The other shoe dropped last Tuesday as Addamax Inc launched a massive antitrust action against the Open Software Foundation naming as well Hewlett-Packard Co and Digital Equipment Corp, two of its high-profile founder-sponsors in the suit. The suit, filed in federal court in Massachusetts, follows on the heels of an investigation into the Foundation begun several months ago by the US Federal Trade Commission focusing on alleged antitrust violations stemming from the vaunted Request For Technology scheme for acquiring the add-ons to Unix that it needs. All current indications are that the Trade Commission investigation has broadened of late. Addamax is the privately-held five-year-old Champaign, Illinois-based software vendor whose trusted systems technology was snubbed by the Foundation in favour of SecureWare when it selected a security system for OSF/1 in 1989. It has charged the Foundation, DEC and Hewlett-Packard with violations of the US Sherman and Clayton Antitrust Acts, the Massachusetts Antitrust Act, the Massachusetts Unfair Trade Practices Act and Massachusetts common law. It is seeking a permanent injunction against the Foundation, its seven corporate sponsors or any company from ever marketing the Foundation’s trusted system product.

Royalty-free

Such an injunction, if granted, could effect the Open Desktop software the Santa Cruz Operation Inc is putting together for the Advanced Computing Environment initiative since it is based largely on DEC’s version of OSF/1. Addamax is also asking the court for punitive tripled damages, which the suit itself leaves unspecified but which Addamax president Peter Alsberg estimates could exceed $100m, based on the size of the market and the pricing that existed at the time he claims he was damaged. The complaint alleges that the Foundation and its corporate sponsors have acted as an illegal cartel by conspiring to fix prices for software technology, setting price ceilings in certain markets, and providing competitive advantage to the Foundation’s sponsors by dictating standards favourable to their technologies and strategies. Addamax says it named Hewlett-Packard and DEC rather than any of the other founders because we believe they were particularly visible in directing the Foundation’s illegal activity. The case specifically addresses the Foundation’s acquisition via its Requests for fully paid-up royalty-free perpetual licences to third-party software at prices Addamax contends are below fair market value and even well below the cost of developing the technology. The complaint charges that the Foundation illegally acquired SecureWare’s trusted system technology, bundled it into OSF/1 – effectively an illegal tying arrangement such as has brought IBM Corp to grief in the past and contrary to industry practice sold it at a single all-inclusive price. Since OSF/1 includes security at no extra cost, there is no incentive for an OSF/1 user to buy a competitive security product even if it is superior, Alsberg claimed. That can totally destroy a market for a small independent software vendor like Addamax and even the threat of it gives the Foundation deal or die power.

By Maureen O’Gara

Addamax claims that since the Foundation represents 70% of the worldwide market, it has restrained trade and substantially lessened competition. As proof of the pudding, Addamax says that the instant the Foundation opted to go with SecureWare, the order stream for Addamax’s own B1 secure product, whose clients were largely the Foundation sponsors and members, completely dried up. In fact, Convex Computer Copr, a Foundation member, breached a contract with Addamax and refused to use its product because of the Foundation’s stance, it says. As a result, the company suffered severe revenue loss. It was forced to shut its federal office in Rockville, Maryland, and reduce its 80-strong staff to a skeleton crew of 15 within six months of the Foundation’s decision. Addamax is believed to have filed its suit, which has been expected for some time, in Massachusetts because Massachusetts law i

s favourable to such an action. In addition, it avoids any attempts by the defendants to seek a change of venue and forestall proceedings since both the Foundation and DEC are headquartered in Massachusetts. Addamax claims specifically that the consortium and its sponsors have intentionally tried to drive it from the trusted Unix market by bundling B1 security products, since they aligned themselves with SecureWare. The picture of the the Foundation Request For Technology mechanism that the suit paints is a far cry from the technologically pure process it is supposed to be. The suit maintains that the independent consultants the Foundation hired to evaluate the competing Addamax/SecureWare Request submissions told Addamax that their preliminary assessment favoured Addamax over SecureWare. This evaluation, the suit alleges, caused Hewlett-Packard to despatch Larry Dwyer, a senior executive, to the Foundation to take a principal role in the Foundation’s selection process, an action that itself contravenes the hands-off policy the alternative Unix club claims to apply to its sponsors. Hewlett had already licensed SecureWare’s technology to incorporate it into HP-UX as an unbundled add-on and adapted the operating system to accommodate it.

Pittance

Dwyer was a principal in the company’s acquisition of the product, and because it had a prior financial commitment to the SecureWare technology, and stood to gain a market advantage by a SecureWare win, the suit charges, Dwyer saw to it that the Foundation selected SecureWare for OSF/1 – despite the technical superiority of Addamax. In negotiating with the Foundation, Addamax, which demanded a royalty stream for its technology, was allegedly advised that it either had to deal with the Foundation and accept a pittance in return, or face the destruction of its market and ultimately be forced out of business. On several occasions, the suit says, the Foundation representatives noted to Addamax that whoever the Foundation selected, the other company would be put out of business. Adddamax claims that its Request for Technology submission addressed every mandatory and additional criteria the Foundation set. Addamax also allegedly asked for a licence fee and royalty schedule lower than that bid by SecureWare. However, the Foundation, without formally amending the Request, changed the priority of its selection criteria to emphasise Compartmented Mode Workstation technology, one allegedly important to Hewlett-Packard, above all other requirements. Previously, the Foundation had merely designated Compartmented Mode Workstation as a desirable but not mandatory element of the submission. When Addamax learned from the Foundation that Compartmented technology had become a priority, it sought the Foundation’s permission to build its own technology. The Foundation advised Addamax not to submit a bid, and it failed to win the Request. Addamax maintains there is no justification for the Foundation to bundle B1 class security with OSF/1, a situation unique in the industry; it has asked for a jury trial.