“Psystar has violated Apple’s exclusive reproduction right, distribution right, and right to create derivative works,” Alsup wrote in his ruling (see full text below). Not only did the company infringe on Apple’s (AAPL) copyrights by installing Mac OS X on its hackintoshes, he explained, it violated the Digital Millennium Copyright Act to do so.

An ugly defeat for Psystar, which just a few weeks ago asked a judge to bless its business and rule that it is legally allowed to sell machines with Apple’s Mac OS X pre-installed. Still, it doesn’t mean that the acrimonious legal battle between the two companies is finished. Psystar could appeal, though Alsup’s ruling would seem to leave the company pretty far up that certain creek it’s been traveling lately–without a paddle.

There remain a number of accusations to be decided at trial, among them, Apple’s claims of breach of contract, trademark infringement, trademark dilution and unfair competition. Beyond these, there are the damages that will almost certainly be brought against Psystar on the copyright issues in the case.

“The court asked for briefs on that subject,” Pamela Jones notes over at Groklaw. “In short, Psystar is toast. Psystar’s only hope now is Florida, and frankly I wouldn’t bet the house on that one. Judges notice if you were just found guilty of a similar cause of action in another state.”

Psystar –

We hold these truths to be self evident:

That as long as Apple’s iPhone is locked, there will be those who wish it open. And that as long as this is the case, iPhones will be jailbroken and outfitted with third-party applications not vetted by Apple. And this will remain so regardless of whether or not Apple manages to convince the U.S. Copyright Office that jailbreaking an iPhone is copyright infringement and a violation of the Digital Millennium Copyright Act. So all this jawing over Apple’s legal stance on iPhone jailbreaking is ultimately for naught.

So the Electronic Frontier Foundation can argue that jailbreaking is protected under fair-use doctrines. And it can urge the Copyright Office to add a jailbreaking exemption to the DMCA on the grounds that “the culture of tinkering (or hacking, if you prefer) is an important part of our innovation economy.” And Apple (AAPL) can insist that such an exemption is “an attack on Apple’s particular business choices with respect to the design of the iPhone mobile computing platform and the strategy for delivering applications software for the iPhone through the iPhone App Store.”

And they can go round and round and round. But their sparring and bloviating will ultimately be meaningless. Because if Apple’s history with iPhone jailbreaks (see stories below) has taught us anything, it’s that they’re essentially unstoppable.

PREVIOUSLY:

• Apple HQ on Defcon 1 Tantrum Alert After iPhone 2.0 Crack
• iBrokeIt
• Latest Use for $100 iPhone Credit: Replace Inoperable iPhone

The MPAA “RealNetworks’ RealDVD should be called StealDVD,” said MPAA Executive Vice President and General Counsel Greg Goeckner in a statement. “RealNetworks knows its product violates the law and undermines the hard-won trust that has been growing between America’s movie makers and the technology community. The major motion picture studios have been making major investments in technologies that allow people to access entertainment in a variety of new and legal ways. This includes online video-on-demand, download-to-own, as well as legitimate digital copies for storage and use on computers and portable devices that are increasingly being made available on or with DVDs. Our industry will continue on this path because it gives consumers greater choices than ever. However, we will vigorously defend our right to stop companies from bringing products to market that mislead consumers and clearly violate the law.”

Uri Geller, the purported spoon-bending paranormalist, apparently did neither when in May of 2007 he sent a DMCA take-down notice to YouTube demanding that it remove a clip debunking his “supernatural” abilities. And boy, did he ever pay for it.

You see, Geller didn’t own the video. And that made his DMCA take-down notice unlawful, as the Electronic Frontier Foundation pointed out when it filed suit against him for misrepresentation of copyright claims. “We’ve seen a rash of people abusing the DMCA lately, attempting to take down legitimate criticism and commentary online,” EFF staff attorney Jason Schultz said at the time. “To allow thin-skinned public figures like Uri Geller to abuse this system forces critics to remain silent and creates unfair hurdles for free speech to thrive online.”

Well, the hurdle to which Schultz was referring was knocked down today when Geller settled the EFF suit. Under the terms of the settlement, Geller will license the disputed footage, all eight seconds of it, under a noncommercial Creative Commons license. A monetary settlement was also reached, but the terms are not public–unless you too are a paranormalist and can divine them.

Google has finally made an official comment on Microsoft’s unsolicited $44.6 billion bid for Yahoo and, as one might imagine, it’s not a ringing endorsement. In a statement yesterday posted to the company’s blog, Google’s chief legal officer, David Drummond, argued that a Microsoft-Yahoo merger “raises troubling questions” and would pose significant competitiveness issues.

“Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?” Drummond asked. “While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies–and then leverage its dominance into new, adjacent markets. Could the acquisition of Yahoo allow Microsoft–despite its legacy of serious legal and regulatory offenses–to extend unfair practices from browsers and operating systems to the Internet?”

Then, noting that Microsoft and Yahoo operate the two most widely used Web portals, he asked if a merged company might limit the ability of consumers to freely access competitors’ email, IM and Web-based services. “This is about more than simply a financial transaction, one company taking over another,” he concluded. “It’s about preserving the underlying principles of the Internet: openness and innovation.”

And remember kids, you can make money without doing evil–especially if you have more than 70% of paid search revenues worldwide …

Quite a letter, and one full of the sort of FUD (fear, uncertainty and doubt) and faux altruism normally associated with Microsoft missives. The software giant, of course, was quick to take exception. The company issued a terse statement yesterday refuting Google’s protests, arguing that a merger of Yahoo and Microsoft will create a stronger rival to Google. “The combination of Microsoft and Yahoo will create a more competitive marketplace by establishing a compelling No. 2 competitor for Internet search and online advertising,” Brad Smith, Microsoft’s general counsel, wrote. “The alternative scenarios only lead to less competition on the Internet. Today, Google is the dominant search engine and advertising company on the Web. Google has amassed about 75% of paid search revenues worldwide and its share continues to grow. According to published reports, Google currently has more than 65% search-query share in the U.S. and more than 85% in Europe. Microsoft and Yahoo, on the other hand, have roughly 30% combined in the U.S. and approximately 10% combined in Europe. Microsoft is committed to openness, innovation and the protection of privacy on the Internet. We believe that the combination of Microsoft and Yahoo will advance these goals.”

Which, as you’ll see below (and in our companion video), is pretty much how it turned out. What follows is Digital Daily’s abridged guide to the year in tech news–a fond reminiscence of what was, and our First Annual Year-End List For Year-End List Haters.

1. Yahoo Shareholders Reject Plan to Tie Executive Compensation to Company’s Crappy Performance
   Well, what do you know: Yahoo’s annual shareholder meeting didn’t conclude with CEO Terry Semel’s head piked on the exclamation point of the Yahoo sign outside company headquarters.

2. I Know It Was You, Fredo. You Broke My Heart. You Broke My Heart!
   Apparently, Fred Anderson is the “Fredo” of the Apple options backdating family.

3. We’ve Asked John Williams to Do a Special Performance of the Theme From “The Poseidon Adventure” for Our Q4 Results
   Who’s programming Microsoft’s on-hold music, Apple’s Phil Schiller? Waiting for the company’s third-quarter earnings call to begin yesterday, those listening in were treated to an instrumental piano version of Celine Dion’s “My Heart Will Go On.” From “Titanic,” the disaster movie.

4. I’m Proud to Say Our New “Soylent Green” iPod Is Made of 100% Biodegradable Greenpeace Activists!
   If you’re going to try to smear Apple for reckless environmental practices, you best have some hard epidemiological and toxicological data on hand, because goofy Photoshop treatments of the company’s marketing materials just can’t stand up to a blow from the Apple PR machine.

5. And Online Display Impressions Soared as More Americans Checked Their AOL Accounts for Old Times’ Sake
   To hear tell from Time Warner executives, the company’s better-than-expected earnings for the first quarter owed quite a bit to gains in online-advertising market share by its AOL Internet division.

6. Web 2.0 Audience in Mirror May Be Smaller Than It Appears
   How ironic is it that Web 2.0–the “participatory Web”–has far fewer participants than its architects would have us believe?

7. And for My Next Trick, I’ll Turn Myself Into a Complete Jackass
   If you’re going to demand that YouTube remove a video to which you object under the Digital Millennium Copyright Act, it’s probably wise to make sure that you actually understand the DMCA.

8. War Is Peace. Freedom Is Slavery. Ignorance Is Strength. DRM Is DCE.
   You can’t put frosting on manure, but HBO’s Chief Technology Officer Bob Zitter isn’t above trying.

9. We’re Naming It the Motorola STNKR, After Our Q1 Earnings …
   Carl Icahn was right. Motorola really is desperate for a new product. How else to explain a patent the company was awarded last month for a “communication device having a scent-release feature and method thereof.”

10. The Frienemy of My Frienemy Is My Enemiend
    If Microsoft is planning an acquisition in the online marketing and advertising space, it better act fast, because if it waits much longer there won’t be anything left to acquire.

11. How Would Monsieur Ellison Like His BEA Served? Mixed in a Bucket With Oracle’s Other Acquisitions?
    Looks like we may be in for another PeopleSoft-esque takeover drama …

12. I’m Just Biding My Time Here Until I Can Quit and Study Whale Feces Full Time
    Given the chance, how would you alter the course of your career? Well, if you worked at Microsoft’s Security Response Center, you might consider taking a job as an Olympic drug tester, a gravity research subject, or a “whale-feces researcher.”

13. Much Like Energy, BS Cannot Be Created or Destroyed, It Can Only Be Changed From One Form to Another
    If Steorn’s perpetual motion effort is anything like its e-commerce venture (and by all accounts things do seem to be going that way), the only thing in its future is insolvency.

14. From Now On, We’ll Be Known as Nlsn/NtRtings
    Looks like vowels won’t be the only accoutrements to be tossed aside in the rise of Web 2.0. The venerable page view is to be abandoned as well.

15. The Defendant Stands Accused of Copyright Infringement, Breach of Contract and Misappropriation of Dumb Luck
    According to popular legend Facebook founder Mark Zuckerberg once kept two versions of his business card in his wallet–one with the title CEO, the other with “I’M CEO . . . BITCH.”

16. Well, Here Come YouTube’s Video ID Tools. Guess That Means Godot Will Be Here Any Minute Now
    Google’s apparently finished “educating users about copyright law” and has moved on to the far more important business of making sure not to run afoul of it.

17. Look at It This Way: Now That Yahoo’s an ‘Ecosystem,’ the EPA Can Finally Declare It a Superfund Site
    “Our financial performance is not what we would like to see long-term.” This, from Blake Jorgensen, Yahoo’s chief financial officer who, just six weeks into the job, is already well versed in the company’s fiscal truisms.

18. Gates to Google: My Lyrical Technique Will Leave Your Body Weak
    Much as Microsoft Chairman Bill Gates fancies himself untroubled by Google’s incursions into his software empire, they clearly do chafe him a bit.

19. Newest Yahoo Mail Feature: BCC Beijing
    Sure, Yahoo signed China’s “Public Pledge on Self-Discipline for the Chinese Internet Industry,” a voluntary agreement to monitor and restrict information deemed “harmful” by Beijing, but did it have to take it quite so seriously?

20. Apple: Wham, Bam, Thank You Fanboi
    “I feel like a $200 whore.” That was one iPhone early adopter’s crass assessment of his feelings of self-worth, after Apple unexpectedly cut the price of the device by a third–just two months after it arrived at market.

21. In the Unlikely Event of a Water Landing, Sergey’s California King May Be Used as a Flotation Device
    With its onboard hammocks, full-size sofas and California King beds, it’s a wonder Google’s “party plane” has room for scientific instrumentation befitting the National Aeronautics and Space Administration, but apparently it does.

22. Act Now and Get a Downgrade to the OS You Really Want, ABSOLUTELY FREE!
    It’s looking more and more like the pent-up demand for Windows Vista we’ve heard so much about this past year is really just pent-up demand for Windows XP.

23. Dude, I Work for Friggin Forbes Magazine. Have You Heard of It?
    The year-long guessing game is over. New York Times reporter Brad Stone has outed Daniel Lyons, a senior editor at Forbes magazine, as the author of the Secret Diary of Steve Jobs, the satirical blog lampooning Apple’s iconic CEO (See? Told you it wasn’t me).

24. If Facebook’s Worth $15 Billion, Then My Stupid Idea’s Got to Be Good for $10 Mil
    Apparently the vainglory from which Facebook CEO Mark Zuckerberg appears to suffer is communicable and spreading rapidly throughout the social network’s developer community.

25. A Billion Here, a Billion There, and Pretty Soon You’re Talking Real Bollocks
    MySpace is worth $65 billion in the same way that Facebook is worth $15 billion–hypothetically.

26. “Apple Has Destroyed the Music Business”–Not That We Didn’t Try Our Best
    Many, many years ago, when the digital-music business consisted of little else besides Napster and the Recording Industry Association of America’s lawsuits against it, Apple proved that there was indeed a decent business to be had in selling music online for $1 per song.

27. It’s Not an Unpaid Endorsement, It’s a “Social Ad”
    Facebook’s Social Ads aren’t endorsements, they’re a “representation” of user activity.

28. Obama Announces “No Tech Policy Left Behind” Plan
    If Google’s mission is to organize the world’s information and make it universally accessible and useful, then Democratic presidential candidate Barack Obama’s is to do the same to its tech-policy issues.

29. Sounds More Like the “Zune of Reading” to Me
    If Jeff Bezos truly hopes to create “the iPod of reading,” observers say he’s going to have to do a hell of a lot better than Amazon’s new Kindle e-book reader.

30. Fiascobook
    What Facebook CEO Mark Zuckerberg lacks in foresight, he certainly makes up for in disingenuous hair-shirt remorse.

A bit of background: In November 2004, Perfect 10 asked a federal district court judge to enjoin Google from displaying pictures and links to the company’s copyrighted photos. Perfect 10 objected to Google search results displaying thumbnails of its photos, along with the links to third-party sites offering larger versions. The pictures were copyrighted, it said, and nearly all the sites indexed by Google were displaying them without permission. “In some cases, as many as 96% of Google search results on Perfect 10 model names go not to Perfect10.com, but to infringing Google AdSense partners of which Google has received notice,” Perfect 10 proprietor Norm Zada argued at the time. “That’s not legitimate search. Google’s extraordinary gain in market cap from nothing a few years ago to close to $80 billion is more due to their massive misappropriation of intellectual property than anything else. Google is currently displaying over 3,000 Perfect 10 copyrighted images and linking them to Web sites containing numerous other Perfect 10 copyrighted images and in many cases ads for which Google earns revenue. Google is no longer a legitimate search engine. It is a commercial advertising operation determined to increase ad revenue regardless of what rights it tramples on in the process. If all an infringer needs to avoid liability is to provide some sort of a ’search function,’ that will be the end of intellectual property in this country.” An interesting corollary, no? How ironic is it that Zada’s father, Lotfi Zadeh, is widely considered to be the father of fuzzy logic.

Anyway… After months of legal wrangling the Ninth U.S. Circuit Court of Appeals reversed the decision of the lower-court judge, who had prevented Google from displaying thumbnails of Perfect 10 photos improperly posted to other sites. The federal appeals court “rejected Perfect 10’s theory and found that until Perfect 10 gave Google actual knowledge of specific infringements (e.g., specific URLs for infringing images), Google had no duty to act and could not be liable,” Electronic Frontier Foundation attorney Jason Schultz explains. “It also held that Google could not ’supervise or control’ the third-party Web sites linked to from its search results, something most people (except, apparently, Perfect 10) probably already knew. The rule provides strong guidelines for future development and avoids the kind of uncertainty that could chill start-ups trying to get the next great innovation off the ground. Finally, the court also rejected Perfect 10’s attempts to turn Web surfers into pervasive copyright violators. Specifically, Perfect 10 had claimed that Google users who looked at photos in their browsers were infringing the photos because their computers automatically ‘cached’ a copy of the photo in memory. Thankfully, the ruling … affirmed that any such copying is a fair use and cannot be infringing.”

The YouTube acquisition is certainly not without its own risks. The most significant issue facing Google following this acquisition is the potential for a deluge of litigation concerning copyrighted content on YouTube. A protracted legal battle in the courts could result in millions of dollars of legal expenses, and settlement outside the courts is also a possibility. The worst case scenario can be seen in the fates of companies like Napster and MP3.com. Our analysis of the top 100 most-viewed videos so far in November indicates that under 35% of these videos (by total views and number of videos) potentially contain contentious copyrighted material. This means that the majority of videos on the site are truly user-generated content. As a result, we believe the impact of Google/YouTube removing copyrighted content may be less than feared. However, it is unclear how much of YouTube’s traffic comes to the site primarily for copyrighted content rather than user-generated videos.”

–Credit Suisse analyst Heath Terry

Google may not have figured out the best way to cash in on its $1.65 billion YouTube purchase, but the entertainment industry obviously has: litigation. NBC Universal and Viacom have filed an amicus curiae, or friend-of-the-court, brief in support of a pending copyright-infringement lawsuit against the video site–one that could have a critical impact on the future of online video. Offered in support of journalist Robert Tur, who sued YouTube when his footage of the 1992 L.A. riots apparently was posted repeatedly on the site, the brief asks a U.S. District Court judge in Los Angeles to deny Google’s motion to dismiss Tur’s suit. “YouTube actively manipulates and modifies the content in ways that the uploading user clearly does not, including copying, reformatting and adapting the works (…) further disseminating them,” the brief states. “In operating its own commercial Web site, YouTube engages in activities that are reserved to the copyright holder.”

The brief continues: “Many of NBCU’s most valuable copyrighted works have been copied, performed and disseminated without authorization by YouTube and other similarly operated Web sites. NBCU has a strong interest in preserving the strength and viability of all of its legal rights and remedies in response to such conduct.” And it has an equally strong interest in seeing Tur prevail in court. Because if he does, it will establish the precedent that YouTube is not protected under the safe harbor provision of the Digital Millennium Copyright Act (DMCA), which protects Internet service providers from the consequences of their users’ actions.

Of course, should YouTube be found to qualify for safe harbor protection, Viacom and NBCU may see the legs kicked out from under their own suits. Which is the way Google sees things playing out. “These suits simply misunderstand the Digital Millennium Copyright Act,” said general counsel Kent Walker. “Most content owners understand that we respect copyrights, we work every day to help them manage their content, and we are developing state-of-the-art tools to let them do that even better.”

Of course, as often as not, conventional wisdom is wrong–particularly when it comes to Google and its business dealings. And we may soon find out if that’s the case this time. On Monday afternoon, Google responded to Viacom’s $1 billion copyright infringement suit over video clips on YouTube (PDF), denying the company’s claims and asking for a judgment dismissing the complaint. “By seeking to make carriers and hosting providers liable for Internet communications, Viacom’s complaint threatens the way hundreds of millions of people legitimately exchange information, news, entertainment and political and artistic expression,” Google said. “Google and YouTube respect the importance of intellectual property rights, and not only comply with their safe harbor obligations under the DMCA (Digital Millennium Copyright Act), but go well above and beyond what the law requires.”

The company’s point: The DMCA shields it from liability for copyright violations its customers may commit on YouTube. This is basically what Google has been saying all along. And Viacom, for one, isn’t buying it. “It is obvious that YouTube has knowledge of infringing material on their site and they are profiting from it,” Viacom said in a terse statement. “It is simply not credible that a company whose mission is to organize the world’s information claims that it can’t find what’s on YouTube. Unfortunately, Google continues to distinguish itself by failing to join the majority of major digital companies that have affirmatively embraced the legal rights of copyright holders.”

So what’s next? A jury trial, apparently. After all, Google has demanded one. And there are currently no settlement negotiations under way. The two companies will meet on July 27 with the judge, who is then likely to set a courtroom schedule for a legal brawl that could change the future of online video.