Reprinted with permission from CNET News
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.
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.)
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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