“Psystar…has built its business on infringing Apple’s copyrights and trademarks, free-riding on Apple’s research and development efforts, and trading on Apple’s hard-earned reputation for high quality, innovative and easy-to-use computers,” Apple said in its motion.

“Psystar’s appropriation of Apple’s intellectual property and goodwill has been systematic and brazen, from the name of Psystar’s ‘OpenMac’ computers to its deliberate pirating of Apple’s Mac OS X,” the company added.

“Psystar even seeks to profit from Apple’s efforts to protect its rights, extolling this litigation as Psystar’s ‘opportunity to gain market share,’ in a pitch to venture capitalists….Unless Psystar is permanently enjoined, it will not stop its unlawful conduct–conduct that is causing irreparable harm to Apple’s business, brand and goodwill.”

Catch that? Psystar was pitching VCs on its plan to use Apple’s IP to “compete directly against Apple.” Shameless. Little wonder Cupertino is so intent on burying the would-be rival.

And make no mistake, Apple legal is going to grind Psystar into fine silicon dust. In addition to the injunction, Apple is requesting compensation for legal costs and statutory damages owed under the Copyright Act and the Digital Millennium Copyright Act. And according to Apple’s expert witness, statutory damages for the former should run “between $1500 and $300,000″ and for the latter “between $449,500 and $4,495,000.”

Suffice it to say, that’s quite a bit more than the current value of Psystar’s assets which, according to its bankruptcy filing, are no more than $50,000.

The suit, over Joltid-owned peer-to-peer technology used in Skype’s software, seeks an injunction against Skype as well as damages that Joltid claims “are amassing at a rate of more than $75 million daily.”

A nasty surprise for Skype’s new owners: Silver Lake, the Silicon Valley-based private equity group; Index Ventures, the London-based venture capital firm; Internet entrepreneur Marc Andreessen’s new Andreessen Horowitz fund; and the Canada Pension Plan Investment Board. Though, really they should have seen this coming. After all, Skype and Joltid have been sparring since earlier this year.

From an eBay Securities and Exchange Commission filing earlier this year:

As previously disclosed, Skype has been in a dispute with the licensor of certain key technologies and had terminated a “standstill” agreement that had been entered into between the parties, permitting either to take action against the other with effect from March 2009. On March 12, 2009, Skype Technologies S.A. filed a claim in the English High Court of Justice (No. HC09C00756) against Joltid Limited, a BVI company.

In connection with the license agreement between the two companies, Skype licenses peer-to-peer communication technology from Joltid, and Joltid has claimed that Skype has breached the terms of the license agreement. Following the filing of the claim, Joltid purported to terminate the license agreement. In particular, Joltid has alleged that Skype should not possess, use or modify certain software code (the “Code”) and that, by doing so, and by disclosing the Code in certain U.S. patent cases, pursuant to orders from U.S. courts, it has breached the license agreement.

On the basis of, among other things, the parties’ mutual dealings since the execution of the licence agreement, Skype is asking the English High Court for declaratory relief, including findings that:

(i) Skype is lawfully accessing, in possession of, using and modifying the Code so that Skype is not in breach of the license agreement with Joltid and accordingly Joltid’s notice of breach and subsequent notice of termination are invalid;

(ii) Skype lawfully disclosed the Code in the U.S. patent cases so that Skype is not in breach of the license agreement with Joltid and accordingly Joltid’s notice of breach and subsequent notice of termination are invalid; and

(iii) Joltid has certain indemnity obligations in relation to the U.S. patent proceedings.

Although Skype is confident of its legal position, as with any litigation there is the possibility of an adverse result if the matter is not resolved through negotiation. In such event, Skype would be adversely affected and the continued operation of Skype’s business as currently conducted would likely not be possible.

Perhaps this is why we saw so few bidders for Skype?

You see, DISH, though it had been barred from shipping DVRs with the patent-infringing functionality, continued to do so, justifying its behavior by claiming it had implemented a noninfringing workaround. But in June of this year, a court found that not to be the case. The court again reprimanded EchoStar (SATS) and ordered the company to pay TiVo (TIVO) $103 million in additional fines for the violations that occurred during the time in which the “workaround” was implemented. And now, it has added another $200 million to that.

TiVo, as one might imagine, was overjoyed by the ruling, which leaves open the possibility of further sanctions if EchoStar does not abide by the injunction.

“We are pleased by the Court’s ruling to impose contempt sanctions of approximately $200 million against EchoStar for its continued violation of a Court-ordered permanent injunction, and to award TiVo its attorney fees and costs incurred during the contempt proceedings,” the company said in a statement. “This brings total damages and sanctions in this case to approximately $400 million through July 1, 2009, plus attorney fees, and is exclusive of potential further damages and sanctions. Additionally, we are pleased that the Court ‘will seriously entertain the award of enhanced sanctions’ if ‘EchoStar is unsuccessful on appeal and nevertheless continues to disregard this Court’s orders.’”

Who knows, if DISH keeps it up, TiVo may get that $974.5 million yet.

TiVo’s (TIVO) complaint seeks both damages for past infringement and a permanent injunction–similar to the one it won against satellite provider Dish Network (DISH)–that would force AT&T (T) and Verizon (VZ) to shut down their DVR services.

“Attempts were made to reach a commercial arrangement,” TiVo CEO Tom Rogers said during an earnings call today. “They were not reached. We believe we are being caused irreparable harm and that harm increases everyday this doesn’t cease. We have found ourselves in a similar situation with AT&T and Verizon. We need to stop their continued unauthorized use of our intellectual property.”

And, God willing, corral them into that commercial arrangement to which Rogers refers. After all, the company lost 146,000 subscribers in its second quarter. It desperately needs to do something to win new ones and lower its churn.

[Image credit: Flickr/montevino]

Amazon (AMZN) hasn’t yet commented on the settlement beyond the filing, which offers little more information than that it was “unanticipated” and will be charged to “other operating expense” in the second quarter.

The $200 million verdict is the second-largest patent jury award this year, the largest of all–coincidentally, I’m sure–being the $388 million verdict against Microsoft won by Singapore’s Uniloc in April over an infringement of its security technology. Then, as in the i4i case and most other patent rulings that haven’t gone its way, Redmond responded with incredulity, claiming it couldn’t have possibly infringed on the patent because the patent is invalid. “We believe the evidence clearly demonstrated that we do not infringe and that the i4i patent is invalid,” said David Bowermaster, a Microsoft spokesman, in the company’s now boilerplate statement on such matters. “We believe this award of damages is legally and factually unsupported, so we will ask the court to overturn the verdict.”

In 2007, Google (GOOG) applied for its own mark on Android, the name for its open-source mobile phone operating system, and was rejected on the grounds that it was too similar to Specht’s. Google went ahead and debuted the OS with the Android name anyway, and now Specht is suing the company. In a complaint filed in a Chicago federal court, Specht claims that Google’s use of the term will deceive and confuse customers. He asks the court to bar Google from using the name and demands $2 million in damages for its misstep. Google, says Specht, “stole first and asked questions later.”

Google, for its part, disagrees. The company clearly views the suit as opportunistic and says it has no intention of paying that $2 million penalty. It says the trademark, Android Data, hasn’t been used in at least three years and that Android Data Corporation has been dissolved. It argues there can be no confusion between the two names. “We believe the claims are without merit and we plan on defending them vigorously,” a spokesperson said. “We have no interest in settling this case.”

In sum, Microsoft engaged in bait and switch–assuring consumers they were purchasing ‘Vista Capable’ machines when, in fact, they could obtain only a stripped-down operating system lacking the functionality and features that Microsoft advertised as ‘Vista.’”

– Excerpt from the Vista Capable lawsuit

Looks like the three-hour deposition Microsoft CEO Steve Ballmer gave in the so-called “Vista Capable” class action suit was for naught. A judge Wednesday ruled that the lawsuit, which has troubled Microsoft for nearly two years now, cannot go forward as a class action. Instead, plaintiffs who claim Microsoft labeled PCs “Windows Vista Capable” even though the computers were capable of running only the stripped down “Home Basic” version of the OS, must pursue their cases individually. Seems the plaintiffs were unable to convincingly demonstrate that the “Windows Vista Capable” marketing program resulted in increased sales for Microsoft, an argument essential to supporting their class action claim.

A lucky turn of events for Microsoft (MSFT) and one that could potentially save the company millions of dollars in compensatory damages and, by some accounts, up to $8.52 billion-worth of memory and graphics cards if it should lose the case–assuming any of the plaintiffs have the courage to go up against Microsoft on their own.

This week members of the House Judiciary Committee passed the Prioritizing Resources and Organization for Intellectual Property (called “PRO IP” groan…) Act of 2007, legislation that would create an “anti-piracy czar” at the White House level, a separate IP-enforcement division at the Justice Department and ratchet up already high civil penalties for copyright infringement.

The measure is backed by many of the most powerful politicians on the House Judiciary Committee, including John Conyers (D., Mich.), Lamar Smith (R., Texas) and “Hollywood” Howard Berman (D., Calif.), the content cartel and, of course, Zucker, who likes to tell everyone that it dramatically advances the cause of protecting innovation, technological invention and creativity.

Said Zucker, “This is such an important step in combating this incredibly serious piracy and counterfeiting problem that’s getting worse, not better.”

In Zucker’s eyes, maybe. But not in the eyes of consumer folks like Google Senior Copyright Counsel William Patry who calls Pro IP “the most outrageously gluttonous IP bill ever introduced in the U.S.” and consumer advocacy group Public Knowledge which feels it is in sore need of adjustment.:

This bill takes already extraordinary copyright damages and increases them, expanding the threat of litigation intended to stifle competition and innovation. … Increasing penalties is one of the least necessary, and quite possibly counterproductive, actions the committee could take, particularly when current law is adequate to deal with most infringement issues and because the higher penalties serve only to force faster and larger settlements potentially from innovators. … Instead of following the course of this bill, the committee should look to the future, to a more realistic and rational copyright regime that can adapt pre-VCR copyright laws to a post-YouTube world.”

The RIAA and its online counterpart, the Digital Media Association, have petitioned the Copyright Royalty Board to slash the so-called mechanical royalties paid to musicians and music publishers for digital downloads, subscription music services and ringtones. Seems the RIAA and DiMA feel they’ve suffered unfairly during the transition to digital distribution and they’d like artists to share in their misery.

The National Music Publishers’ Association, noting the favorable economies of digital distribution, asks for a royalty of 15 cents per track for permanent digital downloads. The RIAA argues that a royalty of approximately 5 cents to 5.5 cents per track is more reasonable. The DiMA–which represents Apple, Amazon and RealNetworks, among others–suggests cutting that royalty further still.

Find that astonishing? Just wait; it gets worse. For streaming music services, the NMPA proposes a rate of the greater of 12.5% of revenue, 27.5% of content costs, or a micro-penny calculation based on usage. The RIAA finds 0.58% of revenue more reasonable. And the DiMA says there really shouldn’t be any royalty at all. “Fundamentally, this fragile marketplace is showing signs of promise, but it cannot be saddled with additional, excessive costs,” the DiMA argues. “The board should be careful not to impose a royalty that kills the proverbial goose and deprives songwriters and publishers of their golden egg.”

An interesting choice of metaphor and one in which the DiMA and RIAA might easily figure as the giant at the top of the beanstalk:

Fee! Fie! Foe! Fum!??
I smell the blood of a musician.
Be he ‘live, or be he dead,
I’ll grind his bones to make my bread.”

Grind his bones to make my bread, indeed.

Said Rick Carnes, president of the Songwriters Guild of America: “Our opponents have to recognize that this rate-setting is not a matter of gamesmanship for songwriters, but rather one of survival. As I stated in my testimony, in response to a question from those seeking to cut the mechanical royalty rate in half and to denigrate the importance and contribution of professional songwriters to the music industry, ‘Yes, songs are plentiful, just as rocks are plentiful. But if you want diamonds, you are going to have to pay the miners a living wage.’ ”

That’s quite a sum to demand for the alleged infringement of a design patent–especially one for which there is evidently a fair bit of prior art.

But that doesn’t seem to phase faze Lagos Analysis much. “This patent infringement lawsuit is another step in LANCOR’s continued protection of its intellectual property,” said the company’s founder, Ade Oyegbola (who, it should be noted, was convicted of bank fraud in Boston in 1990). “LANCOR will continue to take aggressive steps to protect its intellectual property around the world.” Adding “ALL MY BANK ACCOUNTS IN DIFFERENT PARTS OF THE WORLD HAVE BEEN FROZEN AND I NEED YOUR ASSISTANCE IN THEIR DISLODGEMENT, FOR WHICH YOU ARE ENTITLED TO 35% OF THE SUM OF $45.4 MILLION …”

The DOJ says the $222,000 in damages awarded to the Recording Industry Association of America in the Virgin Records America et al. v. Thomas copyright-infringement case is constitutional. Seems it didn’t quite buy Thomas’s argument that fining someone – particularly a single mother of two – $222,000 for songs that could be bought for $24 on iTunes violates a Supreme Court precedent that prohibits fines that are “so severe and oppressive as to be wholly disproportioned to the offense or obviously unreasonable.”

From the DOJ’s brief:

Although defendant claims that plaintiffs’ damages are 70 cents per infringing copy, it is unknown how many other users–‘potentially millions’–committed subsequent acts of infringement with the illegal copies of works that the defendant infringed. Accordingly, it is impossible to calculate the damages caused by a single infringement, particularly for infringement that occurs over the Internet. Furthermore, plaintiffs contend that their witnesses ‘testified to the substantial harm caused by the massive distribution of their copyrighted sound recordings over the Internet, including lost revenues, layoffs and a diminished capability to identify and promote new talent…’

“Most recently, Congress has crafted a statute that serves as a deterrent to those infringing parties who think they will go undetected in committing this great public wrong, as well as providing compensation to copyright owners who have to invest resources into protecting property that is often unquantifiable. Accordingly, given the findings of copyright infringement in this case, the damages awarded under the Copyright Act’s statutory damages provision did not violate the due process clause…”