Apple seeks go-ahead for action against Psystar

Stephen Withers
Monday, 15 June 2009 13:04

Business IT - Technology

Apple has asked a court to allow its case against Psystar to proceed, despite the cloner's application for Chapter 11 bankruptcy protection.

Apple has been pursuing Psystar for various alleged infringements relating to its sale of Mac OS X on PCs assembled from selected generic components.

Psystar recently filed for Chapter 11 bankruptcy protection, a provision that allows a company that cannot meet its debts to continue trading while it its reorganised.

Normally, litigation involving a company in Chapter 11 is put on hold. But Apple is seeking a 'relief from stay', meaning that the case would proceed as scheduled, although even if Apple did win it would not "collect any judgement other than through the bankruptcy claims processor further order of [the] court'.

Apple's motion asserts that Psystar would "suffer little, if any, prejudice" if the stay is lifted, but that maintaining it "will prejudice Apple."

The argument is made that determining the legality of Psystar's underlying business model (selling computers running Mac OS X without Apple's permission) is a central issue in sorting out how Psystar could be reorganised successfully.

According to Apple's motion, "The Debtor [Psystar] has no legitimate property rights in an infringing product and cannot pursue reorganization of its business affairs based on the sale of products that violates applicable non-bankruptcy law."

Interestingly, Apple cites proceedings between Novell and SCO as a precedent. Novell obtained a summary judgement that it was entitled to copyright royalties from SCO, but before the case was tried SCO filed for bankruptcy.

The bankruptcy court ruled that Novell's application for the lifting of the automatic stay be granted, in part because of the importance of determining the value of Novell's claim within the context of the bankruptcy proceedings.

Thus, argues Apple, Psystar's bankruptcy proceedings will benefit from a prompt resolution of the case between the two companies.