But Psystar's lawyer said he will continue the fight to the U.S. Supreme Court if necessary.
"This is far from over," K.A.D. Camera of the Houston firm Camera & Sibley LLP, who represents Psystar, said in an interview today.
In a ruling Wednesday, the U.S. Court of Appeals for the Ninth Circuit confirmed a lower court's late-2009 permanent injunction against Florida-based Psystar that prevented the company from copying, using or selling Mac OS X, and blocked it from selling any system with Apple's operating system preinstalled.
Psystar, which began selling Mac clones in the spring of 2008, customized Mac OS X so it would run on non-Apple hardware, then used the software to power the machines it sold. In July 2008, Apple sued Psystar, claiming that the latter infringed Apple's copyright and that its use of Mac OS X violated the software's license agreement.
That license banned the use of Mac OS X on any but Apple's own hardware.
Several months before the district court slapped Psystar with the injunction, the company filed for bankruptcy , revealing that it owed hundreds of thousands of dollars in fees to the law firm which was representing it in the Apple lawsuit.
Although Psystar came out of bankruptcy later that year, it has not sold Mac clones since December 2009.
In an opinion issued Wednesday, Circuit Judge Mary Schroeder affirmed the lower court's injunction.
"We conclude that the district court correctly ruled that Apple had not engaged in copyright misuse," Schroeder wrote. "This is principally because its licensing agreement was intended to require the operating system to be used on the computer it was designed to operate, and it did not prevent others from developing their own computer or operating systems."
Psystar had contended that it could do whatever it wanted with the copies of Mac OS X it purchased, since it bought those copies on the open market, including from Apple's own online store as well as Amazon's.
Schroeder confirmed the district court's ruling that Psystar's reasoning didn't hold water.
"[Psystar's] argument falsely assumes that Apple transferred ownership of Mac OS X when it sold a retail-packaged DVD containing software designed to enable Apple's existing customers to upgrade to the latest version of the operating system," she wrote in the opinion. "The buyers of that DVD purchased the disc. They knew, however, they were not buying the software. Apple's SLA clearly explained this."
The only win Psystar received from the appellate court involved the numerous motions Apple was granted to seal court documents in the case. Apple had asked that the documents not be made public because they purportedly revealed technical details of Mac OS X, including how Apple locked the software to its Mac hardware.
Schroeder said that the district court "fail[ed] to articulate the rationale underlying its decision to seal," and then vacated those orders and remanded them back to the lower court.
As of Friday, those documents remained sealed.
Psystar's attorney said that the company's legal fight with Apple is not over. "There is at least one more round, perhaps two," said Camera.
Psystar will either ask the Ninth Circuit to consider the appeal en banc -- a request that all the judges on that bench review the case, not just the three-judge panel whose opinion was written by Schroeder - or it will petition the U.S. Supreme Court to hear the case.
"We haven't decided yet," said Camera, referring to Psystar's options.
He called Schroeder's ruling to vacate the orders sealing Apple documents a victory for Psystar. "It's significant because Apple has tried to keep secret how it limits [Mac OS X] to its hardware," said Camera, "even though that information is in the public domain."
He also claimed that the Ninth Circuit's ruling contradicted that of another appellate court, the U.S. Court of Appeals for the Fifth District.
"The Ninth Circuit is now squarely in conflict with the Fifth Circuit on copyright misuse," Camera said. "The Fifth Circuit held that it is copyright misuse to use copyright to limit your software to your hardware, while the Ninth Circuit held that Apple can do just that." An appeal to the Supreme Court may be necessary to resolve that contraction, said Camera.
He also argued that the case is larger than Psystar.
"The principal issue in the case is Apple's limiting Mac OS X to its own hardware," said Camera. "But this is more than only Psystar. It could determine whether the likes of Dell can sell machines that run OS X."
Camera declined to comment when asked whether others besides Psystar are involved with the case. "I can't answer that question," he said, "but I am not representing Dell."
From Camera's comments, it is clear that regardless of the appellate court ruling this week, the case will linger.
"What's really interesting about this case is that it's two guys in a garage challenging the world's largest technology company," said Camera. "That's why I'm really excited to be litigating the case."
Apple did not immediately reply to a request for comment.
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer , on Google+ or subscribe to Gregg's RSS feed . His e-mail address is email@example.com .
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This story, "Mac Clone Maker May Take Apple Case to Supreme Court" was originally published by Computerworld.