Distribution, Competition, and Antitrust / Intellectual Property (IP) Law

Monopolization Claims Against Adobe Relating to Acquisition of FreeHand Survive Motion to Dismiss

Free FreeHand Corp. v. Adobe Systems Inc., No. 11-CV-02174-LHK (Feb. 10, 2012) (Koh, J.).

Judge Koh refused to dismiss the bulk of an antitrust complaint Against Adobe Systems relating to its acquisition of FreeHand, a professional vector graphic illustration software. Although Adobe signed an FTC consent order in 1994 requiring it to divest itself of FreeHand after it acquired Aldus, that provision expired in 2005, whereupon Adobe acquired FreeHand by purchasing Macromedia. The plaintiffs alleged a “monopoly broth” of post-merger anti-competitive conduct, including (1) alleged charging of monopoly prices, (2) discontinuing support for and development of FreeHand, (3) bundling of Adobe’s Illustrator product with other Adobe products, and (4) declining to release FreeHand’s source code to the open source community. Although the court determined that declining to release the source code could not be considered as part of the overall effect of Adobe’s alleged anticompetitive conduct, it allowed the other allegations to stand.

 

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