Psystar Claims Schiller “Unprepared” for Testimony

Another week, and another set of filings in the Apple vs. Psystar case. And yes, the case continues to get grittier and grittier. Last week Apple accused Psystar of destroying evidence, and this week Psystar is kicking it up a notch. The depositions of key Apple employees are currently under way, and August 14, it was Phil Schiller’s turn. According to Psystar, Schiller was “wholly unprepared and unwilling to testify”. At the same time, Apple has suddenly told the courts it will no longer seek recovery of lost profits from Psystar, because that would require Apple to give out its profit margins – and Apple doesn’t want to do that.

Schiller on the spot

Let’s start with Phil Schiller’s deposition first. It took place on August 14, but Psystar was far from impressed with Schiller’s performance. In a filing to the court, Psystar claims that Schiller was “wholly unprepared and unwilling to testify” about the damages Apple claims to have suffered because of Psystar’s Mac clones. The filing further states that Schiller did not answer questions asked during the depositions.

Psystar now seeks a do-over asking the courts to order Schiller to answer the questions:

Apple’s furnishing a witness on injury who was wholly unprepared to testify about that subject is a discovery violation that relates to a core issue in this case, the harm, if any, that Apple suffered as a result of Psystar’s conduct. Psystar respectfully requests that this Court (1) order Apple to properly prepare Mr. Schiller for his deposition as a corporate representative on injury, (2) require that Mr. Schiller appear for a continuation of his deposition in Houston, at the offices of Psystar’s lead counsel, within the next fourteen days, and (3) pay Psystar’s attorneys’ fees associated with Mr. Schiller’s deposition, this brief, and any subsequent proceedings.

In what is sure to be a very surprising move, Apple disagrees with Psystar’s filing. In a counter-filing (is that a word?), Apple states that Psystar’s deposition of Schiller was “nothing more than an effort to harass one of Apple’s senior executives and prematurely seek expert testimony”. According to Apple, Psystar’s filing leaves out several key facts, and Apple therefore asks the court to reject Psystar’s request for a do-over.

Apple states in their counter-filing:

Despite Apple’s objections, Psystar’s counsel sought testimony on the quantification of damages — the subject of expert testimony — rather than the injury suffered by Apple… Mr. Schiller was fully prepared to discuss the non-quantifiable injury to Apple but Psystar’s counsel chose to not ask those questions and terminated the deposition instead.

Those who have followed the case in more detail will remember that the exact same thing happened when Apple was ‘depositioning’ Psystar; Apple also claimed Psystar was not answering questions properly about the company’s financial information. In that case, the judge sided with Apple.

Sudden Apple turn-around

In what will also raise a few eyebrows, Apple has suddenly told the courts it will no longer seek recovery of lost profits from Psystar. Apple states that its margin information is a closely guarded secret, and that the benefits of keeping that information a secret outweigh the possible damages done by Psystar. The decision comes after Apple reviewed Psystar’s financial information (which it got during the discovery phase).

Apple further wants the judge to issue a protective order which would make it impossible for Psystar to retrieve the margin information through the discovery phase:

In light of Apple’s decision not to seek lost profits and Psystar’s stated intent to disclose Apple’s confidential information, Apple now seeks a protective order specifically precluding the discovery by Psystar of Apple’s non-public profit margins on the sale of individual products or product lines. Indeed, Apple believes that discovery of its non-public financial information should be limited to revenues, R&D and advertising costs related to Mac computers and Mac OS X.

Since I’m certainly no laywer, please take my assumptions that follow with a mountain of salt. I find it rather odd that after reviewing Psystar’s financial information, Apple suddenly no longer wants its damages recovered. It seems as if Apple realised it could not, with a straight face, argue that Psystar had any significant impact on Apple’s revenue stream.

Still, it seems as if the margin information is very important, especially to Psystar. If Psystar can prove that its Mac clone business had zero impact on Apple’s bottom line, it would seem they would have a stronger case.

It seems like Groklaw’s PJ has not yet looked at the documents, but her insights will probably be a lot more useful. I’m sure an article on her end is upcoming, and I will update this one with her findings as soon that article is here.


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