Talk about a clean victory – 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 (GPL) – the United States Court of Appeals for the Seventh Circuit has just affirmed the dismissal of the complaint and declared that the "GPL and open-source have nothing to fear from the antitrust laws."

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

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. 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 to for the physical media on which it resides and for assistance provided relating to the software. Not surprisingly then, manuals and the time and support of people who provide 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 argues that he has been barred from doing so while Linux and its derivatives can be obtained at no charge. He asserts that IBM, Red Hat and Novell have conspired to eliminate competition in the operating system market by making Linux available at an "unbeatable" price – for free.

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

The court added that even with free Linux and other open-source products available, "people willingly pay for quality software." Examples include Microsoft Office – notwithstanding free open-source Open Office, and Adobe Photoshop – notwithstanding free open-source Gimp.

And the same is true with operating systems. Many more people use Microsoft Windows, Apple OS X, and Sun 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 following partial lyric of Dire Straits under their breath: "money for nothing," 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 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 with the word "Subscribe" in the subject line.

Disclaimer: This column is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.

Reprinted with permission of Findlaw.com