Tech Industry

PowerTools files suit against Umax

The start-up saw its nascent Mac-cloning business affected dramatically when Apple changed its licensing practices and is striking back with a $50 million lawsuit.

A Texas-based start-up that saw its nascent Mac-cloning business affected dramatically when Apple changed its licensing practices this summer has struck back with a $50 million lawsuit.

The suit is the latest twist in the ongoing saga of Apple's cloning strategy. Apple decided to virtually do away with its cloning licenses earlier this year, buying out Power Computing's license for $100 million and restructuring similar agreements with Motorola and IBM. These moves left UMAX Data Systems (UDS) the only cloner to retain a valid license.

PowerTools signed a contract in August of 1997 to purchase from UMAX "bare bones" Mac clones, which PowerTools then would equip with more advanced, faster components, such as the G-3 processor, and then sell through direct channels or resellers.

Apple, meanwhile, began shipping its G-3 computers last month, even though the PowerTools version of the G-3 Mac has been available since September.

PowerTools alleges in its lawsuit that Apple and UDS "collaborated, conspired, and agreed to boycott PowerTools" after its "announcements about its products and their superior processing and performance capabilities had triggered Apple's attention."

Apple, which has not yet been served with a copy of the lawsuit, declined to comment on the matter.

PowerTools also alleges that after UDS agreed to supply the clone maker with the bare bones machines, the vendor transferred the PowerTools contract to a UMAX subsidiary, UMAX Computer Corporation (UCC). UCC, however, has an agreement with Apple that precludes it from selling "bare bones" or incomplete Macs, which effectively makes the PowerTools deal null and void.

Victor Wong, PowerTools' chief executive, says that the confusion has placed the start-up venture in "very high jeopardy."

"As an ongoing concern, it has affected us dramatically," he said. "We've tried to negotiate with these people for many months now. We have no other alternative at this time."

UMAX general counsel Susan Meyer would say only that, "[UMAX has] no comment on the alleged suit because we have not yet been served."