Apple Inc. v. Psystar Corporation

Filing 56

ANSWER to Counterclaim OF PSYSTAR CORPORATION FOR DECLARATORY RELIEF AS TO THE UNENFORCEABILITY OF COPYRIGHTS byApple Inc.. (Boroumand Smith, Mehrnaz) (Filed on 3/4/2009)

Apple Inc. v. Psystar Corporation

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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] Attorneys for Plaintiff and Counterdefendant APPLE INC. UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

APPLE INC., a California corporation, Plaintiff, v. PSYSTAR CORPORATION, a Florida corporation, and DOES 1-10, inclusive, Defendants. AND RELATED COUNTERCLAIMS

Case No. CV 08-03251 WHA APPLE INC.'S ANSWER TO PSYSTAR CORPORATION'S FIRST AMENDED COUNTERCLAIM FOR DECLARATORY RELIEF AS TO THE UNENFORCEABILITY OF COPYRIGHTS

Plaintiff and counterdefendant Apple Inc. (hereinafter "Apple") hereby responds to the First Amended Counterclaim For Declaratory Relief As To The Unenforceability Of Copyrights (hereinafter "First Amended Counterclaim") of defendant and counterclaimant Psystar Corporation (hereinafter "Psystar") as follows: /// /// ///
APPLE INC.'S ANSWER TO PSYSTAR CORPORATION'S FIRST AMENDED COUNTERCLAIM FOR DECLARATORY RELIEF AS TO THE UNENFORCEABILITY OF COPYRIGHTS, CASE NO. CV 08-03251 WHA

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NATURE OF THIS ACTION Answering Paragraph 1 of the First Amended Counterclaim, Apple admits that Psystar

is seeking relief under the Declaratory Judgment Act (28 U.S.C. § 2201), but denies that such relief is appropriate. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 1. 2. Answering Paragraph 2 of the First Amended Counterclaim, Apple admits that Psystar

seeks a declaration as to the unenforceability of certain copyrights held and asserted by Apple in its July 3, 2008 Complaint and December 2, 2008 Amended Complaint ("Amended Complaint") against Psystar, but denies that such relief is appropriate. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 2. 3. Answering Paragraph 3 of the First Amended Counterclaim, Apple admits that it is the

owner and exclusive licensor of copyrights in Mac OS X® and prior versions of Apple's Macintosh operating system. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 3. JURISDICTION AND VENUE Answering Paragraph 4 of the First Amended Counterclaim, Apple admits that this

Court is vested with federal question subject matter under 28 U.S.C. §§ 1331 and 1338(a). Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 4. 5. Answering Paragraph 5 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 5. THE PARTIES Answering Paragraph 6 of the First Amended Counterclaim, Apple admits that it is a

California Corporation with its principal place of business at 1 Infinite Loop, Cupertino, California 95014. Apple admits that it markets Macintosh Computers, each of which includes Mac OS X. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 6. 7. Answering Paragraph 7 of the First Amended Counterclaim, on information and belief,

Apple admits the allegations contained in Paragraph 7. 2

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8.

Answering Paragraph 8 of the First Amended Counterclaim, Apple admits that Psystar

offers for sale and distributes computers that Psystar refers to as "Open Computers." Apple admits that Psystar distributes computers purporting to run Mac OS X, Microsoft Windows XP and XP 64bit, Windows Vista and Vista 64-bit, and Linux (32 and 64-bit kernels) operating systems. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 8. 9. Answering Paragraph 9 of the First Amended Counterclaim, Apple admits that its Mac

Mini computers are currently sold with either an Intel GMA 950 video card or an NVIDIA GeForce 9400M video card, which are both integrated video cards. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 9. GENERAL ALLEGATIONS 10. Answering Paragraph 10 of the First Amended Counterclaim, Apple admits that in the

First Amended Counterclaim, Psystar refers to "the Mac OS, Mac OS Capable Computer Hardware Systems, and Apple-Labeled Computer Hardware Systems." Apple admits that it sells Macintosh Computers in the United States of America. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 10. 11. Answering Paragraph 11 of the First Amended Counterclaim, Apple admits that Mac

OS X is a graphical user interface-based operating system licensed to operate exclusively on computer hardware available from Apple. Apple admits that, among other functions, operating systems facilitate the interaction between software applications such as word processors, Internet browsers and other applications, and the central processing unit of the computer and its various hardware components. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 11. 12. Answering Paragraph 12 of the First Amended Counterclaim, Apple admits that it is

the developer and exclusive licensor of Mac OS X. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 12. 13. Answering Paragraph 13 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 13. 3

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14.

Answering Paragraph 14 of the First Amended Counterclaim, Apple admits that

operating systems facilitate the interaction between computers and various pieces of hardware including but not limited to hardware such as monitors or printers. Apple admits that operating systems allow applications to run on computer hardware. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 14. 15. Answering Paragraph 15 of the First Amended Counterclaim, Apple admits that Dell,

Acer, Lenovo, Sony, Hewlett-Packard and many other manufacturers make and distribute computers. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 15. 16. Answering Paragraph 16 of the First Amended Counterclaim, Apple admits that there

are manufacturers who make and distribute components for computers. Apple admits that Western Digital makes and distributes hard drives. Apple admits that Intel and AMD make and distribute processors and other integrated circuit products. Apple admits that NVIDIA makes and distributes graphics processing cards. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 16. 17. Answering Paragraph 17 of the First Amended Counterclaim, Apple lacks sufficient

information to answer the allegations and on that basis denies each and every allegation contained in Paragraph 17. 18. Answering Paragraph 18 of the First Amended Counterclaim, Apple denies that its

conduct in licensing Mac OS X is in any way "exclusionary" or "leveraging" or in any way amounts to unfair competition. With regard to the remaining allegations in Paragraph 18, Apple lacks sufficient information to answer the allegations and on that basis denies each and every allegation contained in Paragraph 18. 19. Answering Paragraph 19 of the First Amended Counterclaim, Apple admits that it is

the only source of computer hardware licensed to run Mac OS X. Apple admits that its Mac Pro, Mac Mini, MacBook, MacBook Air, MacBook Pro and iMac computers support Mac OS X. Apple admits that in the First Amended Counterclaim, Psystar refers to "Apple-Labeled Computer Hardware Systems." Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 19.
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20.

Answering Paragraph 20 of the First Amended Counterclaim, Apple admits that it

licenses Mac OS X for use only on Apple's hardware. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 20. 21. Answering Paragraph 21 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 21. 22. Answering Paragraph 22 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 22. 23. Answering Paragraph 23 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 23. 24. Answering Paragraph 24 of the First Amended Counterclaim, Apple admits that in or

around 1994, Apple announced a program to enable a limited number of pre-approved computer hardware manufacturers to manufacture and distribute, under agreements with Apple, personal computers that supported what was then the current version of the Mac operating system. These agreements included, among other provisions, requirements to pay royalties. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 24. 25. Answering Paragraph 25 of the First Amended Counterclaim, Apple admits that from

about 1995 to about 1997, it was possible to buy a PowerPC-based computer running the then-current version of the Mac operating system sold by Power Computing Corporation under agreements with Apple. Apple also admits that Motorola, Radius, APS Technologies, DayStar Digital and UMAX held licenses from Apple. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 25. 26. Answering Paragraph 26 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 26. 27. Answering Paragraph 27 of the First Amended Counterclaim, Apple admits that no

hardware manufacturer manufactured and distributed personal computers supporting Mac OS 8 under agreements with Apple. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 27. 5

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28.

Answering Paragraph 28 of the First Amended Counterclaim, Apple admits that it

purchased all the assets of Power Computing Corporation. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 28. 29. Answering Paragraph 29 of the First Amended Counterclaim, Apple admits that Mac

OS 9 was released in or about October 1999. Apple admits that it released updates to Mac OS 9. Apple lacks sufficient information to know what Psystar means by "official licensee program" and on that basis denies the remaining allegations contained in Paragraph 29. 30. Answering Paragraph 30 of the First Amended Counterclaim, Apple admits that at the

2005 Worldwide Developer Conference, Steve Jobs announced the planned release of Mac OS X Leopard in late 2006 or early 2007. Apple also admits that on June 6, 2005, a CNET article reported that Apple Senior Vice President Phil Schiller stated that Apple had no plans to sell or support Windows on an Intel-based Mac at the 2005 Worldwide Developer Conference. Apple admits that the CNET article attributed the following statements to Mr. Schiller: "`That doesn't preclude someone from running it on a Mac. They probably will.' [Schiller] said, `We won't do anything to preclude that.'" Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 30. 31. Answering Paragraph 31 of the First Amended Counterclaim, Apple admits that on

June 6, 2005, a CNET article reported that at the 2005 Worldwide Developer Conference, Apple Senior Vice President Phil Schiller stated that "[w]e will not allow running Mac OS X on anything other than an Apple Mac." Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 31. 32. Answering Paragraph 32 of the First Amended Counterclaim, Apple admits that

Paragraph 21 of Apple's Amended Complaint states: "[u]pgrades to the Mac OS may be licensed separately, but the terms of the license prohibit use of the Mac OS or its upgrades on non-Apple hardware." Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 32. 33. Answering Paragraph 33 of the First Amended Counterclaim, Apple admits that it

utilizes technological protection measures that prevent unauthorized access to its copyrighted works in 6

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Mac OS X. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 33. 34. Answering Paragraph 34 of the First Amended Counterclaim, Apple admits that kernel

panic occurs when an operating system detects an error of the type that causes the operating system to stop accepting user input and to discontinue operation. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 34. 35. Answering Paragraph 35 of the First Amended Counterclaim, Apple admits that Mac

OS X is built on a UNIX foundation. Apple also admits generally that attempts by operating systems to read invalid or non-permitted memory addresses could be a common source of kernel panic. Apple further admits that kernel panic may occur in some operating systems as a result of hardware failure or bugs in the operating systems. Apple also admits that operating systems can discontinue operation in some instances of memory violations in order to, among other reasons, prevent damage and allow for error diagnosis. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 35. 36. Answering Paragraph 36 of the First Amended Counterclaim, Apple admits that Mac

OS X Leopard checks for the identification of processors (including the Intel Core/Dual Core/Core 2 series of processors) which have been tested, encoded for and designed to work with Mac OS X Leopard and detects when they are not present. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 36. 37. Answering Paragraph 37 of the First Amended Counterclaim, Apple admits that Mac

OS X Leopard checks for the identification of processors which have been tested, encoded for and designed to work with Mac OS X Leopard and detects when they are not present. Apple lacks sufficient information to know what Psystar means by "capable of booting" and "can easy (sic) be booted" and on that basis denies the remaining allegations contained in Paragraph 37. 38. Answering Paragraph 38 of the First Amended Counterclaim, Apple admits that it

utilizes technological protection measures that prevent unauthorized access to its copyrighted works in Mac OS X. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 38.
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39.

Answering Paragraph 39 of the First Amended Counterclaim, Apple admits endless

loops in computer programs are commonly referred to as infinite loops. Apple admits that infinite loops can be due to the loop having no terminating condition or having one that can never be met. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 39. 40. Answering Paragraph 40 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 40. 41. Answering Paragraph 41 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 41. 42. Answering Paragraph 42 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 42. 43. Answering Paragraph 43 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 43. 44. Answering Paragraph 44 of the First Amended Counterclaim, Apple admits that it

utilizes technological protection measures to prevent unauthorized access to copyrighted works in Mac OS X. Apple further admits that, as stated in Paragraph 22 of Apple's Amended Complaint, Apple's Software License Agreement for Mac OS X states: 1. General. The software (including Boot ROM Code) . . . accompanying this License whether preinstalled on Apple-labeled hardware, on disks, in read only memory, or any other media or in any other form (collectively the `Apple Software') are licensed, not sold, to you by Apple Inc. (`Apple') for use only under the terms of this License . . . . 2. Permitted License Uses and Restrictions. A. Single Use. This license allows you to install, use and run (1) copy of the Apple Software on a single Apple-labeled computer at a time. You agree not to install, use, or run the Apple Software on any non-AppleLabeled computer or enable another to do so. (emphasis added). Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 44. 45. Answering Paragraph 45 of the First Amended Counterclaim, Apple admits that it

licenses Mac OS X for use only on Apple's hardware. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 45. 8

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46.

Answering Paragraph 46 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 46. 47. Answering Paragraph 47 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 47. 48. Answering Paragraph 48 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 48. 49. Apple admits that it employs technological protection measures that effectively control

access to Apple's copyrighted works in Mac OS X. Apple further admits that it has alleged "that Defendant has manufactured, imported, offered to the public, provided or otherwise trafficked a product, device, component, technology, software, or "code" ("the Circumvention Devices") that are primarily designed or produced for the purpose of either circumventing Apple's technological protection measures that effectively control access to Copyrighted Works, or allowing third parties to access Apple's Copyrighted Works without authorization." Apple admits that it has made these allegations under 17 U.S.C. § 1201 et seq. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 49. 50. Answering Paragraph 50 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 50. 51. Answering Paragraph 51 of the First Amended Counterclaim, Apple admits that it has

alleged claims against Psystar under 17 U.S.C. § 1201 et seq., which is part of the Digital Millennium Copyright Act or "DMCA." Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 51. 52. Answering Paragraph 52 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 52. 53. Answering Paragraph 53 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 53. 54. Answering Paragraph 54 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 54. 9

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55.

Answering Paragraph 55 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 55. 56. Answering Paragraph 56 of the First Amended Counterclaim, Apple admits that it

licenses Mac OS X for use only on Apple's hardware. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 56. 57. Answering Paragraph 57 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 57. 58. Answering Paragraph 58 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 58. 59. Answering Paragraph 59 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 59. 60. Answering Paragraph 60 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 60. 61. Answering Paragraph 61 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 61. 62. Answering Paragraph 62 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 62. 63. Answering Paragraph 63 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 63. CLAIMS FOR RELIEF FIRST CLAIM FOR RELIEF (Declaration of Unenforceability for Copyright Misuse (EULA)) 64. Answering Paragraph 64 of the First Amended Counterclaim, Apple hereby realleges

and incorporates by reference its responses to paragraphs 1 through 63, above. 65. Answering Paragraph 65 of the First Amended Counterclaim, Apple admits that it is

the owner and exclusive licensor of copyrights in Mac OS X and prior versions of the Mac operating system. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 65.
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66.

Answering Paragraph 66 of the First Amended Counterclaim, Apple admits that it

licenses Mac OS X through its Software License Agreement. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 66. 67. Answering Paragraph 67 of the First Amended Counterclaim, Apple admits that it

licenses Mac OS X through its Software License Agreement and that the Software License Agreement speaks for itself. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 67. 68. Answering Paragraph 68 of the First Amended Counterclaim, Apple admits that it

owns copyrights in, among other things, its operating system and other copyrighted works in its hardware. Apple lacks sufficient information to understand what Psystar means by "covered by any copyright corresponding to the Mac OS" and on that basis denies the allegations contained in Paragraph 68. 69. Answering Paragraph 69 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 69. 70. Answering Paragraph 70 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 70. 71. Answering Paragraph 71 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 71. 72. Answering Paragraph 72 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 72. 73. Answering Paragraph 73 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 73. 74. Answering Paragraph 74 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 74. SECOND CLAIM FOR RELIEF (Declaration of Unenforceability for Copyright Misuse (DMCA)) 75. Answering Paragraph 75 of the First Amended Counterclaim, Apple hereby realleges 11

and incorporates by reference its responses to paragraphs 1 through 74, above.
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76.

Answering Paragraph 76 of the First Amended Counterclaim, Apple admits that it is

the owner and exclusive licensor of copyrights in Mac OS X and prior versions of the Mac operating system. Except as expressly admitted herein, Apple denies the allegations contained in Paragraph 76. 77. Answering Paragraph 77 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 77. 78. Answering Paragraph 78 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 78. 79. Answering Paragraph 79 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 79. 80. Answering Paragraph 80 of the First Amended Counterclaim, Apple lacks sufficient

information to know what Psystar means by "Psystar products" and on that basis Apple denies each and every allegation contained in Paragraph 80. 81. Answering Paragraph 81 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 81. 82. Answering Paragraph 82 of the First Amended Counterclaim, Apple admits that it

owns copyrights in, among other things, its operating system and other copyrighted works in its hardware. Apple lacks sufficient information to understand what Psystar means by "covered by any copyright corresponding to the Mac OS" and on that basis denies the allegations contained in Paragraph 82. 83. Answering Paragraph 83 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 83. 84. Answering Paragraph 84 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 84. 85. Answering Paragraph 85 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 85. 86. Answering Paragraph 86 of the First Amended Counterclaim, Apple denies each and 12

every allegation contained in Paragraph 86.
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87.

Answering Paragraph 87 of the First Amended Counterclaim, Apple denies each and

every allegation contained in Paragraph 87. APPLE'S AFFIRMATIVE DEFENSE (Failure To State A Claim Upon Which Relief Can Be Granted Under F.R.C.P. 12(b)(6)) 88. Psystar has failed to state a claim for declaratory relief based on copyright misuse

resulting from Apple's licensing practices. 89. Psystar has failed to state a claim for declaratory relief based on copyright misuse

resulting from Apple's assertion of the Digital Millennium Copyright Act.

DATED: March 4, 2009

Respectfully submitted, TOWNSEND AND TOWNSEND AND CREW LLP

By: /s/ James G. Gilliland, Jr. JAMES G. GILLILAND, JR. Attorneys for Plaintiff and Counterdefendant APPLE INC.
61808385 v2

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