Evan on Engineering Software

If you are now, or during 2008 were, a member of the Open Design Alliance, you should read this post. It discusses some issues which may directly affect you.

As most readers of this blog know, I have a long history with the ODA, as I was its president up until late 2006. Since then, I have tried to avoid commenting on ODA issues as much as I can. Sadly, I must speak up now.

During the calendar year 2008, the ODA required many of its members to sign new membership agreements. The terms of those agreements were less favorable than the existing agreements. The ODA terminated some or all of the members who declined to sign a new agreement.

In doing this, the ODA almost certainly overstepped its authority, violated existing membership agreements, and likely broke the law.

This issue directly affects me, because I'm a member of the ODA. But it affects many other people as well.

Despite having tried to discuss the issue with the ODA's current management, I've been stonewalled. Worse, the ODA's attorney has indicated that the ODA plans to sue me.

Ever since I left the ODA, I've worked behind the scenes on its behalf.  I briefed the ODA's attorneys in the first Autodesk v. ODA case, giving them critical information they couldn't have gotten elsewhere.  In the second Autodesk v. ODA case, I saved the ODA from being sanctioned, provided a deposition that may have short-circuited Autodesk's case, and influenced the ODA's attorneys to file a motion that put the case on hold (for now.)  So, this situation is ironic.

History

If you've been around the CAD industry for a while, you might remember 1997, when Autodesk signed a consent decree with the FTC. Announcing the consent decree, the FTC said:

The large installed base of AutoCAD users necessitates that any new CAD engine developed and offered in the market offer file compatibility and transferability with AutoCAD in order to be an effective competitor, the complaint alleges. Users of AutoCAD have a large number of drawings in the AutoCAD format and many users must share files they create with others who must be able to read and edit those files using their CAD software. This situation creates barriers to entry to CAD engines that cannot read AutoCAD files without losing data or information.

A year after the consent decree, things weren't whole lot better. Autodesk was taking steps that had the effect of making it harder and harder for competitors to support reading and writing of DWG files compatible with AutoCAD. Visio, then in a direct competitive position against Autodesk, got together with a number of other Autodesk competitors, and founded the non-profit OpenDWG (now Open Design) Alliance, which offered the OpenDWG Toolkit and Viewkit: C-language software libraries for reading, writing, and viewing DWG files.

The ODA (As it's become known) was structured in such a way as to guarantee that anyone who wanted to use its libraries could do so. It was intended to be crush-proof: structured so that neither Autodesk, Visio, nor any member of the ODA could kill it off. If it did die, its libraries would be donated to another non-profit organization, to assure they'd always be available.

Membership in the ODA was open to anyone (even Autodesk!) Commercial software developers who wished to include the ODA libraries in their products could join at one of three commercial membership levels, with the annual membership dues varying based on the volume of "member applications" distributed per year, and on whether the developer wanted access to the libraries' source code.

Individuals or organizations who wanted to use the libraries in products that were not distributed commercially could join at the "Associate Member" level. Membership at that level was free, and open to all. To join, the prospective Associate Member only had to agree to a click-through membership agreement on the ODA's website. At one point, the ODA had over 30,000 Associate Membership records in its database. Though that number included a lot of duplicates and dormant members, the numbers were still pretty impressive.

The ODA ended up being fairly successful. In addition to the Toolkit and Viewkit, it developed some new libraries: DWGdirect, and DGNdirect -- the latter with the approval of Bentley Systems (creators of MicroStation, for which DGN was the native format.) As a part of the negotiation process with the ODA, Bentley asked that the DGNdirect libraries only be made available to members who had a signed agreement on file. This seemed like a reasonable precaution: Autodesk had at least once gone to the ODA website, agreed to the click-through membership agreement, received their access password via email, downloaded each and every library on the ODA's website, then denied they did it. (The ensuing conversation about this, between the ODA and Autodesk, was pretty interesting, to say the least.)

How to get Associate members to sign written membership agreements? (Commercial memberships had always been in written form.) The solution was actually in the original click-through membership agreement: Whether by intent, or because the lawyers hadn't thought it through, it only granted members access to the Toolkit and Viewkit. Because the new libraries were distinct, with distinct names, it gave the ODA an opportunity to ask members who wanted access to those new libraries to sign updated membership agreements (which included a more general license grant to use any and all ODA libraries.) The overall terms of the updated Associate membership agreement were essentially the same as the click-though agreement, so the members didn't lose anything in signing it, other than the hassle of having to fax or mail a copy of it to the ODA. Those who didn't want to sign the updated agreement weren't terminated -- they just couldn't access the newer libraries. (For many members, this was not a problem, because they didn't need the newer libraries.)

As of the end of 2006, the ODA had on the order of 3,000 Associate Members with signed agreements. The Associate membership agreement was notable, in that it was perpetual. Generally, the only people who were at risk of having their Associate memberships terminated were those who distributed their "member applications" commercially. And those people only had to upgrade to one of the commercial-level agreements to be back in good graces. The Associate membership agreement also specifically said that the member was not required to pay any fees.  Associate membership was completely free.

The ODA Changes Its Mind

From late 1998, to late 2006, I was the executive director and president of the ODA. After I was gone, Arnold van der Weide became president. Sometime in 2007, the board approved a proposal by van der Weide to start charging Associate Members an annual fee: $250 first year, $100 a year thereafter. The ODA started implementing this process at the beginning of 2008.

When I first heard about this, I asked myself "how can they do that?" For eight years, I'd been responsible for revising, interpreting, and signing ODA membership agreements. I knew the Associate membership agreements were perpetual, and free.

I dicovered how the ODA was doing it on December 31, 2008, when I got an email from a clerk I'd hired some years back at the ODA. (I own a software company, PureCor, Inc., that is an ODA Associate member. The company has one owner, no employees, and is not shipping any products.) The email said this:

Effective January 1, 2008, associate memberships in the Open Design Alliance are subject to a renewal process and fee of US$100.00.

As part of this renewal, we need to have an updated agreement on file for PureCor Inc’s membership. Please initial pages 1-8, complete pages 9-11 (please print legibly), and send all 11 pages via fax or postal mail at your earliest convenience. You will also receive an invoice for US$100.00 attached to an e-mail from officeadmin@opendesign.com. There is a link in that e-mail that you will use to pay the invoice via credit card. If you do not receive this e-mail, with the invoice attached, please let us know.

If you choose not to maintain the membership, please send an e-mail to officeadmin@opendesign.com instructing us to terminate the membership. Once the membership is terminated, you must cease using our libraries and destroy all copies in your possession.

PLEASE NOTE - Payment and a completed agreement must be received within 30 days of the invoice date if you want to maintain the membership. If the agreement and payment are not received, the membership will be terminated. If, after termination, you want a membership, you will need to pay an initial fee of US$250.

Attached to this email was a PDF copy of a new Associate Membership Agreement.

A few things struck me immediately:

• They were requiring an annual fee.

• They were requiring that I sign a new agreement.

• The new agreement was annual, rather than perpetual.

• The new agreement permitted any amount of fees that the ODA board chose to impose.

• The new agreement was actually an "application for membership," and could be rejected by the ODA, at its own discretion.  This completely transformed the nature of the ODA, changing it from an open organization to a closed organization.

In short... the ODA was simply ignoring the terms of existing Associate membership agreements, and saying "sign and pay, or your out."

I chose not to respond.

On January 30, 2009, I received an email from the same clerk, saying the following:

Last month, you were sent an e-mail regarding PureCor Inc’s associate membership. In order to maintain that membership, you were to return an updated associate membership agreement, as well as remit payment for a membership renewal fee in the amount of US$100. Also, as indicated in the e-mail and on the invoice, the membership would be terminated in 30 days from the invoice date if the agreement and the payment were not received.

To date, I have not received a signed copy of the agreement or payment for the membership renewal. Therefore, on behalf of the president, PureCor Inc’s associate membership with the Open Design Alliance is terminated, effective immediately. As a result of termination, you no longer have a license to use our software- you are no longer allowed to use our libraries and you must destroy all copies of the libraries in your possession.

If, after receiving this e-mail, you require an associate membership, you will need to complete an updated associate membership agreement and pay an initial fee of US$250.

Two things were interesting about this email:

• The existing Associate membership agreement required a 30 day notice of breach. The ODA couldn't terminate a member's agreement unless they gave them notice of a breach, then gave them 30 days to fix it. The first email hadn't actually included a notice of breach.

• The clerk who sent the message was not likely authorized by the board of directors to terminate memberships. The message was "signed" by the ODA office manager, who may have been authorized by the president. But, since the notice didn't come directly from her, it didn't seem legit.

I did respond to this email, as follows:

I don't really like the terms of the new agreement, so I'd prefer to maintain the existing membership agreement, unless there's some reason I can't.

As for termination -- if you want to do it, you're going to need to do it per the terms of the existing membership agreement. In any event, I'd like to see the updated bylaws and the relevant (signed) board meeting minutes.

This time, I got a response from Shawn Lindsay, the ODA's attorney. It included a PDF file, with a poorly scanned copy of a letter. (I think attorneys do this to keep people from easily quoting them.) It said, in in part:

You failed to respond and pay your invoice with the 30 days and, accordingly, your associate membership agreement was terminated pursuant to Section 4.2 of the agreement. As a result of termination, PureCor no longer has a license to use the ODA libraries, is no longer allowed to use the ODA libraries, and must destroy all copies of the libraries in PureCor's possession. Please reply within fourteen (14) days of this letter to confirm you have complied. You will also note that PureCor, Inc. is still required to comply with Section 4.3 of the agreement.

I knew what sections 4.2 and 4.3 of the agreement said. (After all, I was paid to interpret them for 8 years.) I responded, probably not in the way Lindsay wanted:

My understanding of the terms of the existing ODA Associate membership agreement is that it requires a notification of breach, with 30 days to cure that breach. The ODA hasn't followed that requirement. Jessica simply sent me a letter saying PureCor's membership was terminated, with no notice of breach or cure period. Further, so far as I know, Jessica is not an authorized person for purposes of terminating memberships. So, I consider any purported termination of PureCor's membership in the ODA to be null and void.

I'll pay the $100 membership fee, subject to reviewing the relevant bylaws and board minutes supporting the imposition of this fee. Additionally, prior to signing a new membership agreement, I'd like to see the relevant documentation supporting the requirement to do so.

I didn't hear back from Lindsay for some time, so I sent him a reminder:

On the chance that you either didn't get my email, or were ignoring it, I'm resending it.

I realize this is just a little Associate member contract issue for you -- but I'd suggest that it's worth handling with thoughtfulness and care.

If I don't hear back from you with a substantive response by this Friday noon, I'll escalate this matter.

He did respond this time (two weeks later):

We have reviewed your correspondence. The ODA terminated PurCor's associate membership agreement properly and according to the contract. You were provided proper notice of changes to the ODA's associate membership program (which was revised pursuant to board resolution) and you were given 30 days notice to comply with the new associate program by paying the $100 fee. You failed to do so. In other words, you had 30 days to pay/comply/cure by paying the $100. You didn't. Accordingly, PurCor's associate membership agreement was properly terminated pursuant to Section 4.2 of the agreement. With respect to Jessica, she was authorized to act on behalf of the ODA.

According to my letter to you dated February 5, 2009, you had until Thursday, February 19, 2009 to reply that you had complied with the termination provisions of your associate membership agreement. We will extend your reply due date until Wednesday, February 25, 2009. We look forward to hearing back from you by then.

I thought maybe Lindsay hadn't actually read the existing Associate Membership agreement. So, I made it easy for him:

Here is the exact language of Section 4.2 of the agreement:

The Alliance may terminate Member's membership in the Alliance if Member fails to adhere to any Rules approved by the Alliance, breaches any material provision of this Agreement (including, without limitation, Section 2.3), and further fails to remedy such nonperformance, noncompliance within thirty (30) days following receipt of notice from the Alliance. The Alliance's right to terminate Member's membership in the Alliance is in addition to any other rights and remedies that may be available to the Alliance, whether at law, in equity or otherwise.

Section 2.2 of the agreement says, in full:

As an associate member of the Alliance, Member will not be required to pay, in accordance with this Agreement and the Rules, any dues, fees or assessments to the Alliance.

And Section 6.6 says, in full:

This Agreement sets forth the entire agreement, and supersedes any and all prior written and oral representations, and agreements, between the parties with respect to the subject matter hereof. This Agreement may not be modified or amended except by written instrument duly executed by an authorized representative of each party. Any attempted or purported amendment, modification or waiver that does not comply with this requirement will be null and void. In the event of any conflict between the terms and conditions of this Agreement, and the terms and conditions of any other agreement between the parties now or hereafter in effect, the terms and conditions of this Agreement will govern and control.

If you respond to me by end of business Tuesday with a retraction of the purported termination, I'll be inclined to consider the issue closed. If you do not do so, I will take whatever steps I deem necessary to protect my interests.

To avoid misunderstanding, I am copying Arnold on this email. If you or he would like to have a phone conversation, to discuss this matter, my phone number is XXX-XXX-XXXX

I think, by this point, he was getting irritated with me:

No need to rehearse the contract language to me; like I previously stated, I read and reviewed the agreement. Bottom line: your interpretation is wrong.
Shall I consider this your response or will you still be responding by 2/25?

No need for you to do any more saber rattling. The ODA will enforce its rights.

That part about "The ODA will enforce its rights" is lawyer-speak for "we are going to sue you." Here's my response:

I thought that, possibly, you'd not actually read the agreement recently, since your interpretation of it seemed so incongruent with its plain language.

The ODA's purported cancellation of PureCor's associate membership agreement is without any legitimate basis, and is therefore null and void. As a result, PureCor continues to be a member in good standing of the ODA, and there is no need for it to comply with the termination provisions of the associate membership agreement.

I expect the ODA to live up to its continuing obligations under the agreement.

Please forward to me the current bylaws, a list of directors and officers, all board minutes and resolutions from 8/06 to date, and copies of all rules.

At this point, he was, I think, trying to get me to shut up:

As stated in my prior correspondence, your associate membership agreement was terminated January 30, 2009. You refuse to comply with the termination provisions. The ODA will seek to enforce the termination provisions of the agreement. The ODA will not entertain any further requests.

Here he reaffirmed that the ODA is planning to sue me.

After this, I thought it would be wise to have copies of the current ODA bylaws and rules, as they were referenced by the new (and old) membership agreements. So, I sent an email to Lindsay, asking for them. And got no response.

My next step was to send an email to the van der Weide:

Arnold,

You're certainly aware of the interactions I had with Shawn Lindsey in February, regarding my company's Associate membership agreement, and the $100 invoice the ODA had sent at the end of 2008.

Here is Shawn's final word:

"As stated in my prior correspondence, your associate membership agreement was terminated January 30, 2009. You refuse to comply with the termination provisions. The ODA will seek to enforce the termination provisions of the agreement. The ODA will not entertain any further requests."

That, of course, is more than a threat. It is a direct statement that the ODA intends to sue me.

I'd like to suggest that you call me, and we discuss this issue. It's actually far more serious than you might imagine.
My phone number is XXX-XXX-XXXX.

This got a quick response, not from van der Weide, but from Lindsay:

I am in receipt of your email last week, your voicemail of today's date,
and your email to Arnold. As you have already been informed, your
associate membership agreement was terminated. The ODA will not be
providing you copies of its Bylaws and Rules.

My final email was this, sent to van der Weide:

Arnold,

I wanted to make sure I'm not misunderstanding: I see no other way to interpret Shawn's refusal to provide me with the Bylaws and Rules than as a refusal by the ODA to enter into a new membership agreement with me.

There was no response.

What to do?

I suppose there are a few ways this exchange could play out:

• I could sue the ODA. I'd have to do that in Seattle (King County), WA, as the agreement requires that. (The ODA is a Washington Nonprofit Corporation.) It would cost me tens or hundreds of thousands of dollars.

• I could wait for the ODA to sue me (Also in Seattle.) I believe, but am not certain, that the statue of limitations gives them two years to do it -- so the fact that I've not heard anything from them for the last month means nothing.

• Even if the ODA didn't sue me, they have refused to enter into a new membership agreement with me. Since Autodesk would not likely license RealDWG to me, the effect of this is to prevent me from being able to offer DWG support in a software product. And, as DWG is a requirement for entry into the CAD market, the ODA has effectively locked me out of the CAD software market.

• I could figure out something else to do. Which is what I've done.

Class Action

I am now in the process of assisting attorneys in the preparation of a class action against the Open Design Alliance.

I'm not the only Associate member of the ODA that has had to deal with this situation. I'm probably one of about 3,000. Chances are that most of them let their memberships be terminated -- but there are certainly a significant number that paid the bill, and signed the new agreement.  As it's likely that the ODA also forced commercial-level members to sign new membership agreements, the class represented by this action may extend to nearly all ODA members (except for  Founding-level members, who were certainly protected by the board of directors.)

This is, sadly, an elegant case. The ODA's actions were unconscionable, willful, and even managed to violate the Washington Nonprofit Corporations act.

While I know the background on this matter, and can provide a detailed memorandum of points and authorities to the attorneys, I cannot be a lead plaintiff in a class action against the ODA, because I'm not "typical" of other members in the class.

I am looking for ODA members, either former or current, who might be willing to be lead plaintiffs. If the ODA told you that you needed to sign a new membership agreement during 2008, whether you signed or not, you may qualify. The Lead Plaintiffs will control the course and direction of the litigation, and will likely receive an award if the class prevails.  (There is no risk to the lead plaintiffs.  They are not liable for damages to the ODA, no matter the resolution of the case.)

If you are interested in serving as a lead plaintiff, please contact me, at evan@yares.com

Evan Yares

P.S. --  As I will not be a lead plaintiff, I will not profit in any way from this case. If there is a cash settlement, class members (such as PureCor) will likely receive, at most, a refund of any improper fees collected by the ODA. However, to head-off claims that I'm trying to "greenmail" the ODA, I will commit to donate any settlement I may receive to the Electronic Frontiers Foundation.