April 14, 2010, 3:34 PM — Since I wrote about Adobe considering taking Apple to court over the new iPad/iPhone SDK (software development kit) licensing restrictions, Adobe hasn't officially added anything to the story. And, neither have my sources. That said, I have spoken to several prominent attorneys about what Adobe might try to do and here is what they told me.
Before going into that though I've heard from some people asking why Adobe and Apple are at such loggerheads. It's true that historically the two companies have worked well together. You could argue that the pairing of the early Mac and Adobe Photoshop is what made both the Mac and Photoshop so popular. Over the years, though, the companies have also often not seen eye-to-eye. For example, Adobe has sometimes delayed Adobe software releases for the Mac platform in favor of Windows.
The immediate cause though is that, as a Slashdot commentator put it so well, "Apple changed the rules without telling Adobe. It's as if you worked for 2 years on a shiny sports car only to be told, 3 days before you'd be able to take it on the road, that its category had been banned from using the roads ever again. I don't think Adobe would've been that p**sed off had Apple told them BEFORE they started working on their Flash exporter." By handicapping Adobe in the already lucrative iPhone/iPod Touch software development market and the remarkably hot iPad market, Adobe has apparently decided that enough is enough.
Now the question is how to go about it. No matter what route Adobe chooses, it won't be easy.
As Thomas Carey, chairman of the business practice group at Sunstein, a technology and intellectual property law firm, observed: "Adobe could sue on antitrust grounds, arguing that Apple has market power in the smartphone and tablet computer markets, that it is locking Adobe out as a competitor for app sales, and that it has no rational basis for doing so. It would further try to find some way to allege that there is a per se violation of the antitrust laws, placing Apple in the more difficult position of having to prove that there is no less restrictive means of achieving whatever legitimate objective it may have formulating its SDK license restrictions. It may also seek to allege a 'refusal to deal' complaint based upon the Clayton Act and/or the Sherman Act."
Well, Adobe could, but Carey continued: "Unfortunately for Adobe, to date the courts have sided with Apple in addressing these questions.
Still, Carey added: "It is also possible that Adobe would proceed first in Europe, arguing that the iPhone and/or the iPad is an essential facility that antitrust laws require be opened up to all comers. This strikes me as equally unlikely to succeed, but I am not a European lawyer."
Carey continued, "It will not help Adobe's cause that Google has released Android as a competitive platform, thus making Apple not the only game in town." Indeed, there are quite a few Linux-powered iPad like devices already on their way.
But are there other legal alternatives? Lee Gesmer, one of the founders of Gesmer Updegrove, a business and technology law firm, starts with the basics: "Assume I control a technology. Assume further that I create a contractual wall -- a walled garden -- that prevents you from developing software for that technology. At its most basic, this is what Apple has done. Is this legally actionable?"
And the answer is, according to Gesmer: "At the highest level of generality, the answer is 'no.' Assume I am Apple, you are Adobe. I have said to the world, I do not want Adobe Flash on my i-Devices. The way in which I will enforce that is to require all developers for i-Devices to agree (directly or indirectly) not to enable Flash on i-Devices. In this case, I require all developers to agree that they will not use cross-platform compilers. I have a gated community, and you may not enter."
Now "The law permits this," Gesmer continued, but there are exceptions. Gesmer remarked that these include:
1. It would be an exception if you and I have a contract which this action violates, explicitly or implicitly.
2. It could be an exception under antitrust principles if I have a very high market share. However, in the Apple/Adobe scenario, it seems unlikely this argument would have any traction. Apple does not have a high market share (although this may be arguable in sub-i-markets).
3. I could argue that this license requirement is a form of boycott (joint refusal to deal imposed by you on the market). Again, this would be based on antitrust principles, and likelihood of success is low, but not zero.
The bottom line, concluded Gesmer, is that: "In a legal vacuum, Adobe has a very tough case. If there is some contractual or legal relationship that Adobe can use to leveral a legal argument, they will have a much better chance of success."
Does Adobe have such an ace up their sleeves? We're going to have to wait and see.
