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Macs, clones, and license agreements

As you may know by now, a company known as Psystar has announced they're selling Mac "clones" for $549, complete with Leopard pre-installed. From a legal perspective, these machines clearly violate Apple's OS X 10.5 end user license agreement (EULA). If you're so inclined, you can find a full copy of all of Apple's EULAs on this page--the 10.5 EULA is a 2.1MB download. The relevant portion of the EULA is section two, part A:

This License allows you to install, use and run one (1) copy of the Apple Software on a single Apple-labeled computer at a time. You agree not to install, use or run the Apple Software on any non-Apple-labeled computer, or to enable others to do so.

Seems pretty black and white, doesn't it? Use OS X in this manner, and you're violating the EULA. So how can a company like Psystar hope to stay in business, given this legal transgression that's key to their business model? Wired offers up some legal opinions on how they may be able to survive--basically, violating an EULA isn't in nearly the same class of legal violation as is violating copyright or patent law. A breach of contract suit won't prevent Psystar from selling their clones, and probably wouldn't even serve as a financial deterrent: as one attorney notes in the Wired article, "the maximum damage Apple would be able to claim is the price of Leopard -- actually, the OEM (original equipment manufacturer) price of Leopard, which might be a few dollars." Another attorney comments that EULAs are problematic in court, as they've vague by nature. He says, "Companies make them as broad as possible but there's no way to basically enforce them. It's a scare tactic, a way to say, hey, we're reserving all these rights."

The Wired article is a good read, and notes that Apple's best defense may be in technology, not the courts--future system updates may render cloned systems unusable, which will certainly cut down on Psystar's ability to attract and retain customers. So that's what the experts think. From where I sit, over in the "just barely passed the required business law class" section of the room, here's my take on why I don't think it'd be wise of Apple to bring their EULA into the court system.

Because they are so very broad, EULAs contain language that I just don't see how any court would uphold. Consider the particular passage restricting how I use the software I've licensed from Apple. Who is Apple to say how I use the software I've paid for? If you accept that Apple can include a statement limiting OS X to installation on an "Apple-labeled computer," then where does the line get drawn? Couldn't they then just as easily include these terms:

  • You agree not to install or use any release of Microsoft Office.
  • You agree to only use OS X between the hours of 7pm and 10:30pm, GMT.
  • You will send quarterly reports detailing your use of OS X.
  • You agree not to ever play a game on your Mac, because games waste time.
  • You agree to sell any machines you own that run any variant of Linux or Windows.

You get the idea; if Apple is allowed to dictate on which machine I install the software, why can they not dictate just about anything else they want to, even if such restrictions sound ludicrous on the surface? Who determines what a company can and cannot dictate about how it's software is used? As a real world example, I imagine that nearly every OS X user has violated the OS X EULA in some way. How can I say that? Because one section contains this line:

Except as and only to the extent permitted by applicable licensing terms governing use of the Open-Sourced Components, or by applicable law, you may not copy, decompile, reverse engineer, disassemble, modify, or create derivative works of the Apple Software or any part thereof.

Have you ever duplicated an Apple-bundled application? Ever stuck a custom icon on an Apple-bundled application or folder? Modified an Apple-bundled program's menus or language files? Ever used the strings command in Terminal to find what interesting words and phrases may be hidden within an Apple-bundled program? If you can answer yes to any of these questions, then congratulations--you, too, have violated the OS X EULA. Part of me actually hopes Apple does take Psystar to court over the EULA; I really would like to know just what it is a company may or may not include (and enforce) in its EULA.

I think the lawyers in the Wired article got it right, however--Apple's not going to fight this one over the EULA. They'll find a patent or copyright issue to fight over, or they'll just rely on the fact that future changes in Leopard may cause issues for those who purchased clones. Whatever happens, it's going to be an interesting few months in the world of Mac hardware.


  1. I think the lawyers' analyses from the Wired article misses a big point. Yes, a contract lawsuit wouldn't bring much. However, the contract is only part of the problem. The contract is the agreement that gives you permission to install OS X. Without that permission, any copy you make is illegal - and hence, an infringement of Apple's copyright in OS X. In order for Psystar to sell a computer with OS X pre-installed, it has to copy OS X onto the computer. Except, Psystar does not have a license to install copies of OS X on hardware intended to be sold to end users. Apple does not license anyone to install a copy of its software for installation on a new system. By comparison, Microsoft does license Windows to be installed on new systems, that is what an "OEM" version of Windows is. Microsoft distinguishes between an OEM license for Windows and a Full-Packaged Product (Microsoft's terminology) for Windows. The licenses are different - the OEM version may not be transferred to a new machine, whereas the Full-Packaged Product may, if you follow the terms of the license. Apple doesn't make these distinctions because there is no such thing as the OEM license for OS X.

    Therefore distributing and reproducing copies of OS X in the guise of an OEM would violate Apple's copyright in OS X. Apple only licenses current owners of its technology to install the retail, end-user version of OS X. Since this is the only version Psystar could have access to, there really isn't any way for Psystar to legally pre-install OS X. Apple should at least be entitled to an injunction against Psystar from making illegal copies of it's software. Perhaps I'm missing something.

  2. While I think some of your points have some validity, however, here's the other side of the coin. Say Psystar buys retail copies of OS X from Amazon or whomever. Psystar breaks the license agreement when they install it on their hardware, but from what I've read, installing the software you've purchased (or licensed) is *not* counted as making a copy -- it's simply installing the software so you can use it. As such, I think they're still at the EULA violation stage.

    If I then buy the machine from Psystar, I will also be violating the EULA - as the EULA transfers with the sale of the software. But really, I think that's all it is. Psystar's selling me some hardware, which they (probably?) warranty, and a used copy of OS X (it's perfectly legal to sell your copy of OS X, as long as you transfer the license with it). Because that copy is installed on non-Apple hardware, the EULA has been violated ... but I still don't see a copyright violation, because no copy of the software has been made.

    At least, that's how this non-lawyer sees it ... it will be fun to see how the real lawyers handle it. (Assuming we get that far; it seems more likely now that Psystar is nothing more than a sham of some sort.)


  3. As I said at the end, I could be missing something, and perhaps my reading of the Copyright Act is too hyper-technical. I certainly agree that your summary of Psystar's arguments is basically right, and states the argument that those challenging Apple's EULA are making - with one exception: Installing software does make a copy, it's just that making such a copy is permitted (in the language of Section 117 of the Copyright Act, it's not an infringement).

    My basic disagreement with that view is that it reads section 117 much too broadly. First, you have to be an owner of the copy. Even conceding that a licensee can be an owner of a copy (not a gimme), I think that everyone can agree you have to have obtained that first copy legally - no court is going to allow you to make a second copy of a stolen first copy. But that's the catch, the license for the first copy of Apple's OS X is only for it to be installed on Apple branded hardware by an End User. There is no such thing as a licensed OEM copy of OS X. Since that's true, how can Psystar argue it is the "owner of a copy," when they do not own a license to install OS X on non-Apple branded hardware?

    Second, section 117 allows the creation of the second copy "provided that such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner." I think a fair reading of that language is that the purpose of the right to make this second copy is so you can operate the software. That's not Psystar's purpose - Psystar's purpose is to use the software to make and sell competing hardware. Since the Act specifically states that use in a manner that is not "as an essential step in the utilization of the computer program" is not permitted, it would seem that Psystar's use would not be covered.

    Finally, section 117 let's someone sell this second copy, buy only so long as they've made the copy as permitted, that is, in order to operate the software. This is why an individual owner of an upgraded Mac can sell their licensed copy of OS X already installed on their computer, but Psystar cannot.

    My apologies for a long post.

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