http://www.theregister.com/2006/11/10/gpl_wallace_appeal/
Alexander Terekhov wrote: > > ------ > Free software still legal - judge > > GPL passes bizarro world anti-trust test > > By Kevin Fayle in San Francisco ? More by this author > > Published Friday 10th November 2006 17:35 GMT > > Get The Register's new weekly newsletter for senior IT managers > delivered to your inbox, click here. > > Silicon Justice Daniel Wallace certainly gets points for effort and > determination. > > After suing the Free Software Foundation (FSF) in 2005 for price-fixing > and finally losing earlier this year, Wallace filed an action against > IBM, Novell and Red Hat alleging that the companies' distribution of > Linux under the GNU General Public License (GPL) violated US federal > antitrust law. Not to be deterred by the dismissal of this new case > after the district court judge found that he didn't have a leg to stand > on, Wallace kept fighting the free-software "conspirators" right up to > the Court of Appeals for the Seventh Circuit. That court affirmed the > dismissal this week, after finding that Wallace did indeed lack even the > slightest shred of a case against the companies. > > At first glance, Wallace's main argument is intriguing. After it sinks > in, however, its appeal only lingers for extreme literalists or > Microsoft executives. > > The argument goes something like this: since the source code for Linux > is free for everyone, and since the companies involved have all > contributed to the source under the GPL, the companies have formed a > conspiracy to engage in predatory pricing with the aim of forcing > smaller developers out of the software market. Essentially, by giving > software away, they have stifled competition by creating an environment > where small developers can't compete with Linux's price-point. The GPL > functions as the conspiracy in this strange world, since it is a common > effort to pull the price-rug out from under any potential competitors. > > Let's start right there, eh? The Seventh Circuit panel's opinion, penned > by the prolific and learned Chief Judge Frank Easterbrook, smacks this > reasoning down with a lingering noise of fingers-on-face that makes the > spine tingle. Judge Easterbrook sees this logic as an attempt to "turn > the Sherman Act on its head" by using antitrust law to drive prices up > by preventing people or companies from distributing free (as in speech) > software. > > Remember that the goal of antitrust law is to encourage competition in > order to keep prices low for the benefit of consumers. Thus, if prices > remain at the lowest level possible through competition, there is no > antitrust violation. In US antitrust law, a predatory pricing scheme > involves three steps: first, there is a period of artificially low > prices; next, competitors fall out of the market; finally, the predatory > company achieves monopoly pricing. If no monopoly arises, then low > prices remain. > > Since the prices in question couldn't get much lower, Easterbrook > argues, it is clear that the companies have not engaged in predatory > pricing. Software distributed under the GPL could never result in > monopoly prices, Easterbrook claims, since the GPL keeps prices low > forever and encourages an increase in output by making source code easy > to build on. In fact, according to the judge's logic, the GPL is a > weapon against monopoly (read: Microsoft), not a means to achieve it. > > Moreover, Easterbrook writes, proprietary software still has a huge > market share, and many people continue to choose proprietary software > over alternatives available under the GPL. The number of proprietary > OS's continues to increase despite the fact that the GPL is encouraging > the "dumping" of free software products on the market. Since competition > remains healthy, according to Easterbrook, the low prices enabled by the > GPL do not constitute predatory pricing. > > Easterbrook also took exception to Wallace's labeling of people and > companies who utilize the GPL as "conspirators." Antitrust law prohibits > conspiracies with "restraint of trade" as their goal. In the case of the > GPL, however, Easterbrook states that the GPL doesn't restrain trade in > the slightest. Instead, he argues, it is a cooperative agreement that > encourages new products and derivative inventions. And even though these > new products might be clunky, difficult to use and inaccessible to all > but the geekiest of geeks, such a cooperative is not illegal. > > Wallace also chose to renew his price-fixing argument here, which fared > no better with Chief Judge Easterbrook than it did with the judge in the > FSF case. While the GPL does, literally, fix the price of the source > code at zero, Easterbrook states, maximum prices are usually a good > thing for consumers. As such, they are evaluated under the Rule of > Reason. > > The Rule of Reason is an antitrust rule that, in essence, states that > only unreasonable restraints on trade are subject to antitrust laws. A > maximum price is, technically, a restraint on trade because it restricts > price opportunities. Since intellectual property law gives creators the > right, but not the obligation, to charge for their property in order to > recover fixed costs, however, and since open-source software creators > have been able to cover their fixed costs through donations of time, it > would be ineffecient and harmful to consumers to force developers to > charge for their source code. Thus, free software is perfectly > reasonable, and survives this sort of antitrust scrutiny. > > In summation, Chief Judge Easterbrook assuages any remaining fears that > the open-source community might have by definitively stating that "[t]he > GPL and open-source software have nothing to fear from the antitrust > laws." > > And not even the entry of antitrust-rogue Microsoft into the open-source > game can screw that one up. ® > > Kevin Fayle is an attorney, web editor and writer in San Francisco. He > keeps a close eye on IP and International Law issues. > ------ > > He he. regards, alexander. _______________________________________________ gnu-misc-discuss mailing list [email protected] http://lists.gnu.org/mailman/listinfo/gnu-misc-discuss
