNOON, YOUR HONOR. JIM

GILLILAND AND MEHRNAZ BOROUMAND SMITH FOR APPLE.

ALSO WITH US

IS THE NEW GENERAL COUNSEL OF APPLE, BRUCE SEWELL. MR. SEWELL: THE COURT: MR. CAMARA: GOOD AFTERNOON, YOUR HONOR. WELCOME. AND? KIWI CAMARA

GOOD AFTERNOON, YOUR HONOR.

FOR THE DEFENDANT PSYSTAR CORPORATION.

I'M JOINED BY MY

COLLEAGUE NOAH RADBIL, WHO HAS JUST PASSED THE BAR. THE COURT: MR. RADBIL: THE COURT: MR. CAMARA: THE COURT: HERE PRO HAC VICE. CONGRATULATIONS. NO, NOT YET. I'D BE HAPPY TO DO THAT. IT'S THE TEXAS BAR. THAT'S ALL RIGHT. YOU'RE WELCOME TO BE HAVE YOU BEEN SWORN IN?

THANK YOU.

HAVE A SEAT EVERYONE. LET'S HEAR

WE ARE HERE FOR THE MOTION ON INJUNCTION. FROM APPLE FIRST. MR. GILLILAND:

YOUR HONOR, THIS IS APPLE'S MOTION

JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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FOR THE ENTRY OF A PERMANENT INJUNCTION AFTER THE COURT HAS GRANTED SUMMARY JUDGMENT OF COPYRIGHT INFRINGEMENT AND VIOLATION OF THE DIGITAL MILLENNIUM COPYRIGHT ACT. PSYSTAR ESSENTIALLY CONCEDES THAT APPLE IS ENTITLED TO A PERMANENT INJUNCTION HERE. THEY HAVE NOT OFFERED ANY

EVIDENCE OR ARGUMENT THAT THERE SHOULD NOT BE AN INJUNCTION. THE ONLY ISSUE THAT APPEARS TO BE IN FRONT OF THE COURT IS THE BREADTH OF THAT INJUNCTION. SPECIFICALLY, PSYSTAR ASKS THE COURT TO CARVE OUT ITS NEWEST PROJECT, WHICH IT HAS NAMED REBEL EFI, FROM THE INJUNCTION THAT WOULD FOLLOW FROM THE VIOLATIONS THAT HAVE BEEN FOUND. BUT INJUNCTION SHOULD NOT BE RESTRICTED TO ANY

PARTICULAR PRODUCT OR ANY PARTICULAR PRODUCT NAME. WHAT THIS COURT HAS FOUND IS THAT THERE WAS UNLAWFUL CONDUCT, AND THE SCOPE OF THE INJUNCTION SHOULD BE COMMENSURATE WITH THE SCOPE OF THE UNLAWFUL CONDUCT. SPECIFICALLY, HERE YOU'VE RULED THAT THERE HAS BEEN COPYRIGHT INFRINGEMENT AND THERE HAS BEEN VIOLATION OF THE DIGITAL MILLENNIUM COPYRIGHT ACT; THEREFORE, ALL THAT APPLE HAS ASKED FOR IS AN INJUNCTION, THE LANGUAGE OF WHICH IS COEXTENSIVE WITH THE SCOPE OF THE VIOLATIONS. AS YOUR HONOR KNOWS FROM THE RECORD IN THE CASE, PSYSTAR HAS INFRINGED APPLE'S RIGHTS REPEATEDLY. IT HAS SOLD

MODIFIED VERSIONS OF MAC OS X VERSION 10.5.2, 10.5.3, 10.5.4, .5 AND NOW 10.6. JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NATURE. QUOTE:

THE COURT SHOULD NOT BE RESTRICTED IN THE LANGUAGE THAT IT USES FOR AN INJUNCTION ABOUT DESCRIBING ANY SPECIFIC PRODUCT OR SPECIFIC TITLE. THAT WOULD SIMPLY INVITE

GAMESMANSHIP IN THE FUTURE, INVITE THE RELABELING OF PRODUCTS, THE REFORMATTING OF PRODUCTS. ALL WE'RE ASKING THE COURT TO DO DO NOT INFRINGE APPLE'S

IS TO ISSUE AN INJUNCTION WHICH SAYS:

COPYRIGHTS OF MAC OS X; DO NOT CIRCUMVENT THE TECHNOLOGICAL PROTECTION MEASURE IN MAC OS X; DO NOT DISTRIBUTE PRODUCTS THAT EITHER CONTAIN OR GENERATE THE KEY THAT'S CONTAINED IN MAC OS X. THE COURTS ROUTINELY GRANT INJUNCTIONS OF THIS AS YOUR HONOR SAID IN WARNER BROTHERS VERSUS BROWN,

"IT HAS BEEN GENERALLY ACCEPTED THAT UPON A FINDING OF INFRINGEMENT, AN INJUNCTION MAY ISSUE AS TO EXISTING AND FUTURE WORKS." EXACTLY THE SAME RULING WAS MADE IN THE DISNEY VERSUS POWELL DECISIONS BY THE D.C. CIRCUIT. THERE THE COURT FOUND

THERE HAD BEEN INFRINGEMENT ON T-SHIRTS OF THE COPYRIGHT FOR MICKEY MOUSE AND THE COPYRIGHT FOR MINNIE MOUSE, BUT THE INJUNCTION THAT WAS ENTERED WAS AN INJUNCTION AGAINST COPYRIGHT INFRINGEMENT OF ANY DISNEY CHARACTER ON ANY PRODUCT. IN A&M RECORDS VERSUS NAPSTER, JUDGE PATEL ISSUED AN INJUNCTION AGAINST COPYRIGHT INFRINGEMENT OF ANY OF THE PLAINTIFF'S COPYRIGHTED SONGS, EVEN THOUGH, IN THE COURSE OF ANY ONE LAWSUIT, THEY COULD ONLY PROVE INFRINGEMENT OF A FEW OF JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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THEM. SIMILARLY, IN REAL NETWORKS, SIMILARLY JUDGE SPERO IN SILICON IMAGE SOMETHING VERSUS ANALOGIX, AN INJUNCTION ROUTINELY INCLUDES THE FUTURE CONDUCT. SO, THAT'S ALL WE ARE ASKING THE COURT TO DO HERE. PSYSTAR'S ARGUMENT IS THAT YOUR HONOR CARVED OUT FROM THIS CASE ANYTHING OTHER THAN MAC OS X LEOPARD WHEN APPLE ASKED THE COURT TO STAY THE FLORIDA ACTION AND TO REOPEN DISCOVERY HERE. WE ASKED THE COURT TO EXERCISE ITS DISCRETION TO DO THAT, AND YOUR HONOR ELECTED TO NOT, DEFERRING TO JUDGE HOEVELER IN FLORIDA AS TO WHETHER OR NOT TO TRANSFER THE CASE, AND DECIDING TO KEEP THIS CASE ON TRACK SO WE COULD HAVE THE SUMMARY JUDGMENT ARGUMENT WHEN WE DID AND WE COULD HAVE THIS HEARING NOW. THAT RULING WAS WITHOUT PREJUDICE TO ANY FUTURE MOTIONS. FILED. THE MOTION TO TRANSFER THE FLORIDA CASE HAS BEEN WHETHER

THE REPLY BRIEF WILL BE DUE A WEEK FROM TODAY.

OR NOT IT IS TRANSFERRED HERE IS NOT THE ISSUE.

THE ISSUE HERE

IS WE'RE SEEKING AN INJUNCTION THAT IS COMMENSURATE WITH THE SCOPE OF THE VIOLATION THAT YOU ALREADY FOUND. PSYSTAR HAS BEEN TRAFFICKING IN TECHNOLOGY THAT CIRCUMVENTS THE TECHNOLOGICAL PROTECTION MEASURE IN MAC OS X. WE ARE ASKING FOR AN INJUNCTION THAT STOPS THAT. MATTER WHAT THEY CALL THE PRODUCT THAT DOES IT. IT DOESN'T YOU DON'T HAVE

JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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TO RESOLVE AT THIS POINT WHETHER ANY PARTICULAR PRODUCT WOULD CIRCUMVENT THE TECHNOLOGICAL PROTECTION MEASURE OR NOT. FOR THE PARTIES TO WORK OUT LATER. THAT'S

WE'RE SIMPLY ASKING FOR AN

INJUNCTION THAT FITS THE SCOPE OF THE VIOLATIONS THAT YOU FOUND. DO YOU HAVE ANY QUESTIONS FOR ME, YOUR HONOR? THE COURT: HAVE A QUESTION. MR. GILLILAND: THE COURT: MR. CAMARA: THANK YOU, YOUR HONOR. LET ME HEAR FROM THE OTHER SIDE. I MIGHT

ALL RIGHT. MAY IT PLEASE THE COURT. YOUR HONOR,

MR. GILLILAND'S MOST IMPORTANT POINT IS THE LAST POINT, WHICH IS THAT, IN GIVING THEM THE INJUNCTION THEY ASK FOR, YOU WOULD NOT NOW BE DECIDING WHETHER REBEL EFI OR ANY PARTICULAR PSYSTAR PRODUCT CONSTITUTES A VIOLATION OF THAT INJUNCTION OR CONSTITUTES COPYRIGHT INFRINGEMENT. AND THAT'S RIGHT.

THE EFFECT OF GIVING THEM THE INJUNCTION IS THAT WE WOULD BE LITIGATING IN THIS COURT WHETHER OR NOT REBEL EFI, WHICH IS THE SUBJECT OF LITIGATION IN FLORIDA ALREADY, IS A VIOLATION OF THE COPYRIGHT ACT OR NOT. NOW, WE BELIEVE THAT REBEL EFI AND SNOW LEOPARD INVOLVED DIFFERENT FACTUAL AND LEGAL QUESTIONS. AND IN THE

FLORIDA COURT, THEY ARGUE IN SUPPORT OF THEIR MOTION TO TRANSFER THAT THEY DO NOT INVOLVE DIFFERENT FACTUAL QUESTIONS, AND IN SUPPORT OF THAT ARGUMENT THEY INTRODUCED THE TESTIMONY OF MR. VIDRINE, WHO THIS COURT STRUCK FROM THIS CASE. JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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SO, IN ORDER TO SATISFY THE PREDICATE OF THEIR ARGUMENT, WHICH IS THAT THESE TWO THINGS ARE ACTUALLY THE SAME, THEY NEED TO RELY UPON EVIDENCE THAT, ON OUR MOTION TO ENFORCE THE DISCOVERY RULES, THIS COURT RULED WAS EXCLUDED. SIMILARLY, WHEN THEY TRIED TO ADD EVIDENCE OF SNOW LEOPARD, BRING BACK MR. VIDRINE, AND INCLUDE FURTHER EVIDENCE OF SNOW LEOPARD, AND INCLUDE EVIDENCE OF PSYSTAR'S NEW PRODUCTS, THIS COURT RULED THAT IT WOULD NOT REOPEN DISCOVERY IN THIS CASE, AND, THEREFORE, THAT THE CASE FILED IN FLORIDA WAS THE FIRST FILED CASE GOVERNING THOSE ISSUES. SO WE WOULD SUBMIT TO THE COURT THAT IF THEY RECEIVE THE KIND OF INJUNCTION THEY'RE ASKING FOR, THEY'RE BETTER OFF THAN IF THE COURT HAD GRANTED THEIR EARLIER MOTIONS. IF THE

COURT HAD GRANTED THEIR EARLIER MOTIONS, THEN WE WOULD HAVE LITIGATED IN THIS CASE WITH DISCOVERY, SUMMARY JUDGMENT, BRIEFING, AND SO FORTH, WHETHER OR NOT REBEL EFI INFRINGES THE COPYRIGHT IN SNOW LEOPARD AND WHETHER OR NOT REBEL EFI IS A PRODUCT THAT FACILITATES CIRCUMVENTION VIOLATION OF THE DMCA. BECAUSE THE COURT DECLINED TO OPEN UP THIS CASE, THAT SUBJECT IS BEING LITIGATED NOW IN FLORIDA. IF THEY RECEIVE THE KIND OF INJUNCTION THEY WANT, THAT QUESTION WILL BE LITIGATED IN THIS CASE, BUT IT WILL NOT BE LITIGATED IN THE ORDERLY COURSE OF CIVIL LITIGATION. INSTEAD IT

WILL BE LITIGATED IN THE COURSE OF A CONTEMPT PROCEEDING. AND JUST AS THEY SAY, THIS COURT CANNOT NOW DECIDE JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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WHETHER OR NOT REBEL EFI WOULD BE IN VIOLATION OF THE KIND OF INJUNCTION THEY ARE SEEKING, AND THE COURT CAN'T DO THAT BECAUSE THE EVIDENCE NECESSARY TO KNOW WHAT TECHNOLOGICAL PROTECTION MEASURES REBEL EFI IS SUPPOSEDLY CIRCUMVENTING AND THE LEGAL QUESTION ABOUT WHETHER END USERS HAVE A DEFENSE UNDER 117, SINCE EVEN ON APPLE'S VIEW, THEY WOULD BE USING OS X ON THEIR OWN COMPUTERS FOR AN INTERNAL USE, WHICH WAS THE BASIS, I BELIEVE, FOR THE COURT'S RULING THAT PSYSTAR IS NOT ENTITLED TO A 117 DEFENSE. SO THERE ARE DIFFERENT FACTUAL AND LEGAL QUESTIONS, AND THE EVIDENCE NECESSARY TO ESTABLISH THOSE DIFFERENT FACTS IS EVIDENCE THAT THE COURT HAS EXCLUDED FROM THE CASE UP TO THIS POINT. THAT'S THE TESTIMONY OF MR. VIDRINE. SO IT WOULD BE A WHOLE NEW LITIGATION, BUT IT WOULD BE A LITIGATION IN THE CONTEXT OF A CONTEMPT PROCEEDING, INSTEAD OF AN ORDERLY NORMAL CIVIL LITIGATION WITH SUMMARY JUDGMENT AND WHATNOT. AGAIN, THE REASON FOR THAT IS BECAUSE THEY MOVED TO ADD THOSE PRODUCTS TO THE CASE, AND THE COURT DENIED THEIR MOTION. SO WE SUBMIT -- AND I WOULD ALSO POINT OUT THAT WHILE IT IS TRUE THAT OUR BRIEFING CONTESTS ONLY THE SCOPE OF REBEL EFI, THAT'S BECAUSE THAT'S THE ONLY THING THAT REMAINS RELEVANT. PSYSTAR HAS ALREADY STOPPED SELLING COMPUTER HARDWARE OUT OF RESPECT FOR THIS COURT'S DECISION. WE BELIEVE THAT DECISION WAS

JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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IN ERROR AND INTEND TO APPEAL IT TO THE NINTH CIRCUIT.

BUT THE

ONLY THING THAT'S CURRENTLY AT ISSUE IS THIS REBEL EFI PRODUCT. AND, AGAIN, REBEL EFI IS ALREADY AT ISSUE IN THE FLORIDA ACTION. THE CASE WE CITED, AMC, FROM THE NINTH CIRCUIT, AND THE CASES CITED THEREIN, INCLUDING ESPECIALLY THE VIRGINIA SOCIETY FOR HUMAN LIFE CASE FROM THE FOURTH CIRCUIT, MAKE CLEAR THAT THIS IS THE KIND OF THING THAT THE FEDERAL COURTS ARE EXPECTED TO DO. WHEN CASES ARE PROCEEDING IN DIFFERENT FORA, IT WOULD BE INAPPROPRIATE FOR THE FIRST COURT SEIZED OF THE DISPUTE TO HAVE AN INJUNCTION THAT FREEZES THE LAW, EFFECTIVELY, AND THAT PREVENTS THE CIRCUIT COURTS FROM COMING TO DIFFERENT CONCLUSIONS ABOUT UNLAWFUL QUESTIONS, DISPUTED QUESTIONS, CLOSE QUESTIONS OF LAW, LIKE THE QUESTIONS OF LAW IN THIS CASE. AND, AGAIN, WE WOULD POINT OUT, WE UNDERSTAND THE COURT HAS REACHED ITS DECISION, BUT WE BELIEVE THERE ARE STRONG GROUNDS FOR APPEAL, AT LEAST ON THE COPYRIGHT MISUSE QUESTION. IF THE NINTH CIRCUIT WERE TO AFFIRM, IT WOULD CREATE A CIRCUIT SPLIT WITH THE FIFTH CIRCUIT, MOST CLEARLY IN THE ALCATEL DECISION, AND WE WOULD SUBMIT WITH THE FEDERAL CIRCUIT IN CHAMBERLAIN, WITH THE SIXTH CIRCUIT IN LEXMARK, AND CRITICALLY WITH THE 11TH CIRCUIT WITH MIAMI CASES PENDING IN TELCOM. WE THINK THIS IS EXACTLY THE SORT OF SITUATION THAT THE FOURTH CIRCUIT HAD IN MIND IN VIRGINIA SOCIETY FOR HUMAN JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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LIFE WHEN IT SAID THAT AN OVERBROAD DISTRICT COURT INJUNCTION MIGHT HAVE THE EFFECT OF FREEZING THE LAW PREMATURELY, INSTEAD OF ALLOWING CIRCUIT SPLITS TO DEVELOP, INSTEAD OF ALLOWING, AS THIS COURT SUGGESTED, A FRESH SET OF EYES TO TAKE A LOOK AT THE ISSUES. NOW, IF WE TAKE A STEP BACK, INJUNCTIONS ARE, OF COURSE, WITHIN THIS COURT'S EQUITABLE DISCRETION. AND AN

APPROPRIATE FACTOR TO CONSIDER IS THE RELATIVE HARM TO THE TWO PARTIES OF GRANTING OR DENYING AN INJUNCTION. PSYSTAR'S SALES, AS APPLE HAS REPEATEDLY BROUGHT TO THE ATTENTION OF THIS COURT, ARE TRIVIAL RELATIVE TO APPLE'S BUSINESS. SO EVEN IF AN INJUNCTION CARVES OUT REBEL EFI FOR THE TWO YEARS NECESSARY FOR THE APPEAL TO PERCOLATE THROUGH THE NINTH CIRCUIT, OR FOR JUDGE HOEVELER TO REACH A DECISION ABOUT COLLATERAL ESTOPPEL IF HE BELIEVES THE CASES ARE THE SAME, OR ON THE MERITS IF HE BELIEVES THE CASES ARE DIFFERENT, THAT WOULD BE TWO YEARS OF DE MINIMIS HARM TO APPLE. WHEREAS, IF THIS COURT

GRANTS APPLE THE KIND OF INJUNCTION APPLE IS SEEKING, AND THEN LATER HOLDS THAT PSYSTAR SALES OF REBEL EFI ARE IN CONTEMPT OF THIS COURT'S INJUNCTION, THAT WOULD END PSYSTAR'S BUSINESS. THAT IS ALL THAT'S LEFT OF PSYSTAR AFTER ITS COMPLIANCE WITH THE SUBJECT MATTER OF THIS COURT'S SUMMARY JUDGMENT ORDER. SO WE THINK THE BALANCE OF HARMS HERE TIP STRONGLY IN FAVOR OF THIS COURT USING ITS DISCRETION IN CRAFTING AN JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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INJUNCTION TO DISPLAY, YOU KNOW, FOR LACK OF A BETTER WORD, A BIT OF JUDICIAL MODESTY AND SAY THAT THE FLORIDA CASE, WHICH IS ALREADY GOING FORWARD PURSUANT TO THIS COURT'S ORDER AND PURSUANT TO APPLE'S BEHAVIOR TO DISCOVERY IN THIS CASE, SHOULD BE ALLOWED TO PROCEED AND JUDGE HOEVELER SHOULD BE ALLOWED TO COME TO A DECISION ABOUT WHETHER HE BELIEVES THE LEGAL ISSUES IN THIS CASE ARE THE SAME AS THE LEGAL ISSUES IN THE FLORIDA CASE, IN WHICH EVENT THERE IS NO PREJUDICE TO APPLE BECAUSE HE WILL APPLY THE DOCTRINE OF COLLATERAL ESTOPPEL, OR TO COME TO THE CONCLUSION THAT, IN FACT, THE LEGAL ISSUES ARE DIFFERENT, SO THAT JUDGE HOEVELER COMES TO THE VIEW THAT REBEL EFI IS, IN FACT, LEGAL. WE SUBMIT THAT IS CLEARLY WITHIN THIS COURT'S DISCRETION TO DO, AND IT WOULD BE A WISE EXERCISE OF THAT DISCRETION. IN THE ALTERNATIVE, IF THE COURT IS INTERESTED IN GRANTING THE KIND OF BROAD INJUNCTION THAT APPLE SUGGESTS, WE SUBMIT THAT INSTEAD OF THE CARVE-OUT, THE COURT COULD GRANT A LIMITED STAY OF ENFORCEMENT OF THAT INJUNCTION, LIMITING ITS ENFORCEMENT AS TO REBEL EFI UNTIL THE FLORIDA -- UNTIL JUDGE HOEVELER HAS COME TO A DECISION OR UNTIL THE NINTH CIRCUIT AFFIRMS OR REVERSES THE SUMMARY JUDGMENT IN THIS CASE. I WOULD BE HAPPY TO ANSWER ANY QUESTIONS IF YOUR HONOR HAS ANY. THE COURT: NOPE. NO QUESTIONS. THANK YOU.

JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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MR. CAMARA:

THANK YOU, YOUR HONOR. YOUR HONOR, IT SEEMS TO ME THAT IF THE

MR. GILLILAND:

PSYSTAR IS TWO STEPS AHEAD OF ITSELF AT THIS POINT.

COURT ISSUES THE INJUNCTION THAT WE BELIEVE IS APPROPRIATE, THEN IT WILL BE UP TO PSYSTAR AND ITS COUNSEL TO DETERMINE WHETHER THERE ARE ANY PARTICULAR PRODUCTS THAT IT CAN OR CANNOT CONTINUE TO SELL IN THE FUTURE. MR. CAMARA SEEMS TO BE ACKNOWLEDGING THAT THE COMPANY IS GOING TO SELL REBEL EFI AND THAT THAT WILL BE CONTUMACIOUS CONDUCT, BUT WE DON'T NEED TO ADDRESS THAT QUESTION YET. ONCE THE COURT ISSUES THE INJUNCTION THEN PSYSTAR WILL HAVE WITHIN ITS OWN MEANS THE DECISION ABOUT WHETHER TO SELL THAT PRODUCT OR NOT SELL THAT PRODUCT, OR ANY OTHER PRODUCT. IT'S NOT FOR THE COURTS TO TRY TO GUESS WHAT THEY ARE

GOING TO DO IN THE FUTURE. ALL WE ARE ASKING YOU TO DO IS ISSUE AN INJUNCTION WHICH STOPS THE CONDUCT YOU ALREADY FOUND UNLAWFUL, WHICH IS INDUCING INFRINGEMENT, CREATING DERIVATIVE WORKS, AND TRAFFICKING IN CIRCUMVENTION TECHNOLOGY. IF THE INJUNCTION SAYS

THAT CONSISTENT WITH THE COURT'S FINDINGS, THEN PSYSTAR WOULD HAVE TO DECIDE WHAT TO DO NEXT WITH ITS BUSINESS. THE AMC CASE CITED BY DEFENDANT IS COMPLETELY INAPPOSITE HERE. THERE THE FIFTH CIRCUIT HAD ALREADY DECIDED IT WAS AN ADA CASE

THAT CERTAIN CONDUCT WAS NOT INAPPROPRIATE.

ABOUT WHEELCHAIR ACCESS, AND THE FIFTH CIRCUIT ALREADY RULED JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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AMC'S THEATERS WERE IN COMPLIANCE.

THEN A DISTRICT COURT IN THE

NINTH CIRCUIT RULED TO THE CONTRARY AND ISSUED A NATIONWIDE INJUNCTION. IN THAT CIRCUMSTANCE, THE NINTH CIRCUIT SAID THAT

TRANSGRESSES THE JURISDICTION OF THE FIFTH CIRCUIT. HERE WE DON'T HAVE ANY SUCH CONCERN. THIS COURT IS

THE ONLY ONE THAT'S EVER ADDRESSED ON THE MERITS PSYSTAR'S CONDUCT. THIS COURT HAS FOUND IT IS UNLAWFUL. CONSEQUENTLY,

THE INJUNCTION SHOULD STOP IT. THE COURT: WHERE DOES IT STAND IN FLORIDA? WHAT

EXACTLY ARE THE ISSUES THAT ARE TENDERED FOR THE JUDGE THERE? MR. GILLILAND: A COUPLE OF THINGS, YOUR HONOR.

FIRST OF ALL, APPLE HAS FILED ITS MOTION TO TRANSFER TO THIS COURT. MONDAY. PSYSTAR HAS OPPOSED. OUR REPLY BRIEF IS DUE ON

JUDGE HOEVELER HAS NOT YET SET A HEARING FOR ORAL

ARGUMENT. IN PSYSTAR'S PAPERS IN FLORIDA, THEY HAVE SAID THAT THE ISSUES REGARDING SNOW LEOPARD AND THE SALE OF COMPUTERS ARE MOOT, BECAUSE THEY'RE NOT GOING TO SELL SNOW LEOPARD OR COMPUTERS THAT RUN SNOW LEOPARD ANY LONGER. SO PSYSTAR HAS SAID THAT THE ONLY ISSUES THAT REMAIN IN FLORIDA ARE ITS ANTITRUST CLAIM AGAINST APPLE, WHICH WE SUBMIT IS A REPACKAGING OF THE CLAIM THAT THIS COURT ALREADY DISMISSED, AND THE LAWFULNESS OF REBEL EFI. AGAIN, I SAY WE DON'T HAVE TO RESOLVE THE QUESTION OF WHETHER THAT IS A LEGAL OR ILLEGAL PRODUCT YET UNTIL AFTER THE JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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INJUNCTION IS ENTERED. THE COURT: IN A PATENT CASE, WHICH THIS IS NOT A

PATENT CASE, I KNOW THAT, BUT IN A PATENT CASE, IF THERE'S AN INJUNCTION, A DEFENDANT HAS USUALLY THE RIGHT TO -- MAYBE NOT THE RIGHT, BUT, CERTAINLY, IT'S DONE ALL THE TIME -- TO BRING A MOTION FOR, ESSENTIALLY, DECLARATORY RELIEF THAT A DESIGN-AROUND DOES NOT INFRINGE. SO WHY WOULDN'T THE DEFENDANT HERE BE

ENTITLED TO BRING A MOTION TO DEMONSTRATE THAT REBEL EFI DOES NOT INFRINGE? MR. GILLILAND: YOUR HONOR. FIRST, IN A PATENT CASE, THE INJUNCTION WOULD SAY STOP THE INFRINGEMENT OF THIS PATENT, THESE CLAIMS. IT WOULD I THINK THAT'S AN EXCELLENT ANALOGY,

THEN BE UP TO THE SELLER TO DECIDE WHETHER ITS PRODUCT DOES OR DOES NOT INFRINGE. AND IF THEY HAVE A WORRY ABOUT A PARTICULAR

DESIGN-AROUND, THEY WOULD HAVE THE OPPORTUNITY TO COME IN AND ASK THE COURT, WHO ISSUED THE INJUNCTION -THE COURT: WOULDN'T IT? MR. GILLILAND: THE COURT: ABSOLUTELY. YES. THAT WOULD APPLY HERE AS WELL,

SO THEY DON'T HAVE TO WAIT UNTIL THEY'RE

ACCUSED OF CONTEMPT; THEY COULD -- FOR SELLING -- ARE THEY ALREADY SELLING THE PRODUCT? MR. GILLILAND: THE COURT: YES, SIR. WELL, MAYBE THAT'S THE

ALL RIGHT.

JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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DIFFERENCE.

BUT IN THE NORMAL SCENARIO, BEFORE THE COMPANY

STARTS SELLING IT, IF THEY WANT TO BE CAUTIOUS, THEY GO TO THE JUDGE AND SAY, WOULD THIS WORK, AND THEY EXPLAIN WHY THEY THINK IT WOULD WORK. MR. GILLILAND: THE SAME PROCESS COULD BE FOLLOWED PSYSTAR -- ASSUMING

HERE ONCE THE COURT ISSUES ITS INJUNCTION.

THAT IT WERE OF THE SCOPE THAT APPLE IS REQUESTING, PSYSTAR COULD TEMPORARILY STOP SELLING THAT PRODUCT AND COME IN AND ASK THE COURT FOR A RULING AS TO WHETHER OR NOT IT WOULD CONSTITUTE CONTEMPT. IN THE RECORDS CURRENTLY BEFORE YOU, APPLE HAS SUBMITTED THE DECLARATION OF DR. KELLY. AND HE DID LOOK AT IT. HE DID GET REBEL EFI,

HE HAS PUT INTO HIS DECLARATION THAT IT WE BELIEVE

DOES, IN FACT, GENERATE APPLE'S DECRYPTION KEY.

PSYSTAR WILL HAVE A DIFFICULT TIME CONVINCING ANY COURT IT SHOULD BE ALLOWED TO SELL THIS PRODUCT. BUT, AGAIN, WE'RE TWO STEPS AHEAD OF OURSELVES, BECAUSE IT PRESUMES THEY ARE GOING TO CONTINUE TO SELL IT AND THAT THEN THERE'S A CONTEMPT PROCEEDING. THE COURT: CASE? MR. GILLILAND: THE COURT: IT'S A MOTION TO DISMISS OR TRANSFER. IS THERE A MOTION TO DISMISS THE FLORIDA

ARE THE MERITS TENDERED ON THAT? NO, YOUR HONOR, IT'S PURELY ON

MR. GILLILAND:

PROCEDURAL GROUNDS AT THE MOMENT. JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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THE COURT:

PROCEDURAL TO SEND IT ALL OUT HERE? CORRECT.

MR. GILLILAND: THE COURT:

ALL RIGHT.

MR. CAMARA, DID YOU WANT TO HAVE THE LAST WORD? MR. GILLILAND: MR. CAMARA: THE COURT: MR. CAMARA: THANK YOU, YOUR HONOR.

BRIEFLY, YOUR HONOR. GO AHEAD. I'D LIKE TO MAKE TWO POINTS.

FIRST, IT ISN'T A WORK-AROUND WHICH WE'RE PROPOSING, WE HAVE BEEN DEVELOPING IT AND BEGAN SELLING IT, I IT

BELIEVE, BEFORE THIS COURT RULED ON SUMMARY JUDGMENT.

LITERALLY IS JUST A SEPARATE PRODUCT LINE AT PSYSTAR, AND THE QUESTION, OF COURSE, IS WHETHER THIS INJUNCTION SHOULD BE CRAFTED SO BROADLY. THE COURT: HOW DO I KNOW THAT? HOW DO I KNOW -- THE

PAPERWORK IS PRETTY THIN ON WHAT REBEL EFI IS. MR. CAMARA: THAT'S EXACTLY OUR POINT, YOUR HONOR.

WHETHER REBEL EFI'S INFRINGEMENT IS BEING LITIGATED IN FLORIDA, THAT'S THE FIRST FILED CASE ABOUT REBEL EFI. IT'S THE FIRST

FILED CASE BECAUSE THIS COURT DECLINED TO ALLOW THEM TO BRING SNOW LEOPARD AND REBEL EFI INTO THIS CASE. THE COURT: MR. CAMARA: WANTED DISCOVERY ON. IT WAS JUST SNOW LEOPARD. I BELIEVE IT WAS ALL NEW PRODUCTS THEY

BUT EVEN IF IT WAS SNOW LEOPARD, THIS

COURT DECLINED TO ALLOW THEM TO BRING IN DMCA AND COPYRIGHT JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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CLAIMS ABOUT SNOW LEOPARD, WHICH IS THE ONLY THING THAT REBEL EFI IS BEING USED TO ALLOW END USERS TO USE. SO THE FIRST FILED CASE ABOUT THAT ISSUE IS IN FLORIDA. THERE IS NOT, AS THIS COURT HAS JUST ACKNOWLEDGED, AN

ADEQUATE FACTUAL RECORD IN THIS CASE, TO DECIDE WHETHER OR NOT THAT INFRINGES THE COPYRIGHT ACT. THE COURT: I DIDN'T SAY THAT. INJUNCTION. NO. BUT THAT'S -- NO. BE CAREFUL HERE.

THERE IS AN ADEQUATE RECORD TO GIVE A BROAD

THERE IS AN ADEQUATE RECORD FOR YOUR COMPANY TO

PROCEED AT ITS PERIL IF IT VIOLATES THE INJUNCTION BY SELLING REBEL EFI. I DON'T KNOW WHETHER IT DOES OR NOT. I DON'T KNOW

ENOUGH ABOUT THE PRODUCT TO TELL YOU YES OR NO ON THAT. BUT IF THEN YOUR OPPONENT BROUGHT A MOTION FOR CONTEMPT AND IT FELL WITHIN THE SCOPE OF THE INJUNCTION, YOUR CLIENT WOULD BE IN BRINGING TROUBLE. MR. CAMARA: THE COURT: YES, YOUR HONOR. AT LEAST IN THIS COURT IN THIS CIRCUIT.

SO PLEASE DO NOT TAKE ANYTHING THAT I HAVE SAID AS SOMEHOW A CONTORTED STATEMENT THAT YOU HAVE MY BLESSINGS TO SELL REBEL EFI. MR. CAMARA: THE COURT: I DID NOT -I'M GOING TO ISSUE AN INJUNCTION. IF

PSYSTAR VIOLATES IT WITH REBEL EFI, THERE WILL BE A PRICE TO PAY, AT LEAST IN THIS COURT. I AM NOT SAYING THAT IT DOES VIOLATE IT, BECAUSE WHAT JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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YOU SUPPLIED ME IS SO SKETCHY, I CAN'T TELL. MAYBE IT DOESN'T.

MAYBE IT DOES.

THE NORMAL RULE IS THAT AN INJUNCTION IS ALWAYS ALMOST ALWAYS BROADER THAN THE FOUR CORNERS OF THE COMPLAINT BECAUSE, OTHERWISE, IT WOULD BE TOO EASY TO LET AN INFRINGER JUST MOVE ON TO THE NEXT PROBLEM. PARADOX AT WORK. MR. CAMARA: THE COURT: INFRINGER. YES, YOUR HONOR. YOU COULD NEVER CATCH UP TO THE IT WOULD ALWAYS BE ZENO'S

SO THE INJUNCTION WILL BE BROADER THAN THE FOUR I WANT THAT TO BE CLEAR, THAT YOU DO

CORNERS OF THE COMPLAINT.

NOT -- YOU HAVE A PARTICULAR FACILITY WITH TAKING A WORD OR A PHRASE AND SOMEHOW MAKING IT INTO A CONCESSION ON WHICH AN ENTIRE STRUCTURAL ARGUMENT IS BASED. I WANT TO BE CLEAR. WHILE THIS RECORD IS SKETCHY ON

REBEL EFI, IT IS NOT SKETCHY ON THE HARDCORE INFRINGEMENT BY YOUR CLIENT. IF IT TURNS OUT LATER THAT REBEL EFI IS JUST

ANOTHER INCARNATION THAT FALLS WITHIN THE SCOPE OF THE INJUNCTION, THERE WILL BE CONTEMPT PROCEEDINGS THAT WILL -COULD BE SEVERE ON YOUR CLIENT WHETHER OR NOT IT'S BEING LITIGATED IN FLORIDA. MR. CAMARA: SO TAKE THAT TO HEART. YES, YOUR HONOR.

I GUESS THE ONE THEN VERY LIMITED POINT I WOULD MAKE IN LIGHT OF THE COURT'S STATEMENT, WE BELIEVE THAT THIS COURT, IN ITS SUMMARY JUDGMENT MOTION, DID NOT REACH THE QUESTION OF JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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WHETHER OR NOT END USERS, AS OPPOSED TO PSYSTAR, HAVE A DEFENSE UNDER 17 USC SECTION 117. APPLE'S BRIEFING ON SECTION 117 CLAIMED THAT PSYSTAR DID NOT ENJOY 117 DEFENSE BECAUSE PSYSTAR WAS NOT USING OS X ON NON-APPLE COMPUTERS FOR AN INTERNAL USE. NOT BE TRUE OF END USERS. THAT, OF COURSE, WOULD

AND IF IT ISN'T TRUE OF END USERS,

THEN PSYSTAR'S REBEL EFI, WHICH FACILITATES THAT USE, WOULD NOT VIOLATE THE DMCA BECAUSE IT DOES NOT FACILITATE AN INFRINGEMENT UNDER CHAMBERLAIN AND THIS COURT'S DECISION IN THE FACEBOOK CASE, THE ELEMENT OF COPYRIGHT INFRINGEMENT WOULD NOT BE MET. SO WE WOULD ASK THE COURT, IF THE COURT IS GOING TO GRANT THE BROAD INJUNCTION, THAT IT GRANT AN INJUNCTION WITH THAT LIMITING PRINCIPLE IN MIND, THAT WHETHER OR NOT SECTION 117 IS A DEFENSE ENJOYED BY END USERS OF PSYSTAR'S PRODUCTS IS A LEGAL AND FACTUAL ISSUE THAT SIMPLY HAS NOT YET BEEN LITIGATED IN THIS CASE. WE UNDERSTAND, OF COURSE, THAT INJUNCTIONS SHOULD BE BROADER THAN THE FOUR CORNERS OF THE COMPLAINT. FOR EXAMPLE, AN

INJUNCTION THAT EXTENDS TO SNOW LEOPARD, TO MAKING MEDICINES THAT RUN SNOW LEOPARD, WOULD BE PERFECTLY PROPER. THAT WOULD BE

TRUE UNDER THE DISNEY CASE AND UNDER LOTS OF OTHER CASES BECAUSE THOSE TWO SETS OF FACTS WOULD NOT DIFFER IN ANY LEGALLY RELEVANT RESPECT. WE SUBMIT AN INJUNCTION THAT EXTENDS TO SOMETHING WHICH RAISES A NEW AND DIFFERENT FACTUAL LEGAL AND QUESTION JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

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WOULD BE AN INJUNCTION WHICH IS OVERLY BROAD.

THAT'S WHY WE'RE

SUBMITTING TO THE COURT THAT REBEL EFI SHOULD BE CARVED OUT. THE PARTIES AGREE THAT REBEL EFI HASN'T BEEN LITIGATED YET. THE QUESTION IS JUST WHETHER IT SHOULD BE WE

LITIGATED IN A CONTEMPT PROCEEDING OR IN A SEPARATE CASE.

SUBMIT BECAUSE IT RAISES DIFFERENT LEGAL AND FACTUAL CASES, IT SHOULD BE LITIGATED IN A SEPARATE CASE. AND UNDER THE FIRST

FILED DOCTRINE, IT SHOULD BE LITIGATED UNDER THE FIRST CASE THAT WAS FILED THAT COVERS IT, WHICH, IN THIS CASE, IS THE FLORIDA CASE. THE COURT: MR. CAMARA: THE COURT: ALL RIGHT. THANK YOU, YOUR HONOR. UNDER SUBMISSION. THANK YOU.

MR. GILLILAND: THE CLERK:

THANK YOU, YOUR HONOR.

WE'RE IN RECESS.

(PROCEEDINGS ADJOURNED.)

JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842

CERTIFICATE OF REPORTER I, JOAN MARIE COLUMBINI, OFFICIAL REPORTER FOR THE UNITED STATES COURT, NORTHERN DISTRICT OF CALIFORNIA, HEREBY CERTIFY THAT THE FOREGOING PROCEEDINGS IN NUMBER CASE NAME ,

WERE REPORTED BY ME, A CERTIFIED SHORTHAND

REPORTER, AND WERE THEREAFTER TRANSCRIBED UNDER MY DIRECTION INTO TYPEWRITING; THAT THE FOREGOING IS A FULL, COMPLETE AND TRUE RECORD OF SAID PROCEEDINGS AS BOUND BY ME AT THE TIME OF FILING. THE VALIDITY OF THE REPORTER'S CERTIFICATION OF SAID TRANSCRIPT MAY BE VOID UPON DISASSEMBLY AND/OR REMOVAL FROM THE COURT FILE.

________________________________________ JOAN MARIE COLUMBINI, CSR 5435, RPR WEDNESDAY, DECEMBER 16, 2009

JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER, U.S. DISTRICT COURT 415-255-6842