9th Cir.: Apple Not Misuse Copyright by Restricting Use of MAC OS X Operating System Software to Apple computers

The 9th Circuit today held that Apple may continue to prohibit buyers (i.e., licensees) of its MAC OS X operating system software from using the system on non-Apple computers. The ruling in Apple Inc. v. Psystar Corp., No. 10-15113 (9th Cir. Sept. 28, 2011), concerning Apple's claim that Psystar infringed Apple's software copyright when it bought Apple software and imaged it on to non-Apple computers and then sold the computers (together with a CD containing an unopened, purchased copy of the Apple software). The court held that the purported license agreement accompanying each CD containing MAC OS X made the transaction of buying the software a valid license and not a simple sale. (If it had been a simple sale, then first sale doctrine would have ended Apple's ability to restrict how Psystar used the software.) The agreement stated that it was a license, not a sale, and contained significant use and transfer restrictions. It therefore met the "license not sale" test of Vernor v. Autodesk, Inc., 621 F.3d 1102, 1111 (9th Cir. 2010). Nor did the restrictions in the license amount to copyright misuse, because they "reasonably restrict[ed] use of the software" but did not "prevent the development of competing products." The court distinguished decisions in cases where similar restrictions on which products software could be used with effectively made it impossible for users to develop competing software. The lesson: use restrictions in software copyright licenses may be very strict indeed unless the restrictions effectively prevent users from developing competing products.

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