World of Apple

Earlier today, World of Apple was the first site by many hours (to my knowledge) to report that Apple had prevailed in its Motion to Dismiss Psystar’s Counterclaims. It is my belief that I reported this development within minutes of the Order being entered into the Court Docket. I would like to thank Edible Apple for its acknowledgment of our part in breaking this story. I really appreciated that nod. At the time I reported this news, I had promised some further commentary.

First, here are some basics for persons unfamiliar with legal proceedings. Apple had initially sued Psystar for copyright infringement; inducing others to commit copyright infringement; breach of contract; inducing others to commit breach of contract; trademark infringement; trade dress infringement; trademark dilution; and violations of state and common law unfair competition acts. Psystar responded with thirty-seven affirmative defenses to these claims and brought a countersuit against Apple. Psystar’s countersuit alleged violations of Sections 1 and 2 of the Sherman Antitrust Act and Section 3 of the Clayton Antitrust Act as well as California-specific business codes and state common law on unfair and anti-competitive business practices. So essentially there were two lawsuits going on at one time with Apple being both the Plaintiff and Counter-Defendant, and Psystar being both the Defendant and Counter-Plaintiff.

Apple moved to dismiss Psystar’s counterclaims for reasons previously discussed here. I had predicted that Apple would lose its motion, not because I thought it was without merit, but rather that motions to dismiss are rarely granted unless the arguments are particularly compelling. Although I found Apple’s arguments to be strong, I am not an attorney, so I predicted the usual outcome of losing on a motion to dismiss since every presumption is given in favour of the non-moving party. I made a foolish bet on this prediction with Alex Brooks that I will now have to live up to, but I ask him to have mercy and let me fulfill my end of the bargain over the weekend. [Editors note - I’m ensuring dizzle keeps her end of the deal]

The Court Order Granting Apple’s Motion to Dismiss comprised nineteen pages of very lucid commentary. I understand the issues and legal concepts much more now having read those nineteen pages than I did reading the hundreds of pages of materials submitted and/or referred to by both parties. As I said before, I like this Judge. He is very clear and to the point. Following is an abbreviated summary of the Court’s opinions by category.

Legal Standards for Granting a Motion to Dismiss

Psystar’s counsel had argued that the existence of the various alleged markets was an issue of fact and not an issue of law. Some explanation is needed here. Generally speaking, the judge is present to make decisions on issues of law, while the jury is present to make decisions on issues of fact. Therefore, Psystar was claiming that Apple’s arguments, even if valid, simply were not grounds for dismissal since they were not solely issues of law but also contained disputed issues of fact. Apple obviously disagreed. My earlier statement, “It [the Motion to Dismiss] appears to hinge on Apple’s arguments on the legal standards required to prevail,” turned out to be quite correct.

Judge Alsup found that Psystar merely made conclusory and unsupported allegations of law and inferences drawn therefrom without plausible factual grounding. The case of Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964–65 (May 21, 2007) factored heavily in the Court’s reasoning.

The alleged Mac OS market

The dispute between the parties in the counterclaims concerned whether the Macintosh OS is a single-product market, or whether there are other operating systems, such as Windows, that are also part of the relevant market. Psystar’s success absolutely depended on their being able to demonstrate this single-product market theory, and they argued that this was a factual determination for a jury. The Court noted:

The definition of antitrust “relevant market” is typically a factual rather than a legal inquiry, but certain legal principles govern the definition.… Whether products are part of the same or different markets under antitrust law depends on whether consumers view those products as reasonable substitutes for each other and would switch among them in response to changes in relative prices.

Citing Newcal Industries, Inc. v. Ikon Office Solutions, 513 F.3d 1038, 1044 n.3 (9th Cir. 2008).

Now I understand much more clearly why Psystar focused so heavily on the idea that a small but significant non-transitory increase in price (SSNIP) would not reduce Apple’s consumer base to any significant degree. At first blush, this seems quite strong in Psystar’s favour. Many Mac users would pay even more for the product without considering switching to Windows. However, the Newcal case dealt with a derivative, not a primary, market. Basically, in that case, there were two competing manufacturers of copying equipment. The issue was not with the primary sale of the copiers but with the sale of parts and supplies. It is completely inapplicable to Psystar’s claim. As an example, if this present case was about Apple requiring only Apple-branded RAM and Apple-branded hard drives, then perhaps there would be a precedent, but not in a case alleging a single-product primary market. The Court recognized that Psystar did cite one case which could lend support to their allegation; however, that case had later been implicitly over-ruled and was no longer valid case law.

The Court also noted:

Single-brand markets are, at a minimum, extremely rare. “Even where brand loyalty is intense, courts reject the argument that a single branded product constitutes a relevant market.”

Citing Green County Food Market, Inc. v. Bottling Group, 371 F.3d as75, 1282 (10th Cir. 2004).

Thus:

[Psystar’s] pleadings, however, fail to allege facts plausibly supporting the counterinuitive claim that Apple’s operating system is so unique that if suffers no actual or potential competitors.

In reading the decision, I sensed a hint at this point where the Judge seemed to be telling Psystar that if they could provide a factual basis for their SSNIP claim, rather than simply making conclusory statements of law, an amended counterclaim might survive dismissal. I suspect that Psystar will scour the Apple fanboy sites for hyperbolic statements of loyalty to the death for the cause of Apple and Dear Leader. However, a little more digging will find just as many current Apple users who would certainly consider a switch if the prices were higher. Ah, but would they switch to Windows? Probably not, but this points to the big pink elephant in the middle of the room that seems to have been ignored thus far. Apple is losing some consumers daily, and a large reason is due to price. To whom? Linux. The price can’t be defeated; it is free. There is no way with free alternatives readily accessible to the typical Macintosh consumer that Psystar can make the argument that there isn’t a reasonably equivalent substitute without Rudy Pedraza crossing his fingers behind his back. The Court noted what I had previously said: It is possible that this willingness to pay a higher price is due to additional perks to the purchaser that aren’t so easily quantifiable, such as customer service, the coolness factor, and other such intangibles.

Judge Alsup pointed to the same admission noted by Apple in Psystar’s own pleadings that the Mac OS performs the same functions as other operating systems; operating systems which Psystar itself also sells as alternatives to OS X. I am also somewhat self-pleased (I beg the reader’s indugence) that the Court also noted the same foot-shooting argument that I had detected. Apple’s aggressive ad campaign against Vista doesn’t prove that Vista isn’t a competitor; the whole purpose of the campaign is to prevail against a very real competitor.

In short, Judge Alsup agreed with Apple that Psystar’s arguments on this point were internally contradictory and circular.

The alleged Mac OS capable hardware market and the alleged Apple-Labeled hardware submarket

As per the Court, Psystar’s Federal causes of action in this regard are absolutely dependent on the existence of separate markets with improper tying practices between the two. Additionally the alleged violations of the Sherman and Clayton Acts depend upon the existence of the submarket claimed by Psystar. Although Psystar did not use the terminology of “aftermarket,” the Court used the term “aftermarket” as functionally equivalent to “submarket,” presumably in an effort to give Psystar the benefit of the doubt, and acknowledged that Newcal did allow for the potential of a distinct single-brand aftermarket. However, here is where things get very interesting. Enter stage right: The End-User Licensing Agreement (EULA).

The Court noted that Newcal specifically excluded single-brand aftermarkets that were created by fully disclosed contractual agreement. Citing Newcal at page 1048, the Court noted:

“…the law prohibits an antitrust claimant from resting on market power that arises solely from contractual rights that customers knowingly and voluntarily gave to the defendant.”

In a related case to Newcal, Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992), the aftermarket customers did not have full knowledge of the consequences of the agreement tied to the initial purchase so is thus distinguishable from the present controversy. Again, quoting Judge Alsup:

“…here Apple asks its customers to purchase Mac OS knowing that it is to be used only with Apple computers. It is certainly entitled to do so.… Psystar also asks the Court to create a non-existent market. This order declines to do so.”

The Court distinguished this case from current litigation cited by Psystar against Apple concerning the iPhone in which customers were required to sign a two-year contract with AT&T but were not told that Apple and AT&T had entered into a five-year exclusivity agreement, effectively tying the customer to AT&T for five years instead of the disclosed, and agreed-upon, two years. Obviously that is not the case here. The purchaser of the Mac OS makes his purchase with full knowledge of the limitation.

The Court lastly dealt with Psystar’s reliance upon United States v. Microsoft Corp., 253 F.3d 34 (C.A.D.C. 2001). Judge Alsup acknowledged that portions of that case do support Psystar’s contentions but that other portions flatly contradict them. Further, the Judge noted the age of the case and his doubts on its continued applicability in the face of rapidly changing technology. Additionally, the Court also noted that the case was completely factually distinct as it did not deal with a single brand/product market but the stifling of existing competitors in the browser market.

California State Claims

The Court noted that the Cartwright Act is patterned after the Federal Sherman Act and that the failures noted above would also apply here. There are some differences in the laws, but Psystar did not allege any that would survive the aforementioned deficiencies; such as inter-firm agreements rather than unilateral conduct. Further, the relevant markets would still have to be established, which the Court has opined that Psystar has filed to do.

Since I am more familiar with Court filings and Orders than the average layperson, I chuckled at the Court’s final comment where others might have paid it no attention:

The remaining cases Psystar cites are similarly unenlightening.

(bold emphasis mine) That was a subtle stinger aimed directly at Psystar “creative” use of case law.

Conclusion

It is very important to note that Apple did not prevail in one important area. Apple requested that Psystar’s counterclaims be dismissed “with prejudice.” That would mean that Psystar would have no opportunity to raise them again in modified form. Instead, the Court dismissed the counterclaims without prejudice, giving Psystar twenty days from November 18, 2008 to move for leave to amend its counterclaims and to explain how the amendment would cure the problems described in the order. I have not reviewed the Local Rules for this Court on the procedures for calculation of time, so I am hesitant to set a date certain when this is due. It is safe to assume that the deadline is approximately December 8, 2008.

I believe that Psystar will try again. They have to. If they completely lose their counterclaims, they have very little chance of winning this case. In my lay opinion, their affirmative defenses are very weak. Another real possibility is that settlement discussions will take place during this twenty-day window with Apple making a business decision to pay some “go away” money, and if I were Rudy Pedraza, I would take it and run. Psystar has much more to lose by proceeding, and right now both parties are in an uncertain position creating an atmosphere ripe for settlement. Apple knows that it is possible that Psystar may file amended counterclaims that pass muster with the Court. I have seen it happen in cases I have worked on in which a court strongly criticizes a party’s arguments and later allows them in amended form. Psystar knows that the Court is likely to dismiss any amended counterclaims. If Pedraza waits, and the Court does rule against Psystar again, Apple has very little motivation to settle and a lot of motivation to make an example out of Psystar.

I have noted some Apple web writers asking if this Order could be appealed. As the writers in question appear to be somewhat unsophisticated in legal terminology, I believe what they are asking is whether or not Psystar can file what is known as an interlocutory appeal. At this point, I confess that is beyond my ken, and I will inquire with lawyers that I know. Until that time, the Wikipedia link does provide some information on guidance formulated by the Supreme Court for allowable interlocutory appeals. Right now, however, the Order is definitely NOT ripe for an interlocutory appeal—assuming for sake of argument that this order is within the scope of qualifications for such an appeal—as the dismissal is without prejudice. The question would not arise until such time as the Court dismisses the counterclaims with prejudice, if it ever does.

Another motivation for Psystar to settle might exist if my prior musings are correct. Basically I argued that if Apple were to lose, all they would have to do is cease selling Mac OS X separately and that “market” would evaporate. They could charge slightly more for the computer which would include the OS and free upgrades for the life of the machine as long as it meets the technical specifications. If this is a real possibility (and frankly I have no idea if it is even feasible on the accounting side of things), unless Psystar is counting on some large monetary judgment, their victory would be meaningless. Further I see no basis for any large monetary judgment, Psystar has continued their business up until this point, what quantifiable damages do they have? If their main goal is the intangible prize of being allowed to install OS X on non-Apple hardware, and my solution is feasible, the only ones who will have anything to show for the effort is their attorneys.

Here is a downloadable copy of the Order for the reader’s review.

Made minor grammar corrections after publication.

Here’s something we don’t do often at World of Apple, offer speculation on upcoming products without concrete evidence. Today Mac Rumors published an article speculating on the photos that surfaced over the weekend of what we believe to to be the cases for the new MacBook and MacBook Pro notebooks.

First of all let’s all be clear that these are certainly not Photoshop jobs but they may well be early prototypes.

Mac Rumors tackles two subjects in its post, first of all speculating on what it claims is an unknown video out port as well as what exactly is underneath that covered area on the MacBook Pro case.

So first up the video out port which appears on both the MacBook and MacBook Pro; weeks before these images surfaced AppleInsider published an article stating that the MacBook Pro would lose its full dual link DVI-I port and will instead be replaced with “what appears to be” a Mini-DVI port. Looking at the images in question it is a fair certainly what port this is.

To add further credence let’s measure the ports, a standard USB port is somewhere in the region of 5mm in height and 15 mm wide. A mini-DVI port is around 5mm in height and 10mm in width. Those proportions certainly work.

With immense certainty I can state that this port is a mini-DVI, but this does raise the question on how exactly Apple intends to run a 30-inch display from the MacBook Pro as mini-DVi can only handle a maximum resolution of 1920×1200 @60Hz.

Now lets look at that covered area which can be seen on the far left of the image above. Although Mac Rumors doesn’t directly speculate it does offer some of the crazy suggestions that have hit its forum over the weekend; iMac docking port, DisplayPort and eSATA connection have all made an appearance in discussions.

A bit of common sense needs to brought in here, firstly why would Apple put all the ports in one area and then put the another port completely in a different area, this would cause the mainboard designers a nightmare and would not at all be functional.

The above image is the view of the ports from the other side of the case, as you can see every other port has a clear view to the pink bubble wrap below but in the unknown area is a black object with what looks like some metal mouldings. Granted the tape would prevent the surface below being visible but I don’t even see what looks anything remotely like a hole in the case.

As much as I personally respect Mac Rumors this empty speculation helps nobody, then again the above text is empty speculation with a hint of evidence…

Yesterday was exactly seven days before the rumoured Special Event which will reportedly lead to a brand new MacBook and potentially updated MacBook Pros.

As many sources had pointed towards October 14 as the date then it looked certain that Apple would indeed be using the second Tuesday in October as the stage to show off its new range of notebooks. Typically Apple would send out press invites to such an event exactly seven days prior to the event, but October 7 passed with no word from Apple PR.

Looking back at similar events it seems that Apple is not as keen to host a special event purely for new Mac releases, in fact in the past three years Apple hasn’t held any kind of unscheduled special event for a notebook.

Some may say that as this update doesn’t appear to be a mere speedbump but a major update to the enclosure that Apple would want to show off the new design at an event but lets cast our minds back to May 2006. In January of that year Apple released its first computers with Intel processors, one of them was the MacBook Pro, largely unchanged from its PowerBook predecessor. The consumer range of iBooks was left stranded with the PowerPC processor until Apple quietly swapped it out for brand new black and white MacBooks on May 16, no event, no fuss, just a press release.

Based on this past experience World of Apple remains confident that Apple will release brand new MacBooks and MacBook Pros next Tuesday but without any kind of hoo-ha.

With the opening of Australia’s first Apple Store today it struck me that Apple seems confused about the size of its stores. Reading an article on The Age I noted that Senior Vice President of Retail Ron Johnson appeared to tell reporters at the media opening of the Sydney store that it was the second largest Apple store in the world, behind London’s Regent Street.

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As promised here is a roundup of all the rumours leading up to this years Worldwide Developers Conference, anything directly related to the iPhone has been included in a previous article.

World of Apple will be offering live coverage of tomorrows keynote presentation by Apple CEO Steve Jobs. Tune in at 10 am PT/1 pm ET/6 pm BST.

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At 10 am pacific time on Monday Steve Jobs will address a hall full of thousands of eager developers who are waiting to see what Apple will unveil at this years Worldwide Developers Conference.

World of Apple has offered rumour roundups leading up to Apple events for many years but this year we’ve mixed things up a bit. Due to the mass of speculation surrounding the iPhone we believe it is deserving of its own roundup, everything else will follow shortly after.

So, without further ado lets hit it!

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At Macworld 2008 Steve Jobs took the stage at the Moscone West in San Francisco and gave us a mass of new goodies to drool over, of particular interest was an expansion of Apple’s notebook lineup. The addition marks the first serious foray into a new form-factor of notebook for several years, and particular sought after since the demise of the 12-inch PowerBook in 2006.

The MacBook Air was long rumoured prior to its release to be an “ultra-portable”, but when Jobs finally showed off the Air at Macworld it became clear that Apple avoided the niche market of ultra-portables and instead headed for the ultra-thin notebook market. The Air lacks the power of the MacBook, has no optical drive and doesn’t contain a removable battery but instead is incredibly thin, features long battery life and has a full-size keyboard.

Read more…

The iPhone is currently selling in great numbers and with the upcoming SDK release it looks likely to continue in its momentum, but a device with such potential appears to be lacking somewhat.

Here are five applications that would really light our fires and no doubt those of many current and future iPhone users. With the release of the iPhone SDK in late-February it is more than possible that some of these may already be in the works, if so drop us a line; if not then just credit would be fine…

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This article is a bonus to the three already published articles about, eating in San Francisco, sleeping in San Francisco and making the most of Macworld and Apple.

Getting around San Francisco is a breeze but the key to no stress travel is knowing how it all works. This guide will attempt to alleviate a lot of the stress, which accompanies travelling around a large city like San Francisco.

First of all, unless you are far out of the city, driving is a big no, no. The city is permanently congested and public transport is easy and cheap compared to expensive parking fees.

The SF Muni is key to travelling around San Francisco, a one week Muni pass is available that is valid for unlimited use on all Muni lines. A seven day pass (Monday - Sunday) will cost $15. To put this in perspective $3 is the price of a single bus ticket which is valid for 3 hours of unlimited travel.

Find out where you can buy a Muni pass here.

Visitor passes are also available and these allow travel on the Muni and also the cable cars.
1-day pass: $11
3-day pass: $18
7-day pass: $24

SF Muni maps are available here, according to them the nearest Muni stops to the Moscone centre are 9X, 12, 30, 45, 76, and 81X.

If you’re catching a Muni check out the NextBus website, it’ll let you know when the next one is on the way. Use the Muni system map to help know your route.

If you’re taking a Muni train you can call ‘511′ from a phone, let the system know your line, direction and stop and ‘511′ will respond with train times for the next 30 minutes.

According to 511.org: On the phone, the service is only available on the J, K ,L, M, N, and T lines, and on San Francisco’s historic F-line streetcars. Other trains and buses will be available in 2008.

Cable cars are San Francisco’s novelty transport, a novelty they may be but they are very handy. Cars operate daily 6:30am -12:30am. The POWELL-HYDE line runs from Powell & Market over Nob Hill and Russian Hill to Hyde & Beach in Fisherman’s Wharf. The POWELL-MASON Line runs from Powell & Market, over Nob Hill and through North Beach to Bay & Taylor at Fisherman’s Wharf. The CALIFORNIA Street line runs from California & Market, at the Embarcadero BART/MUNI Metro Station in the Financial District, through Chinatown, over Nob Hill to Van Ness Avenue.

For those interested in the operation of the cable cars, there is a museum on Washington and Mason Sts.

Finally taxis are a great way to get from A to B directly. Catching a taxi in San Francisco is easy when you know how. Hailing a taxi down is not very easy but if you’re staying in a large hotel it’ll quite often have a taxi line; wait here and the valet will get you a cab.

If your hotel doesn’t offer a valet service most hotels will happily ring a taxi for you.

Alternatively you can call a taxi yourself and arrange a scheduled pickup if necessary, the local dispatch number is (415) 333-3333.

For those lucky enough to be heading over to the beautiful city of San Francisco for this years Macworld Conference and Expo, World of Apple is here to offer three complete guides to Food, Sleep and Apple.

Part 1 - Where to Stay?
Part 2 - Good Food Guide

The week of Macworld can overwhelming for newbies and veterans alike, the parties, conferences, shows and general events are difficult to follow. This guide is by no means the be all and end all but it’ll hopefully highlight the best that Macworld 2008 has to offer.

Macworld Parties

Lets start with the biggest party of Macworld this year, Ars Technica and Gizmodo will be hosting a joint event on Monday 14th at 46 Minna. As with most of these events plenty of freebies going around.

Date: Monday, January 14th
Location: Harlot at 46 Minna St, San Francisco, CA
Time: 8pm
Map: Google Maps

The next big event is the annual Macworld Blast! party. Blast! is the official Macworld Expo party and is a great place to mingle with fellow attendees, exhibitors and celebrities (Apple related celebrities that is).

Date: Keynote day (Tuesday, January 15th)
Location: Warfield at 982 Market Street, San Francisco, CA
Time: 8pm - 11pm
Tickets: $40
Map: Google Maps

Also going down is the annual DailyTechTalk Macworld party, this will be the 3rd annual event with great live entertainment and a brilliant selection of drinks at the bar.

Date: Wednesday, January 16th
Location: SWIG at 561 Geary St, San Francisco, CA
Time: 9pm - 3am
Map: Google Maps

Also hosted by DailyTechTalk is the Macworld Closeout, this is less of a party and more of a general meetup but a great place to finish off your mingling.

Date: Friday, January 18th
Location: Clift Hotel at 495 Geary Street, San Francisco, CA
Time: 10pm
Map: Google Maps

Macworld Expo Highlights

Macworld isn’t just made up of booths with products, a keynote and press conferences. It is also jam packed with shows and presentations. Here are a few to definitely check out.

Every year at Macworld, Steve Jobs kicks off the expo by showing the world Apple’s latest products. Last year the stage at Macworld hosted the revealing of the iPhone. What will it be this year?

• What: Keynote
• When: Tuesday, January 15th 9.00am
• Where: Moscone West
• Details: Available to those with conference badges and press passes only. This is the one and only event that is a must see.

Every year at Macworld hundreds of features presentations take place, one of the best is called the “Macworld Best of Show 2008.” Hosted by Macworld magazine this presentation showcases the hottest products at Macworld this year.

• What: Macworld Best of Show 2008
• When: Wednesday, January 16th 2.45pm - 3.45pm
• Where: W-3001
• Details: Not to be missed!

If you’re into having a laugh or just generally like David Pogue then Macworld Live! is the place to be. David Pogue, New York Times columnist hosts his version of a chat show with interviews, song parodies and plenty of Macworld news.

• What: Macworld Live! with David Pogue
• When: Thursday, January 17th 9.00am - 10.00am
• Where: W-3001
• Details: Pogue’s song parodies are hilarious, definitely worth getting up early for this.

Another fun presentation to go watch is “The Process of Elimination”, Andy Ihnatko of the Chicago Times hosts a gameshow just for Macworld attendees.

• What: The Process of Elimination hosted by Andy Ihnatko–Columnist (The Mac Observer),The Chicago Sun-Times & Macworld
• When: Thursday January 17th 2.45pm - 3.45pm
• Where: W-3001
• Details: Join us for some trivia — join us for some fun — join us! Andy Ihnatko will host a game show exclusively for members of the Macworld community. Test your wits with a short series of Apple and general-trivia questions that describe the “Mystery Product.”

Apple Store Events

San Francisco has a brilliant Apple Store (actually has three) located on the corner of Stockton and Ellis. When you’re tired of the bustling Expo take a short walk up 4th Street and you’ll be greeted with that familiar brushed aluminium facade of the Apple Store.

During Macworld week the store often hosts a couple of special presentations that are out of the ordinary schedule. Some of these are well worth checking out, here is a few of our selection.

• What: Run Windows on Your Mac with VMware Fusion
• When: Wednesday, January 16th 1.30pm - 2.30pm
• Where: Apple Store, Stockton Street
• Details: Discover VMware Fusion, the most seamless way to run Windows applications on your Mac.

• What: Expert Photo Tips from Real Experts
• When: Wednesday, January 16th 4.30pm - 5.30pm
• Where: Apple Store, Stockton Street
• Details: Expert photographers and O’Reilly authors Derrick Story, Mikkel Aaland, Rick Smolan, and Harold Davis share their insiders’ perspective on the world of digital photography to help you get the most out of your digital images.

• What: Pogue’s Tips and Tricks for Mac OS X Leopard
• When: Thursday, January 17th 4.30pm - 5.30pm
• Where: Apple Store, Stockton Street
• Details: Get a little humor with your knowledge from David Pogue, a New York Times columnist, Emmy Award-winning correspondent for CBS News, and author of the Missing Manual series. He’ll share his insights into getting the most out of Mac OS X Leopard.

That’s it for our series of posts about Macworld 2008, for those attending we hope you enjoy the show. Feel free to drop us an email with any questions or maybe you want to meet up!