By Randall S. Newton
Editor-in-Chief
The
Open Design Alliance (ODA) has responded to
Autodesk's federal lawsuit by denying all Autodesk allegations and by offering nine counter claims. The Alliance alleges anticompetitive (monopolistic) behavior, violation of trademark law, misrepresentation, and other illegal actions. The ODA requests the forthcoming jury trial include their allegations against Autodesk.
Much of the 26-page response filed with the Federal District Court in Seattle on December 29, 2006 is specific legal language in which the ODA agrees to some Autodesk statements (settling them as fact in the lawsuit), disputes others, and completely denies all Autodesk allegations. The response then puts forth the nine counterclaims, and seeks a variety of remedies including monetary awards. The allegations of anticompetitive behavior are particularly interesting because there is legal precedent regarding Autodesk and antitrust enforcement activity.
The ODA filing identifies “affirmative defenses” against each Autodesk complaint. The alliance says that Autodesk:
- “...fails, in whole or in part, to state a claim upon which relief may be granted.”
- “...[is barred from accusing ODA] by the doctrine of unclean hands, for among other things, Autodesk's use of the mark in a false and anti-competitive manner.”
- “...is barred ... by the doctrine of fair use.”
- “...is barred ... by the doctrines of equitable estoppel and waiver.”
- “...is barred ... by the doctrine of trademark misuse.”
- “...is barred ... by the doctrine of implied license.”
Unclean hands is a legal appeal that alleges a plaintiff is acting in unethically or in bad faith with respect to the subject of the complaint. Estoppel is a legal appeal that seeks to stop a plaintiff from being allowed to enforce certain rights. It is generally interpreted as a defense based on unfair advantage.
In its counter claims, the Alliance alleges that Autodesk has made “false descriptions under the Lanham Act,” a reference to the federal laws on trademark that Autodesk cited in its original lawsuit. ODA also claims Autodesk has violated “related state law and common law” ... and for violations of federal antitrust statutes based on what ODA says are aggressive and unwarranted claims for the .dwg format:
"Despite not having created .dwg, Autodesk has attempted to control the .dwg format for over twenty years and has worked to exclude others from using .dwg files in an effort to gain a larger share of the CAD engine market. For example, in addition to the anticompetitive actions described below, Autodesk has engaged in an anti-competitive effort to trademark the DWG name such that anyone who needed access to .dwg files would have to use AutoCAD or otherwise obtain a license from Autodesk. The DWG name cannot be trademarked by itself. As the primary CAD file format, .dwg is well known in the CAD industry, is synonymous with a CAD drawing file, and indeed is a generic term. Moreover, the DWG acronym is already incorporated into the trademarks and tradenames of several CAD industry members. Autodesk’s attempt to trademark the DWG name amounts to a blatant anti-competitive overreaching grab at controlling the .dwg file format.
The counter claims also take on the nature of Autodesk's “TrustedDWG” technology, calling it “false and damaging to ODA and its members. ... By falsely advertising that files based on ODA libraries are more likely to create stability problems, Autodesk intended to cause consumers to use Autodesk products rather than the products of ODA member companies.”
The ODA alleges that Autodesk's original claims of trademark infringement are false and that “Autodesk has acted with malice and in willful and conscious disregard of the rights of ODA” in making the claims. ODA alleges a violation of the Sherman Act (the law covering antitrust and related monopolistic behavior); “Autodesk has monopoly power in the relevant markets. Barriers to entry in the relevant product market are substantial. ... If not stopped by an injunction from the Court, Autodesk's anti-competitive behavior will result in an entrenchment and enlargement of its already existing monopoly power.”
Of all the claims in the ODA counter-filing, the allegations of monopolistic behavior are the most interesting because there is legal precedent regarding Autodesk and antitrust enforcement. In 1987 the US Federal Trade Commission barred Autodesk from certain behaviors to prevent abuse of what the agency ruled was a monopolistic advantage in the CAD marketplace. The ruling came about when Autodesk was seeking to acquire Softdesk, its largest third-party developer. Softdesk had been developing technology that would have allowed its products to create DWG files without benefit of AutoCAD. The FTC allowed the merger only if Autodesk agreed to do nothing to hinder what we now know as IntelliCAD, including the acquisition of any company that owns the IntelliCAD code. (Softdesk sold the code to Shapeware of Seattle and merged into Autodesk. Shapeware became Visio Corporation and was later acquired by Microsoft, which then created the IntelliCAD Technology Consortium and gave it a perpetual license to use the IntelliCAD code.)
There are nine counter claims in all. The first alleges false description in the original lawsuit filing. The second and third allege specific violations of the Sherman Act regarding anticompetitive (monopolistic) behavior. The fourth alleges false advertising in violation of California law (California being Autodesk's home state) by making statements that “induce customers to cease use of non-Autodesk .dwg files.” The fifth counter claim alleges violation of Washington state consumer protection laws regarding unfair competition (the ODA is registered as a Washington state non-profit corporation). The sixth counter claim restates the unfair competition allegation but assigns the violation to California law. The seventh counter claim appeals to common law, alleging that Autodesk “has acted to cripple competition by controlling the use of the .dwg format.” The eighth counter claim cites “intentional interference with prospective economic advantage, but does not cite any specific state or federal law. The ninth counter claim cites trade libel “through implementation of its 'TrustedDWG Technology' Autodesk willfully, without justification, and without privilege, communicated or caused to be communicated through written means to users of its AutoCAD product, certain false, misleading and disparaging information.”
The ODA seeks both a preliminary and permanent restraint of the alleged illegal behavior, an award of unspecified monetary damages as well as punitive damages and repayment of ODA's costs. ODA also asks that Autodesk be required to publish “corrective advertising... that informs consumers, the trade and the public at large of Autodesk's unlawful conduct.” Other demands include replacing the existing statement when AutoCAD opens a .dwg file created by an ODA member with “a neutral statement,” the elimination of the TrustedDWG pop-up box, and “such other and further relief as the court may deem just and proper.”
The next court date, where these counter charges will be reviewed by Federal Judge Marsha J. Pechman in Seattle, is set for February 20, 2007. A copy of the filing in PDF format is available as item 42 on the “Lawsuit Tracker” page maintained by Owen Wengerd of CADlock.
Past articles on the Autodesk v Open Design Alliance lawsuit:
November 20, 2006: “Autodesk Sues Open Design Alliance for Trademark Infringement.”
November 20, 2006: “Autodesk Statement Regarding Lawsuit against Open Design Alliance.”
November 22, 2006: “Text of Autodesk Complaint Against ODA in AECnews Gallery.”
November 22, 2006: “Court Favors Autodesk, Grants Temporary Restraining Order Against Open Design Alliance.”
November 22, 2006: “Documents from Autodesk v. Open Design Alliance Available for Download.”
November 24, 2006: “Drawings, Rolexes, and Unclean Hands: Autodesk and the Open Design Alliance Face Off in Federal Court.”
November 27, 2006: “Open Design Alliance Complies with Court Order, Pulls Offending Code.”
December 14, 2006: “Owen Wengerd Does the Heavy Lifting, Creates Autodesk v. ODA Repository.”
December 15, 2006: “Open Design Alliance Releases New DWGdirect Libraries to Comply with Court Order.”