Re: EASTERBROOK's "quick look" on the GPL and Wallace's claim

[Alexander Terekhov]

More coverage...

http://news.com.com/2010-7344_3-6137894.html

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Perspective:  How GPL fits in with the future of antitrust regulation

By Eric J. Sinrod
Published: November 22, 2006, 10:04 AM PST

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perspective Talk about a clean victory.

The "GPL and open-source have nothing to fear from the antitrust laws,"
declared the U.S. Court of Appeals for the Seventh Circuit recently.
That was in response to a federal complaint charging IBM, Red Hat and
Novell with conspiring to thwart competition in the operating-system
market by providing Linux free of charge under the GNU General Public
License. The appeals court affirmed the dismissal of the complaint.

The court was called upon to determine whether supplying copyright
software under the GPL violated federal antitrust laws. Pursuant to this
license, devised by the Free Software Foundation, authors who distribute
works authorize not only copying but also the creation of derivative
works.

People are permitted to make and distribute derivative works only if
they adhere to the same license terms as the original work. Accordingly,
as noted by the court, "the GPL propagates from user to user and
revision to revision; neither the original author, nor any creator of a
revised or improved version, may charge for the software or allow any
successor to charge."
The decision pointed out that "the goal of antitrust law is to use
rivalry to keep prices low for consumers' benefit."

One well-known example of free, open-source software, as discussed by
the court, is the Linux operating system, a derivative of the Unix
operating system created by AT&T long ago and now available for free.
Linux, at first the work of Linus Torvalds, currently is maintained by a
wide open-source international community.

IBM offers Linux with some of its servers, and Red Hat sells DVDs,
manuals and support for the maintenance of Linux. It is important to
recognize that the GPL only covers software. Therefore, people are
allowed to charge for the physical media on which it resides and for
assistance relating to the software. Not surprisingly then, manuals,
service and support are the most expensive components of using Linux.

The plaintiff in the case, Daniel Wallace, has wanted to compete with
Linux by offering a derivative work or by writing an operating system
from the ground up. He argued that he has been barred from doing so,
while Linux and its derivatives can be obtained at no charge. He
asserted that IBM, Red Hat and Novell have conspired to eliminate
competition in the operating-system market by making Linux available at
an "unbeatable" price: free.

The court found Wallace's theory to be "faulty substantively." The
decision pointed out that "the goal of antitrust law is to use rivalry
to keep prices low for consumers' benefit." Here, the court concluded
that Wallace sought to employ "antitrust law to drive prices up," which
would "turn (antitrust law) on its head."

Even with free Linux and other open-source products available, the court
added that "people willingly pay for quality software." Examples include
Microsoft Office--notwithstanding free open-source Open Office--and
Adobe Photoshop--notwithstanding free open-source Gimp.
Now on News.com:

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The same is true with operating systems. Many more people use Microsoft
Windows, Apple Computer's Mac OS X, and Sun Microsystems' Solaris than
Linux. Accordingly, as stressed by the court, and in contravention of
Wallace's claims, the number of proprietary systems is growing--meaning
that competition in the market continues, even though the GPL allows for
the availability of Linux.

Perhaps when the court boldly declared that "the GPL and open-source
software have nothing to fear from the antitrust laws," the justices
could be heard singing the Dire Straits' song Money for Nothing under
their breath--as people can use Linux for free to make money in their
business ventures. (They only are precluded from charging for making
derivative works.)

Biography

Eric J. Sinrod is a partner in the San Francisco office of Duane Morris.
His focus includes information technology and intellectual property
disputes. To receive his weekly columns, send an e-mail to
ejsinrod@duanemorris.com with "Subscribe" in the subject line. The views
expressed in this column do not necessarily reflect those of Sinrod's
law firm or its individual partners.
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He he. Uh drunken EASTERBROOK.

regards,
alexander.