Addamax Corp. v Open Software Foundation, Digital Equipment Corporation and Hewlett-Packard Company

Addamax Corporation  contended in an antitrust suit against the OSF and others,  

"Yet, Addamax was driven out of business, not because its product failed in the marketplace, but because the defendants and the coordinated exercise of their power prevented Addamax from competing for sales… For all this stipulated injury, Addamax asks this Court to award it damages in the amount of $51,175,000, plus treble damages and attorneys' fees."  

OSF and its member must have breathed a collective sigh of relief when Boston District Court Judge Trauro found on May 21, 1997

"It is not enough for Addamax to allege that its injury was caused by defendant's antitrust violations. It must show that the violation was a "material cause" of its injury. As the court stated above, the computer industry is an inherently risky business. Technology advances quickly. Addamax started off too slowly, and when it finally caught up, it suffered from a malady faced by many companies in many fields. The customers did not want to buy its products. Beneath the layers of technical computer jargon is the undeniable fact that Addamax was an ineffective company trying to sell security software's version of the ford Edsel. The fact that Addamax's woes coincided, in part, with the rise of OSF is mere coincidence and not the results of any alleged antitrust violations. The court, therefore, finds that defendant's conduct was not a material cause of any of Addamax's losses. For the reasons mentioned above, the court holds that Addamax is not entitled to any damages. An order will follow."

888 F. Supp. 274 (D. Mass. 1995), later proceeding, 964 F. Supp. 549 (D. Mass. 1997), aff’d, 152 F.3d 48 (1st Cir. 1998). Addamax challenged actions of group of computer sellers who set standards for operating system technology. 

On summary judgment, the court (1) found antitrust injury because of the computer sellers’ power in the downstream market for PC’s, and (2) rejected the concept that standard setting body as a joint venture acted unilaterally or was insulated from section 1 liability simply because it was a valid joint venture. The court rejected per se treatment, and applied the rule of reason. The court found triable issues as to market power and anticompetitive effect because of the group’s ability to affect industry standards and factual issues with respect to anticompetitive intent based on certain documents. Ultimately, defendants prevailed at trial.

 

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