eBay Inc. v. Digital Point Solutions, Inc. et al

Filing 146

Memorandum in Opposition to 128 Compel Responses to Requests for Production, Interrogatories and Requests for Admission filed byDigital Point Solutions, Inc., Shawn Hogan. (Attachments: # 1 Affidavit Declaration of Seyamack Kouretchian, # 2 Affidavit Declaration of Ross M. Campbell, # 3 Affidavit Declaration of Shawn Hogan, # 4 Proposed Order Denying Plaintiff's Motion to Compel)(Campbell, Ross) (Filed on 10/23/2009) Modified on 10/26/2009 (gm, COURT STAFF).

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eBay Inc. v. Digital Point Solutions, Inc. et al Doc. 146 1 TOWNSEND AND TOWNSEND AND CREW LLP JAMES G. GILLILAND, JR. (State Bar No. 107988) 2 MEHRNAZ BOROUMAND SMITH (State BarNo. 197271) MEGAN M. CHUNG (State Bar No. 232044) 3 J. JEB B. OBLAK (State BarNo. 241384) Two Embarcadero Center Eighth Floor 4 San Francisco, CA 94111 Telephone: (415) 576-0200 5 Facsimile: (415) 576-0300 Email: jggillland~townsend.com 6 mboroumand~townsend.com mmchung~townsend.com 7 jboblak~townsend.com 8 Attorneys for Plaintiff and Counterdefendant APPLE INC. 9 10 11 UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION 12 13 14 APPLE INC., Case No. 08-3251 WHA 16 v. 18 15 Plaintiff, corporation, and DOES 1-10, inclusive, REPLY BRIEF IN SUPPORT OF APPLE INC.'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTLY-FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR 17 PSYSTAR CORPORATION, a Florida Defendants. 19 LIMITED PURPOSES Date: Time: September 24, 2009 20 21 AND RELATED COUNTERCLAIMS. 8:00am Courroom: 9 Trial Date: January 11,2010 22 23 REDACTED PUBLIC VERSION 24 25 26 27 28 REPLY BRIEF IN SUPPORT OF APPLE INC.'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTLY-FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO. 08-3251 WHA townsend. Dockets.Justia.com 1 TABLE OF CONTENTS Page 2 3 i. INTRODUCTION .......................................................................................................... I 4 5 II. ARGUMENTS AND AUTHORITIES ...........................................................................1 A. 6 7 8 The Pending Action Includes All Psystar Computers Running All Versions of Mac OS X.......................... ........................ ............. ........... ..... ...1 Apple Responded to Discovery Regarding Mac OS X ver. 10.6, While Psystar Did Not ...............................................................................4 Even IfPsystar Has Devised Another Way to Crack the Encryption of B. C. 9 10 Mac OS X That Does Not Warant Filing A Different Lawsuit ................................................................................................6 D. 11 the Mac OS X The Key Legal Issues Regarding the Terms of License Are Identical in the Two Lawsuits.........................................................8 12 13 E. Psysta's Unabashed Attempt to Avoid this Cour's Prior Ruling Dismissing Its Antitrust Claims Should Be Halted............................... 10 III. CONCLUSION .............................................................................................................11 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPL Y BRIEF IN SUPPORT OF APPLE INC.'s MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL Y-FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO. 08-3251 WHA townsend. 1 TABLE OF AUTHORITIES Page 2 3 CASES 4 Apple Inc. v. Psystar Corp., 5 586 F. Supp. 2d 1190 (N.D. CaL. 2008) ............................................................................ 10, 11 Decker Coal Co. v. Commonwealth Edison Co., 6 7 8 805 F. 2d 834 (9th Cir. 1986)....................................................................................................2 IMS. Inquiry Mgmt. Sys. Ltd. v. Berkshire Information Sys., Inc., 307 F. Supp. 2d 521 (S.D.N.Y. 2004)....................................................................................... 4 9 10 11 In re Crown Vantage, Inc., 421 F.3d 963 (9th Cir. 2005)................................................................................................... 11 Med. Broad. Co. v. Flaiz, 12 13 2003 WL 22838094 (RD. Pa. 2003)........................................................................................: 4 Montgomery v. Noga, 168 F.3d 1282 (lIth Cir. 1999).............................................................................................3,4 14 15 Olan Mils, Inc. v. Linn Photo Co., 23 F.3d 1345 (8th Cir. 1994)..................................................................................................... 3 Pac. & S. Co., Inc. v. Duncan, 16 17 18 744 F.2d 1490 (lIth Cir. 1984)................................................................................................. 3 Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F. 2d 93 (9th Cir. 1982)...................................................................................................... 2 Perfect 10, Inc. v. Amazon.com, Inc., 19 20 21 508 F.3d 1146 (9th Cir. 2007)...................................................................................................3 Wall Data Inc. v. Los Angeles County Sherif's Dept., 447 F. 3d 769,786 .....................................................................................................................8 STATUTES 22 23 24 25 26 27 28 17 U.S.C.: 106............................................................................................................................................8 117(a)......................................................................................................................................3 411...........................................................................................................................................3 1201.........................................................................................................................................7 1201(a)(2)................................................................................................................................7 townsend. REPLY BRIEF IN SUPPORT OF APPLE INC.'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTLY-FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO. 08-3251 WHA 11 1 TABLE OF AUTHORITIES (continued) Page 2 3 OTHER AUTHORITIES 4 5 5 Wiliam F. Patry, Patry on Copyrights, 17:78 (2009) ..............................................................4 Nimmer on Copyrights, 12A. 18(B).............................................................................................4 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY BRIEF IN SUPPORT OF APPLE INC.'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL Y-FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO. 08-3251 WHA 11 townsend. 1 I. INTRODUCTION Since the filing of 2 3 this lawsuit by Apple in July, 2008, Psysta has released seven different models of its computers, ruing eight different versions of Mac OS X, using three different 4 5 mechanisms to cause Apple's software to run on Psysta's computers. Psystar does not, and cannot, contest that everyone of these computer systems are at issue in this case. Nor does it 6 7 8 argue that Apple was required to fie another Amended Complaint every time Psystar introduced a new computer. Yet now Psysta senselessly contends that its newest computer system, which uses a fourh method to run the latest version of Apple's Mac OS X, is excluded from this action and, instead, should be the subject of a brand new Declaratory Relief action that Psystar just filed in Florida. 9 10 11 Every argument made by Psystar to try to justify its foru-shopping - filing a new lawsuit 3,000 miles away - is wrong or irrelevant or both. Specifically, Apple's Amended Complaint 12 13 encompasses Psystar's violations of Apple's intellectual property rights in Mac OS X version 10.6 14 15 (Snow Leopard) because it was broadly drafted to include each version of Mac OS X. Apple never interfered with Psystar's opportunity to take discovery regarding Mac OS X version 10.6 (Snow Leopard); Apple and its witnesses answered all the questions on this subject that were put 16 17 18 to them. The specific method Psystar employs . is immaterial since Psysta's circumvention is unlawfl however it occurs. Recent changes 19 in the Mac OS X Software License Agreement render Psystar's conduct even less defensible, not 20 21 more so. Finally, the antitrust allegations already dismissed once by this Court gain no additional credibility by being filed again in a different federal court. For all ofthese reasons, Apple's Motion to Dismiss or Enjoin should be granted. 22 23 II. ARGUMENTS AND AUTHORITIES A. 24 25 The Pending Action Includes All Psystar Computers Running All Versions of MacOSX 26 Apple's Complaint and its Amended Complaint were carefully written: neither pleading 27 limits Apple's allegations of copyright infringement and violation ofthe Digital Milennium 28 Copyright Act ("DMCA") to version 10.5 (Leopard) of Mac OS X. Psystar's repeated assertions 1 townsend. REPLY BRIEF IN SUPPORT OF APPLE INC.'s MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL YFILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO. 08-3251 WHA 1 to the contrary are simply wrong. 2 Snow Leopard is the trade name for the latest version of Mac OS X - version 10.6 - which 3 was released to the public three weeks ago, on August 28,2009. Because it is simply the latest 4 version of Mac OS X, Snow Leopard is included in at least the following core allegations in 5 Apple's Amended Complaint (Docket No. 38) (emphasis added): 6 21. Apple licenses the use of its Macintosh operating system ("Mac OS") 7 8 softare for use only on Apple-labeled hardware.... Upgrades to the Mac OS.may be licensed separately, but the terms ofthe license prohibit use of the Mac OS or its upgrades on non-Apple hardware. 9 10 11 26. Mac OS, Mac OS X, Mac OS X version 10.5, and Mac OS X Server, individual fies constituting components of Mac OS, Mac OS X, Mac OS X version 10.5, and Mac OS X Server,... are each original works of authorship created by Apple constituting copyrightable subject matter (hereafter, "the 12 13 Copyrighted Works.") 27. Defendant has created derivative works from, reproduced, distributed 14 15 and/or displayed the Copyrighted Works in violation of Apple's exclusive right under the Copyright Act. 45. Defendant has ilegally circumvented Apple's technological protection 16 17 18 measures that control access to Apple's Copyrighted Works. 48. ... Defendant has manufactured, imported, offered to the public, provided or otherwise traffcked a product, device, component, technology, softare, or "code" ("the Circumvention Devices") that are primarily designed or 19 produced for the purose of either circumventing Apple's technological protection measures that effective control access to Copyrighted Works, or allowing third paries to access Apple's Copyrighted Works without authorization. 20 21 Prayer for Relief, ir2: Awarding Apple a preliminary and/or permanent injunction against the sale or distribution of any software or device... that allows for the rung of Apple software on non-Apple computers. ... 22 23 Mac OS X version 10.6 (Snow Leopard) is the newest iteration of Mac OS X. It is 24 25 encompassed within the Amended Complaint's definitions of Mac OS and Mac OS X as well as the definition of Copyrighted Works. Therefore, this Court is the first one to have jurisdiction over disputes regarding Psystar's infringement of Apple's rights in Snow Leopard and should decide how and where to resolve that dispute. Decker Coal Co. v. Commonwealth Edison Co., 26 27 28 805 F. 2d 834,843 (9th Cir. 1986); Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F. 2d 93,95 (9th REPLY BRIEF IN SUPPORT OF APPLE INC.'s MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL YFILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO. 08-3251 WHA 2 townsend. 1 Cir. 1982). Psystar admits that the lawsuits in California and Florida both "involve claims for copyright infringement and circumvention of the technological protection mechanisms (and) both involve first sale and 117 arguments by Psystar" (Opp. Br. at 8),1 but characterizes these as only 2 3 4 5 "superficial" similarities. In fact, however, as shown by the allegations from Apple's Amended Complaint cited above, these issues are the hear of the matter and should be resolved in one place for all puroses. 6 7 8 Psystar contends, incorrectly, that even ifthe words of Apple's Amended Complaint include Mac OS X version 10.6, the Amended Complaint should not be construed to cover that 9 10 11 product because Apple has not yet registered its copyright in Snow Leopard. In fact, however, Apple has filed with the United States Copyright Office a request to register the Snow Leopard copyright expeditiously in accordance with the law. 17 U.S.C. 411. (Reply Declaration of Sue Caroll, ,r,r 2-3; Exs. 1-3.) The Snow Leopard copyright is now registered as U.S. Copyright Reg. No. TX 6-973-319. (Id. 'r4; Ex. 4.) Moreover, since this Court undeniably has 12 13 jurisdiction over 14 15 Apple's claims that Psystar has infringed other registered copyrights, it was not even necessary that the copyright in Mac OS X version 10.6 also be registered. In Perfect 10, Inc. v. 16 17 18 Amazon. com, Inc., 508 F .3d 1146, 1154-5d n.1 (9th Cir. 2007), the Ninth Circuit Cour of Appeals resolved this exact issue: Once a cour has jurisdiction over an action for copyright infringement under( 17 U.S.C.) section 411, the cour may grant injunctive relief to restrain infringement 19 of any copyright, whether registered or unegistered. See, e.g., Olan Mils, Inc. v. 20 21 Linn Photo Co., 23 F .3d 1345, 1349 (8th Cir. 1994); Pac. & S. Co., Inc. v. Duncan,. 744 F.2d 1490, 1499 n. 17 (11th Cir. 1984). In addition, once a court has jurisdiction over a registered work, it also has jurisdiction over unregistered works that are derivative of 22 23 the registered work. Montgomery v. Noga, 168 F.3d 1282 (11 th Cir. 1999). In Montgomery, the copyright holder brought an action alleging 24 25 infringement of his copyright in a computer program and a later upgrade of that computer program. Id. at 1287. The copyright in the original program was registered, but the copyright in 26 27 28 1 Section 117 of the Copyright Act allows the "owner of a copy of a computer program" to make, under very limited circumstances not applicable here, a "new copy or adaptation" if that is done "as an essential step in the utilization of the computer program in conjunction with a machine...." 17 U.S.C. 117(a). REPLY BRIEF IN SUPPORT OF APPLE INC,'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL YFILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO, 08-3251 WHA 3 townsend. 1 the upgrade was not registered. Defendants argued that the derivative work could not be the 2 subject of an infringement action because it was a "separate work" that required its own 3 registration, and was not in existence at the time of the registration of the underlying work. Id. at 4 1292. However, the district cour found, and the Eleventh Circuit agreed, that defendant's 5 copying of the later work infringed the copyright in plaintiff s earlier computer program. Id. 6 (collecting cases). Likewise here: since Snow Leopard evolved from Leopard, Psystar's copying 7 infringes Apple's copyrights in both works. Accordingly, this Court has jurisdiction over all of 8 Apple's copyright claims against Psystar. 9 Finally, this Cour also has jurisdiction over Apple's claim that Psystar has violated the 10 DMCA by circumventing the technological protection mechanism in Mac OS X version 10.6. 11 IMS. Inquiry Mgmt. Sys. Ltd. v. Berkshire Information Sys., Inc., 307 F. Supp. 2d 521, 531 n.9 12 (S.D.N.Y. 2004); Med. Broad. Co. v. Flaiz, 2003 WL 22838094, at 3 (E.D. Pa. 2003) (citing 13 Nimmer on Copyrights, 12A. 18(B)); 5 Wiliam F. Patry, Patry on Copyrights, 17:78 (2009). 14 Thus, there is no jurisdictional impediment that prevents this Court from resolving all of the 15 disputes between Apple and Psystar. 16 17 B. Apple Responded to Discovery Regarding Mac OS X ver. 10.6, While Psystar Did Not 18 Psysta's assertion that Apple stonewalled and did not provide discovery regarding any 19 version of Mac OS X other than Leopard is simply incorrect. At least six Apple witnesses 20 Simon Patience, Phil Schiller, Kevin Van Vechten, Michael Culbert, Bob Mansfield and Greg 21 Christie - provided deposition testimony relating to Snow Leopard. (See Boroumand Smith 22 Declaration in Support of Apple's Motion, Exs. 6-11 (citing some of that deposition testimony)). 23 Apple witnesses were never instructed to not answer questions regarding Snow Leopard. On 24 occasion, Apple's counsel objected to the relevance of such questions since, at that time, the Mac 25 OS X Snow Leopard upgrade had not yet been released and Psystar had provided no indication 26 (either through its counselor in its discovery responses) that it intended to run Snow Leopard on 27 its computers. Nonetheless, Apple's witnesses were permitted to answer all the questions posed 28 by Psystar. townsend. REPLY BRIEF IN SUPPORT OF APPLE INC.'s MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL YFILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO. 08-3251 WHA 4 1 Furthermore, Psystar's explanation of the discovery responses is also inaccurate. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 . As Snow Leopard was not released until after 24 the close of discovery and Psystar did not provide any discovery indicating its plans to run Snow 25 Leopard on its machines,3 Apple did not produce any Snow Leopard specific documents. Had 26 27 28 REPLY BRIEF IN SUPPORT OF APPLE INC.'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL Y- townsend. FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO, 08-3251 WHA 5 1 Psysta not hidden its intent to run Snow Leopard on its computers, Apple would have provided 2 this information to Psysta as well. Additionally, as Apple has stated in its Motion to Dismiss or 3 Enjoin, it supports re-opening discovery for limited puroses so that Psystar (and Apple) can have 4 access to relevant Snow Leopard related documents from one another. 5 c. Even If Psystar Has Devised Another Way to Crack the Encryption of Mac OS X That Does Not Warrant Filng A Different Lawsuit 6 7 Psystar has sold seven different computers shipped with eight different versions of Mac OS 8 X. (Reply Declaration of Dr. John Kelly (hereafter, "Kelly Decl.") ir 2 and Ex. 1, (Excerpt from 9 Kelly Report).) When Apple fied its Amended Complaint, Psystar was shipping two products 10 with Mac OS X installed: the Open Computer and the OpenPro. Since then Psysta has added five 11 products to its line: the Rack-Mount OpenPro, the Open(3), the Open(Q), the Open(7), and the 12 Rack-Mount Open(7). (Kelly Decl., ir 2.) While Psysta now claims the computers rung Snow 13 Leopard are "entirely different," in truth its product line has not changed. Indeed, the Open(7) 14 being offered with Snow Leopard has the same base specifications as the Open(7) that Psystar has 15 been sellng for months. Only the version of Mac OS X has changed. (Kelly Decl. ir 2.) 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY BRIEF IN SUPPORT OF APPLE INC.'s MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL YFILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PUROSES CASE NO. 08-3251 WHA 6 townsend. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Psysta also says it is going to star sellng a "dongle" sometime in the future that wil 17 allow users to load Mac OS X onto any computer, even if the computer does not come from 18 Psysta.5 Again, the physical form in which Psystar sells its circumvention device is irrelevant to 19 its legal liability. The DMCA prohibits the manufactuing and sale of any "technology, product, 20 service, device, component, or par thereof' primarily designed to circumvent a technological 21 22 23 . Either way Psystar violates the law and infringes Apple's rights. That is the precise issue presented by this lawsuit; it should be resolved for all purposes in this trial, rather than forcing two judges and two juries to consider exactly the same legal claim. 4 The DMCA, 17 U.S.C. 1201 states that "No person shall circumvent a technological measure that effectively controls access to a (copyrighted) work...." 5 Apparently a "dongle" is nothing more than a USB drive -like a thumb drive - that can be lu ed into a com uter's USB ort. REPLY BRIEF IN SUPPORT OF APPLE INC,'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL Y- 24 25 26 27 28 townsend. FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO, 08-3251 WHA 7 1 D. The Key Legal Issues Regarding the Terms of the Mac OS X License Are Identical in the Two Lawsuits 2 3 Each time Psystar loads any version of Mac OS X onto a Psystar computer it breaches 4 Apple's Softare License Agreement ("SLA") because that SLA (whether for Leopard or Snow 5 Leopard) explicitly states that the licensee may only install Apple's softare on a single Apple6 labeled computer at a time.6 See, Opp. Br., Exs. D and E, sec. 2.A. Moreover, since Psysta's Mac OS X on a non-Apple computer exceeds the scope of 7 copying and use of any version of the 8 Apple SLA, that copying and use constitutes copyright infringement. 17 U.S.C. 1 06. This this lawsuit as well as the newly-fied Florida action. 9 fudamental issue permeates every aspect of 10 Psysta canot in good faith contest that it makes multiple, unauthorized, copies of Mac 11 OS X, both version 10.5 and version 10.6. Rather, it apparently intends to argue either that 12 Apple's Software License Agreement is not enforceable or that it is not applicable. Psystar notes 13 minor differences between the wording of earlier and later versions of Apple's Software License 14 Agreement. Opp. Br. at 9-10. But the similarities between the SLAs dwarftheir differences, and 15 the differences do not matter. In all events, the minor word changes do not warant a whole new 16 lawsuit in Florida. 17 Psystar apparently intends to argue that it is not bound by the SLA because Apple "sells" 18 Mac OS X rather than licensing it. This is known as the "first sale" defense under copyright law.7 19 Both the older and newer version of the Mac OS X SLA explicitly state that Apple's softare, 20 "whether preinstalled on Apple-labeled hardware, on disk, in read only memory, on any other 21 media or in any other form (collectively the 'Apple Softare') are licensed, not sold, to you by this license." Opp. Br. Ex. D, sec. 1; Ex. E, 22 Apple Inc. ("Apple") for use only under the terms of 23 sec. 1 (emphasis added). The older version of the SLA (dated August 14, 2007) states that "You 24 own the media on which the Apple Softare is recorded but Apple and/or Apple's licensor(s) 25 26 27 28 6 The later version ofthe Mac OS X SLA uses the wording "Apple-branded" rather than "Apple- labeled." 7 See, Wall Data Inc. v. Los Angeles County Sherif's Dept., 447 F. 3d 769,786 fn. 9 (9th Cir. 2006), "(T)he first sale doctrine rarely applies in the software world because software is rarely 'sold.'" REPL Y BRIEF IN SUPPORT OF APPLE INC.'s MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL YFILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO, 08-3251 WHA 8 townsend. 1 retain ownership of the Apple Software." Opp. Br., Ex. E, sec. 1. The more recent version of the the Apple 2 SLA (dated July 15,2009) says "Apple and/or Apple's licensor(s) retain ownership of 3 Softare itself and reserve all rights not expressly granted to you." Opp. Br. Ex. D, sec. 1. 4 Psysta argues this language change may be significant to its first sale defense and says the 5 new license is not at issue in this lawsuit. 8 However, Psystar ignores two crucial facts which 6 demonstrate that it makes no sense to have two different lawsuits pending regarding the same legal 7 dispute. First, if either version of the SLA helps Psysta's argument (and Apple believes that 8 neither does) it is the 2007 version (which is clearly at issue in this case), not the 2009 version 9 which eliminates the words "you own the media on which the Apple softare is recorded...." 10 Second, both versions of the SLA explicitly state that Apple's software is licensed, not sold. 11 While the question whether the first sale defense applies must be resolved it need not be - and 12 should not be - presented simultaneously to two different courts that could, conceivably, reach 13 two different results. Rather, this Cour, which has invested substantial time and resources into 14 this dispute already, is the appropriate foru to address and resolve this legal issue. 15 Psysta claims the 2009 SLA allows consumers who are not wiling to be bound by 16 Apple's license to retur opened software to Apple while the 2007 SLA is less clear. Psystar then 17 hypothesizes that a consumer who purchased Leopard under the 2007 license from a retailer (not 18 Apple) that does not accept returns of opened software might not be able to get a refund if that 19 consumer chooses to not accept the license. Psystar next suggests that this hypothetical "lack of 20 an opportunity to retur the softare may affect the enforceability of the license agreement." any) ofthis contention, 21 Opp. Br. at 10. Again it is premature for Apple to address the merits (if 22 except to note that Psystar submits no evidence whatsoever that any consumer has ever tried, 23 unsuccessfully, to retu Mac OS X because that person did not agree with its license terms. For 24 the present purose of deciding what cour should address this claim, it is crucial to reiterate that 25 the alleged failing in the SLA exists in the 2007 version, which is clearly at issue in this case, not 26 the later version. Again, then, there is no reason for a completely new lawsuit; this Cour wil 27 28 8 Apple is confdent the language change has no bearing whatsoever on the validity of Psystar' s first sale defense. For present purposes, however, that issue need not be resolved. REPLY BRIEF IN SUPPORT OF APPLE INC.'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL Y- townsend. FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO, 08-3251 WHA 9 1 address and resolve the issue. 2 Psysta next argues that the 2009 license contains an express prohibition on decompiling, 3 decrypting, reverse engineering, disassembling or attempting to derive the source code of 4 Mac OS X while the 2007 license does not. Opp. Br. at 10. That is incorrect: both licenses 5 contain these prohibitions (see, Opp. Br. Ex. D, sec. 2.1.; Ex. E, sec. 2.F.), although the 2009 6 license specifically adds the word "decrypt." Yet again, Psystar's argument (if any) that it is 7 allowed to decrypt under the DMCA is made worse by the 2009 SLA. Moreover, both licenses 8 explicitly state that their restrictions on reverse engineering, etc., are subject to applicable law, 9 including the DMCA. This is no basis for an entirely separate lawsuit. 10 Finally, Psystar notes that the 2009 SLA explicitly has a California choice of law 11 provision. That is true but irrelevant; Apple already has asserted claims against Psysta under 12 California law. Amended Compl., (Dkt. No. 38)'r'r 107-109. 13 E. Psystar's Unabashed Attempt to Avoid this Court's Prior Ruling Dismissing Its Antitrust Claims Should Be Halted 14 15 Despite the fact that this Cour already has considered and rejected the same antitrust claim 16 that Psystar has re- filed in Florida, Psystar argues that this Cour should not "intrude on and, 17 indeed, preempt the judgment of Judge Hoeveler of the United States District Cour for the 18 Southern District of Florida" (Opp. Br. at 3) or "intervene in matters that should be decided by 19 Judge Hoeveler. ..." (Id. at 12). But it is Psystar that is attempting to have Judge Hoeveler 20 "intrude on" and "intervene in" the antitrust and unfair competition claims already decided by this 21 Court. Indeed, Psystar's act of filing in Florida deliberately disregards this Court's prior Order 22 giving Psystar the opportunity to "plead its best case" and waring that otherwise its prior antitrust 23 counterclaims would be dismissed with prejudice. Apple Inc. v. Psystar Corp., 586 F. Supp. 2d 24 1190, 1204 (N.D. CaL. 2008). In response Psystar specifically told the Cour that it had chosen to 25 "not re-plead its Sherman and Clayton Act antitrust claims (and related state claims).. .." 26 (Psystar's Motion For Leave to Amend Counterclaim, Dkt. No. 40, at p. 9, n.1.) 27 Psysta disingenuously argues that it could not have filed the current antitrust claims 28 before, when directed to do so by this Cour, because they involve a new product, Snow Leopard, REPLY BRIEF IN SUPPORT OF APPLE INC.'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL Y- townsend. FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES 10 CASE NO. 08-3251 WH 1 and new definitions of the relevant market. But nothing claimed is truly new. Apple's allegedly 2 3 anti-competitive conduct is its decision to license its Mac OS X softare exclusively for use on Apple computers. This Court has already ruled that Apple does not violate the antitrust laws by licensing in this maner: 4 5 Apple asks its customers to purchase Mac OS knowing that it is to be used only with Apple computers. (Compl. ir28) It is certainly entitled to do so. 6 7 8 586 F. Supp. 2d at 1201 (emphasis added). Despite this unequivocal ruling, Psysta again challenges the exact same licensing practice, on the exact same legal theory, in Florida. See, Psysta's Florida Complaint, irir21-25. The challenged restriction, found in section 2A of 9 the 10 11 SLA, has not changed since this Court's ruling in November, 2008. Psysta attempts to justify its forum-shopping by alleging a different relevant market, a 12 13 purported market for "premium personal computers." It also says it may amend in Florida to try a third bite at Apple, alleging a market for "personal computers ruing UNIX-based operating systems." Opp. Br. at 13. But if 14 15 there are any such plausible relevant markets (which Apple disputes), those alleged markets existed in November, 2008, when Psystar was given the chance 16 17 18 by this Cour to try to plead its "best case." Since it did not do so then, Psystar canot do so now in a different cour across the continent. Psystar's "new" antitrust claim arises from the same operative facts - the same license restriction - as its dismissed one. Consequently, those claims 19 are barred by Psystar's failure to assert them in this action. In re Crown Vantage, Inc., 421 F.3d 963,973 n.7 (9th Cir. 2005). 20 21 III. CONCLUSION 22 Psysta agrees it is within this Cour's authority to enjoin prosecution Qf the Florida action. 23 Opp. Br. at 14. Apple believes the Cour should go fuher and order Psystar to dismiss the action 24 entirely. There is absolutely no reason for two courts simultaneously to be considering the same 25 legal issues between the same paries involving the same products. The best outcome of such a 26 highly inefficient use of judicial resources is that both courts, after expending significant time and 27 resources, reach the same result. The worst outcome, of course, is the opposite. 28 Psysta states it is eager for a trial in order to test the legality of its entire business. That is townsend. REPLY BRIEF IN SUPPORT OF APPLE INC.'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL YFILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO. 08-3251 WHA 11 1 a reasonable concern, but it leads to the conclusion that Apple's motion should be granted. It is 2 much more efficient for the judicial system and the paries to briefly reopen discovery in this case, 3 postpone the trial for a short time, and have all disputes resolved in this case than to have the 4 substantial majority of them resolved in this action but then to conduct an entirely separate lawsuit 5 over the remaining loose ends. Apple's Motion to Dismiss or Enjoin should be granted. 6 DATED: September 21,2009 7 8 Respectfully submitted, TOWNSEND AND TOWNSEND AND CREW LLP 9 By: Is/James G. Gillland, Jr. JAMS G. GILLILAND, JR. 10 Attorneys for Plaintiff and Counterdefendant 11 APPLE INC. 12 62227619 vI 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY BRIEF IN SUPPORT OF APPLE INC.'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTL Y- townsend. FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES CASE NO, 08-3251 WHA 12 1 CERTIFICATE OF SERVICE I, Diane G. Sunen, declare I am employed in the City and County of San Francisco, 2 3 4 5 California in the office of a member of the bar of this court at whose direction this service was made. I am over the age of eighteen and not a par to this action. My business address is Townsend and Townsend and Crew LLP, Two Embarcadero Center, Eighth Floor, San Francisco, California, 94111. 6 7 8 I served the following documents exactly entitled: REPLY BRIEF IN SUPPORT OF APPLE INC.'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTLY-FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES on the interested paries in this action following the ordinary business practice of Townsend and Townsend and Crew LLP, as follows: 9 10 11 K.A.D. Camara Camara & Sibley LLP 2339 University Boulevard Houston, TX 77005 Phone: 713-893-7973 email: camara~camarasibley.com Fax: 713-583-1131 12 13 David Vernon Welker Welker & Rosario 2230 Skilern Drive email: david.welker~werolaw.com Boise, Idaho 83709 Phone: 949-378-2900 Fax: 717-924-6627 14 15 16 17 18 collecting and processing documents for mailng with the United States Postal Service. On the date listed herein, following ordinary business practice, I served the within document(s) at my place of business, by placing a true copy thereof, enclosed in a sealed envelope, with postage thereon fully prepaid, for collection and mailing with the United States Postal Service where it would be deposited with the United States Postal Service that same day in the ordinary course of business. D (By First Class Mail) I am readily familar with my employer's practice for D (By Overnight Courier) I caused each envelope to be delivered by a commercial carier service for overnight delivery to the offces of the addressee(s). 19 20 21 to be delivered by courier this date. D (By Hand) I directed each envelope to the part(ies) so designated on the service list D (By Facsimile Transmission) I caused said document to be sent by facsimile i: (By Electronic Transmission) I caused said document to be sent by electronic transmission to the fax number indicated for the pary(ies) listed above. 22 23 transmission to the e-mail address indicated for the party(ies) listed above via the cour's ECF notification system. 24 25 the perjur under the laws ofthe United States of America that I declare under penalty of foregoing is true and correct, and that this declaration was executed on September 21, 2009, at San Francisco, California. lsI Diane G. Sunnen 26 27 28 CERTIFICATE OF SERVICE CASE NO. 08-3251 WHA Diane G. Sunen townsend.

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