Engadget reported on the issue this morning with a headline of: “Open Tech’s ‘Mac clone’ demonstrates a firm misunderstanding of the law.”

Engadget went on to say:

We’re guessing they figure that as long as they aren’t loading OS X onto the computer themselves, they won’t have any trouble from Apple, but that’s where they go wrong. In addition to the EULA and copyright allegations, Apple’s complaint against Psystar has claims for inducing copyright infringement and infringing on Apple trademarks by advertising non-Apple machines as compatible with OS X which is exactly Open Tech’s ploy here.

So, the real difference between Psystar’s methods and Open Tech’s methods are that Open Tech is not pre-installing OS X on any computer it sells and is not selling OS X to anybody. Open Tech says the following:

*OS X Leopard Will not be pre-installed or included. You can purchase an Open Tech compatible install disk from a third-party vendor install it your self using our Do-it-yourself kit. All other Operating System will be preinstalled*

How would Open Tech fare under the Apple v. Psystar complaint?

Count I: Copyright Infringement – Since Open Tech is not copying, distributing or displaying OS X to anybody. Should be no problem here.

Count II: Contributory and Induced Copyright Infringement – Open Tech is not selling OS X to customers for use on non-Apple hardware, and is not installing OS X on any non-Apple hardware.

Open Tech is selling computers it claims are capable of running OS X. Well, lots of computers are capable of running OS X if you’re willing to work hard enough at it. That can’t be a problem. Open Tech’s problem may be that it will be selling or giving away a do-it-yourself kit for installing OS X on Open Tech computers.

Count III: Breach of Contract: Since Open Tech never installs OS X, they never enter into any contract with Apple.

Count IV: Inducing Breach of Contract: Apple’s Psystar Complaint states:

Psystar … admitted … knowledge of the existence of the License Agreement governing the use of Mac OS X software and of its terms and conditions.

* * *

… Psystar has advised, encouraged and assisted others to breach the License Agreement by, among other things, encouraging those consumers to acquire Mac OS X software and then assisting them to install, use and run it on non-Apple-labeled computers. In so doing Psystar has unlawfully induced breach of the License Agreement by others.

Well, if Apple is correct that encouraging others to buy Mac OS X and assisting them to run it on non-Apple hardware, then Open Tech is in trouble. Of course, if Open Tech is in trouble, then quite possibly anybody who encourages and assists others to install OS X on non-Apple hardware is in similar trouble. I’m looking at you, Hackint0sh, Lifehacker, Gizmodo, TUAW, MacApper, etc. (or even myself for telling you about it!)

Of course, Open Tech is doing a tad more than just providing step by step instructions, like some of the above websites. They are marketing the computers as compatible with OS X and selling or giving away a DIY install kit. That probably sets them apart from the bloggers.

Count V: Trademark Infringement – I have only noticed one use of Apple’s trademarks used on Psystar’s site. Open Tech is displaying a small picture of Apple’s OS X Leopard box art on their site. This could be taken to be a violation of copyright and/or trademark. Could it be some sort of fair use? I don’t know. Any more seasoned trademark attorneys care to address that?

Count VI: Trademark Infringement: Open Tech never called their computers “Open Mac.” It’s a moo point.

Count VII: Trade Dress Infringement – Open Tech doesn’t sell any computers with OS X installed, so no problem there.

Count VIII: Trademark Dilution – Does Open Tech “willfully intend to trade on Apple’s reputation for excellence” as Apple alleges Psystar does? Will Apple suffer harm to its reputation as a result of Open Tech’s actions? It’s hard to say, but I don’t feel so confident that encouraging someone to install OS X on non-Apple hardware equates to illegally trading on Apple’s trademarks.

Counts IX and X: State and Common Law Unfair Competition – In my experience, Unfair Competition claims are very difficult to win, and are thrown into just about every business dispute lawsuit. They’re a catch-all if you fail on your other claims. Apple’s pleading in Psystar was so devoid of application of the law to the facts on these counts, that it’s difficult to understand exactly how Apple believes Psystar’s actions entitle them to relief under these theories.

There ya go. That’s my unsolicited and completely non-official and not-legally-binding opinion of Open Tech’s chances under the Psystar complaint. That ought to instill a lot of confidence, huh?

Open Tech is proud to announce a desktop that is fully capable of running many operating systems including Windows XP, Windows Vista, OSX Leopard, and Ubuntu 8.04. The Open Tech Computer is meant to be open, you can choose want you want it to be. Since the Open Tech Computer is fully customizable, you can customize the RAM, Hard-drive, and the video card. Open Tech Computer 1.0 will launch very soon and have the following specifications.

• Intel Pentium D 945 3.40GHz Dual-Core Processor
• 500 Gb Hard Drive (7200 Rpm)
• 3 GB of DDR2 Ram (667 MHz PC 5400)
• Optical Drive ( Burn and read dvd’s and cd’s)
• 500 Watt Power Supply
• Power Up ATX mid-tower case-Black
• Integrated Wi-Fi 802.11g

Last week, I posted a summary of the claims Apple made against Psystar.  Most of Apple’s claims in that case more or less depend on proving that Psystar installed OS X on its computers before selling them to consumers.

Open Tech is trying to learn from Psystar’s mistake. On the product page, they state:

*OS X Leopard Will not be preinstalled or included. All other Operating System will be preinstalled* VISTA & XP ARE 64-BIT [*Update: see below]

The 3.4 GHz Open Tech Computer 1.0 will sell for $620, obviously taking aim at the Mac mini, while the Core 2 Quad, 2.4 GHz Open Tech XT will sell for $1,200, taking aim at Apple’s Mac Pro.

There’s apparently no word yet on when the computers will be up for sale. I would venture to guess that the folks behind Psystar may be bankrolling Open Tech as well. Strategically speaking, Psystar could well have been a pawn in that it forced Apple into divulging exactly how it would defend itself legally. Open Tech now gets the benefit of knowing Apple’s arguments, even if they are not in cahoots.

The message is clear, though: there is a market for people want OS X without paying for Apple hardware. Given that Mac clones left Apple with one foot in the grave and the other on a banana peel in the past, you can bet that Apple will do whatever it can to stop this practice from becoming mainstream.

UPDATE: As of this morning (July 22, 2008), Open Tech updated their website to say:

*OS X Leopard Will not be pre-installed or included. You can purchase an Open Tech compatible install disk from a third-party vendor install it your self using our Do-it-yourself kit. All other Operating System will be preinstalled*

If you are interested, you can buy a copy of the complaint from here for $9.99. Or, for the much more reasonable price of free, you can download a copy of the complaint by clicking here – courtesy of ZDNet.

I will summarize the ten count Complaint for those of you who don’t have the time or the energy to read the 16 page document.

Background: Paragraphs 1-15 – Apple has spent a lot of time and money becoming awesome. Psystar is not awesome. In fact, they suck, their service sucks, their computers suck, and even OS X sucks when run on their computers. Customers are confused into believing Apple is less awesome.

General Allegations: Per the OS X Leopard Licensing Agreement: OS X Leopard is not sold, it’s licensed. You are allowed to install and run OS X on one computer. You are not allowed to install OS X on any non-Apple hardware.

Count I: Copyright Infringement – OS X is copyrighted by Apple. “Defendant has reproduced, distributed and/or displayed the Copyrighted Works in violation of Apple’s exclusive rights under the Copyright Act. Apple has not licensed or otherwise authorized Defendant’s reproduction, distribution or display of the Copyrighted Works.”

Count II: Contributory and Induced Copyright Infringement – By selling OS X to customers for use on non-Apple hardware, and by installing OS X on non-Apple hardware, Psystar has “induced, caused or materially contributed to the infringing conduct of purchasers.”

Count III: Breach of Contract – Psystar violated the License Agreement by:

1. Installing OS X on non-Apple hardware;
2. Enabling others to run OS X on non-Apple hardware;
3. “Selling and/or Distributing Mac OS X software without requiring that the transferees agree to the terms of the license agreement;”
4. Selling modified versions of OS X; and
5. Installing a single copy of OS X on more than one computer at a time.

Count IV: Inducing Breach of Contract – Psystar induced others to breach the License Agreement by encouraging and assisting customers to buy and install OS X on non-apple hardware.

Count V: Trademark Infringement – Apple has a bunch of trademarks. Apple never authorized Psystar to use them. Psystar’s use of them confuses customers. [Although Apple alleges that Psystar uses Apple's trademarks, they never identify which marks Psystar used or how it used them.]

Count VI: Trademark Infringement – Psystar used the name Open Mac for a short while in the beginning before changing to Open Computer. They shouldn’t have done that.

Defendant’s conduct deprives Apple of the ability to control the quality of the goods and services marketed under the Infringed Marks and Apple’s unregistered common law trademarks and, instead, places Apple’s valuable reputation and goodwill into the hands of the Defendant, over which Apple has no control.

Count VII: Trade Dress Infringement – ["Trade Dress" is basically the distinctive look of OS X's GUI] Psystar’s sale of “goods displaying Apple’s Trade Dress is likely to cause confusion … as to the source of the goods…”

Count VIII: Trademark Dilution – “Psystar willfully intends and intended to trade on Apple’s reputation for excellence.”

Count IX: State Unfair Competition – All that stuff we said before constitutes “unfair competition and unfair business practices and business acts” under California statutory law.

Count X: Common Law Unfair Competition – All that stuff we said before constitutes “unfair competition and unfair business practices under state common law.”

Prayer for Relief: Give Apple a bunch of money, make Psystar cut it out, make Psystar recall all computers it sold, and make Psystar pay for our attorneys’ fees (this awesome Complaint wasn’t drafted for free!)

Ordinarily, I would predict that this kind of case would settle, and, therefore, would never reach trial on the merits. However, Psystar has been taunting Apple and egging them on from the get-go, and may well want this case to go to trial.

MacRumors shed some light on Psystar’s motivation, quoting InformationWeek’s interview with a Psystar employee known as “Robert” back in April:

[Robert] also said Psystar believes Apple’s prohibition against third-party installations might not hold up in court: “What if Honda said that, after you buy their car, you could only drive it on the roads they said you could?”

Robert said Psystar will continue to sell the OpenMac [later changed to Open Computer] system, despite the fact that it appears to violate Apple’s EULA. “We’re not breaking any laws,” he insisted.

MacRumors then pointed out:

Indeed, Apple’s EULA agreement is not cast into law, but simply represents an implicit agreement (“contract”) between the user and company. The enforceability of EULAs, however, has been a subject of much debate, and a true legal challenge would be very interesting. That being said, Robert’s loose use of the word “monopoly” and car/road analogy does not necessarily inspire confidence in his legal prowess.

Well put, MacRumors, I couldn’t have said it better myself.

I don’t think I ever really took Psystar seriously as a company, and saw them more as stunt-pullers. They certainly got some attention, and maybe they have money to fight this case. Maybe the EFF will get involved and see it as a chance to put some limits on the enforceability of software makers’ generally oppressive EULAs.

I don’t think Apple would win all 10 counts, but, to quote Ron White, “I didn’t know how many of those guys it was going to take to kick my ass…but I knew how many they were going to use.”