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Psystar agrees to pay Apple $2.7M in settlement

First on AI: Clone Mac maker Psystar has agreed to pay Apple $2.7 million in damages in a deal that will likely bring the company's sale of unauthorized computers preinstalled with Mac OS X to an end.

In a joint filing from Apple and Psystar Corporation in a San Francisco court Tuesday, Psystar agreed to pay Apple $1,337,500 in damages over copyright infringement, breach of contract, and violation of the Digital Millennium Copyright Act. Additional damages and attorneys fees amounted to another $1,337,500, bringing the total to $2.675 million. Psystar had already lost those complaints in a summary judgment from Judge William Alsup in November.

In exchange for the payout, Apple has agreed to not refile claims of trademark infringement, trade dress infringement, trademark dilution, state unfair competition, and common law unfair competition — items that were not ruled on by Alsup in his summary judgment.

The agreement was signed by attorneys James G. Gilliland, representing Apple, and K. A. D. Camara, counsel for Psystar.

Both parties have also agreed that the terms of the deal will not be argued in favor of or against the venue in the ongoing, separate lawsuit filed by Psystar against Apple in Florida. In that suit, Psystar has alleged that Apple is engaged in "anticompetitive attempts to tie Mac OS X Snow Leopard to its Macintosh line of computers."

But a separate filing from Psystar Monday indicates that the Florida corporation hopes to continue to sell its Rebel EFI product. The $50 application, released in October, allows individuals to install Mac OS X on unauthorized third-party machines. It is compatible with Apple's latest operating system, Mac OS X 10.6 Snow Leopard. That issue will likely be contended by Apple, which previously alleged that the Rebel EFI product amounted to "trafficking in circumvention devices."

At question is Psystar's ability to pay the $2.7 million in damages. The company filed for bankruptcy earlier this year, only to emerge from Chapter 11. But Psystar's total assets, according to court filings, are said to be less than $50,000. Apple, in seeking a permanent injunction to prevent Psystar sales, told the court last week that it believed the company would be unable to pay any damages.

"Even if Psystar could pay damages, the harm to Apple's brand, reputation and goodwill is unquantifiable," Apple said.

The beginning of the end for Psystar came in November, when Alsup ruled in favor of Apple on multiple counts in a summary judgment. Had the two parties not come to an agreement, trial was set to start in January 2010 over the remaining issues.