May 14 (Westlaw Journals) - Adobe Systems’ abandonment of its FreeHand software acquired from Macromedia in 2005 has resulted in increased prices and decreased competition in the market for vector graphics illustration software, according to a putative class-action lawsuit filed in California federal court.
Vector graphic illustration software is used for applications such as designing cartoons, technical illustrations, logos, graphics shapes and fonts. Vector images created with such software have numerous advantages, most notably that they can be scaled or altered with no resulting blurring or pixellating.
Free FreeHand Corp. and four others sued Adobe in the U.S. District Court for the Northern District of California, alleging violations of Section 2 of the Sherman Act, 15 U.S.C. 2; Cal. Bus. & Prof. Code § 16700; and Wash. Rev. Code § 19.86.040. U.S. District Judge Paul Singh Grewal is slated to hear the claims.
According to the complaint, Free FreeHand is a Seattle-based nonprofit advocacy group with more than 5,500 members in the U.S. professional graphic design industry. The group advocates for FreeHand’s continued availability and viability based on members’ belief that the application is superior to Illustrator.
The four other plaintiffs (Mark Oliver Inc., Jabez Palmer, Eric Rosenberg and Jamie Pritchett) say they are graphic design professionals and licensees of Adobe’s competing Illustrator software who have been damaged by Adobe’s alleged interference in the market for FreeHand.
The plaintiffs propose to lead a class of all U.S. users and purchasers of FreeHand. The proposed class is divided into four sub-classes, two each for Windows and Mac FreeHand users.
Each operating system version has two sub-classes. The first, a “damages class,” is for people who purchased FreeHand or Illustrator software. The second, an “injunctive class,” includes all users of vector graphic illustration software in addition to FreeHand.
According to the complaint, Adobe Illustrator and Adobe FreeHand are the only professional vector graphic software applications available on the market for Mac computers. On the Windows side, Adobe’s products have only one competitor, CorelDRAW.
The complaint alleges that Adobe gained monopoly power in the relevant market when it acquired FreeHand in 2005 through its purchase of Macromedia.
Previously, FreeHand was owned by Aldus, which Adobe acquired in 1994. Citing concerns that Adobe might monopolize the vector graphic software business, the Federal Trade Commission required Adobe to divest itself of FreeHand and not to acquire it for 10 years. In the Matter of Adobe Systems Inc., 118 F.T.C. 940 (1994). Ownership of FreeHand then reverted to Altsys, which Macromedia acquired a year later.
When the 10-year period ended, Adobe acquired Macromedia and promptly discontinued support for FreeHand. Shortly thereafter, Adobe increased FreeHand’s price by 45 percent, the plaintiffs say.
In short, the plaintiffs accuse Adobe of acquiring Illustrator’s principal and “superior” competitor and attempting to destroying it while simultaneously jacking up the price on Illustrator.
”Adobe has engaged in unlawful, willful acquisition and maintenance of monopoly power in the market for professional vector graphic illustration software,” the complaint says. “Since acquiring FreeHand, Adobe has significantly raised the price of Illustrator while, at the same time, effectively removing FreeHand from the market by failing to update the program.”
In addition to class certification, the plaintiffs are seeking declaratory relief, damages (including treble and punitive damages), costs, injunctive relief, and attorney fees.
Free FreeHand Corp. et al. v. Adobe Systems Inc., No. 11-CV-02174-PSG, complaint filed (N.D. Cal., San Jose Div. May 3, 2011).
(Reporting by Joe Hylkema, Westlaw Journal Computer Industry)