Advanced Copyright Issues on the Internet - Fenwick & West LLP

subject to a license agreement that prohibited its use on any non-Apple-labeled computer. Appleused lock-and-key technological measures to prevent Mac OS X from operating on non-Applecomputers. Specifically, it encrypted the files of Mac OS X and used a kernel extension thatcommunicated with other kernel extensions to locate a decryption key in the hardware and usethat key to decrypt the encrypted files of Mac OS X. Psystar distributed a line of computerscalled Open Computers that contained copies of Mac OS X, modified to run on Psystar’s ownhardware, which was not authorized by Apple. 577Psystar’s had engaged in the following conduct at issue. It bought a copy of Mac OS Xand installed it on an Apple Mac Mini computer. It then copied Mac OS X from the Mac Minionto a non-Apple computer for use as an “imaging station.” Once on the imaging station, MacOS X was modified. Psystar then replaced the Mac OS X bootloader (a program that runs whena computer first powers up and locates and loads portions of the operating system into randomaccess memory) and disabled and/or removed Mac OS X kernel extension files and replacedthem with its own kernel extension files. Psystar’s modifications enabled Mac OS X to run onnon-Apple computers. The modified copy of Mac OS X became a master copy that was used formass reproduction and installation onto Psystar’s Open Computers. 578The court first ruled that Psystar had violated Apple’s exclusive right to copy Mac OS Xby making copies of the modified version of OS X and installing them on non-Apple computers,and by making copies of such software in random access memory when turning on its computersrunning Mac OS X. The court refused to allow Psystar to assert a defense to such copying underSection 117 of the copyright statute, ruling that Psystar had waived such a defense by failing toplead it. 579 The court also held that distribution of Psystar’s computers infringed Apple’sexclusive distribution rights with respect to Mac OS X. The court rejected Psystar’s defenseunder the first sale doctrine, based on the fact that it allegedly included a legitimately purchasedMac OS X DVD with every Psystar computer. The court held that the first sale defense underSection 109 provides immunity only when copies are lawfully made, and the master copy of themodified Mac OS X residing on Psystar’s imaging station was unauthorized, as were all themany unauthorized copies that were made from such master copy. 580 The court also concludedthat Psystar had violated Apple’s exclusive right to create derivative works by replacing the MacOS X bootloader with a different bootloader to enable an unauthorized copy of Mac OS X to runon Psystar’s computers, by disabling and removing Apple kernel extension files, and by addingnon-Apple kernel extension files. The court rejected Psystar’s contention that thesemodifications did not amount to creation of a derivative work because Apple’s source code,object code and kernel extensions had not been modified. The court held that the replacement of577578579580Id. at 933-34.Id. at 934.Id. at 935. Without giving any reasons why, the court also observed that “the assertion of Section 117 is sofrivolous in the true context of how Psystar has used Mac OS X that a belated attempt to amend the pleadingswould not be excused.” Id. at 936.Id. at 937.- 138 -