Adobe, Dolby and the Battle Over Your Software

What happens when your legally-purchased software becomes unlicensed...

Last week, Adobe began sending out letters to some of its customers warning them that they were using old versions of Adobe software and that, if they continued, they could face “potential claims of infringement by third parties.”

Though the letter nor subsequent Adobe statements say who the “third parties” might be, the most obvious signs point to Dolby, which has been locked in a year-long legal battle with the software maker.

According to Vice, the letters have gone to users of older versions of Lightroom Classic, Photoshop, Premiere, Animate, and Media Director applications. Users of those versions are advised to upgrade as soon as practical.

However, many users are upset about this. Many, especially those with older projects they need to support, worry that switching to the new versions will cause problems and would much prefer to stick with the versions they are using.

But all of this raises a simple question: What happened and what does it mean for the software subscription model? The answers, as we’ll see, aren’t easy.

Background on the Adobe/Dolby Battle

Adobe Logo

In 2012 Adobe decided to largely ditch the model of selling units of software for a subscription model it dubbed the Creative Cloud.

The idea was straightforward, rather than paying a one-time flat fee for an application, users would pay a monthly subscription and not only use the software, but receive ongoing updates for it. While the model has been controversial, it’s also been seen as a success for Adobe.

However, it also produced a problem for one of Adobe’s partners, Dolby. Starting in 2002, Dolby provided audio technology to Adobe to be used in its software for both encoding and decoding audio. However, the licensing fee was based on sales figures, something that became much more difficult to calculate with the move to a subscription model.

Dolby entered into new licensing agreements both in 2012 and 2013 but it seems that those agreements fell apart pretty quick. The agreements, for example, were supposed to provide for third-party audits but Dolby accused Adobe of not even providing the basics for that.

According to Dolby’s lawsuit, in September 2017, the company announced it was exercising its audit rights for the 2015-2017 period. However, they claim that Adobe failed to provide the needed information, just as they had done for the 2012-2014 period.

Dolby Logo

Dolby also claims that Adobe improperly consolidated multiple software products when paying royalties. For example, offering a bundle that had four apps with Dolby software, but only paying for one use. Other issues included problems with site licenses, multiple sales to a single customer and so forth.

This resulted in the March 2018 lawsuit that is ongoing.

However, even before the lawsuit, Adobe removed Dolby software from its products, instead relying on the operating system to decode Dolby audio and not providing any ability to encode in the format.

Though it’s impossible to say for certain that this is what’s going on, it appears that all of the applications Adobe is warning about are before this late-2017 date, meaning that they are versions with Dolby technology still in them.

As such