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Apple says Psystar holding back info in Mac clone legal case

Apple this week asked a federal court judge to intervene in its discovery process with unauthorized Mac clone maker Psystar, which is reportedly violating proper procedure by refusing to answer key questions and turn over critical financial information about its business.

Fed up with the Florida-based firm's online sale of knock-off Mac systems running hacked versions of the Mac OS X operating system, Apple last July sued Pystar in a California court on grounds of copyright infringement. Pystar soon fired back with a counterclaim of is own, alleging that Apple was violating anti-trust laws through the terms of its Mac OS X end user license agreement, which forbids the installation of the software on non-Apple hardware.

The court eventually threw out Pystar's anti-trust claims but is allowing the company to proceed with its second line of defense, which argues that Apple wrongfully extended the scope of its Mac OS copyright through the end user license agreement.

Meanwhile, Apple also at one point expanded its own complaint to allege that Psystar may be part of a larger conspiracy and is seeking to uncover unknown parties who may be secretly backing the clone maker, either financially or otherwise, in its efforts to disrupt Apple's stronghold on Mac hardware sales.

The legal bout, now in the discovery phrase that precedes a formal trial, is seen as a landmark case because it could potentially set a precedent on whether third parties have a right to build and market their own computers capable of running Apple's Mac operating software.

But in a partially redacted administrative request to presiding Judge William Alsup on Wednesday, Apple said representatives for Psystar, including its founder and chief executive Rudy Pedraza, aren't playing nice in the discovery process, and are thus making it extremely difficult for the company and its counsel to obtain the necessary information they need for trial.

In particular, Apple attorney James Gilliland said that despite "numerous meet and confer sessions," Psystar "has produced no monthly profit and loss statement, balance sheets or other financial statements and only a small subset of revenue and cost-related receipts.

"Moreover, at the deposition regarding Psystar’s revenues, profits, assets and liabilities (including investors, lenders or other sources of financial support), taken on March 20, 2009, Psystar’s CEO and founder Rudy Pedraza, the person designated by Psystar to testify on this topic, would not answer basic questions about Psystar’s financials."

Pedraza, who runs small company, reportedly stated approximately 90 times during the deposition "that he did not know or recall answers to basic questions about Psystar’s sales, its general costs and profits, its costs and profits by product line, how it determined its prices and profit margins, [redacted]"

The lack of transparency on Psystar's part regarding its lenders and investors may be an effort conceal the parties behind the Apple-allege conspiracy. Still, these aren't the only disclosure the the small firm is holding back, according to Gilliland. He goes on to inform the judge that Psystar has also failed to turn over any customer purchase receipts or order documents.

"Indeed, despite a supplemental production on April 13, 2009, Psystar still has not produced customer purchase receipts/invoices from at least April 2008, when it began selling its computers, to October 2008. Additionally, only a subset of vendor invoices3, from December 2008 to March 2009, were produced (and those just one day before the deposition)," he wrote.

"Due to these deficiencies in both Psystar’s document production and its testimony (along with others described below), Apple submits this letter brief requesting an order compelling Psystar to produce financial documents sufficient to determine Psystar’s revenues, costs, profits, assets and liabilities and (2) to make available a knowledgeable designee for another deposition on this topic at Psystar’s expense."

A trial date for case is set for November 9th, though a supplemental hearing is likely to be held in the near future to sort through Psystar's failure to comply with standard procedure. The discovery process in the case ends June 26th.

A copy of Gilliland's partially redacted letter to Judge Alsup in PDF format can seen here.