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Saturday, November 11, 2006

Indiana Decisions - Commentary on 7th Circuit's open source ruling [Updated]

Commenting on Judge Easterbrook's opinion this week In Wallace, Daniel v. Int'l Business Machines (SD Ind., Richard L. Young, Judge) (ILB entry here), Infoworld reports, in a story headed "Open Source holds up in court":

"[T]he GPL and open-source have nothing to fear from the antitrust laws," writes The U.S. Court of Appeals for the Seventh Circuit's Judge Easterbrook, reports InternetCases.com.
Plaintiff Wallace filed an antitrust suit against IBM, Red Hat and Novell, arguing that those companies had conspired to eliminate competition in the operating system market by making Linux available at an "unbeatable" price (free) under the General Public License ("GPL"). The U.S. District Court for the Southern District of Indiana dismissed the case, finding the plaintiff had suffered no antitrust injury. The Seventh Circuit affirmed.

"Although antitrust law serves the interests of consumers rather than producers, the Supreme Court has permitted producers to initiate predatory-pricing litigation," Judge Easterbrook wrote in the November 9 decision. "This does not assist Wallace, however, because his legal theory is faulty substantively."

Attorney Evan Brown, writing for InternetCases.com, notes, "Perhaps most significantly, Wallace had not contended that software available under the GPL would lead to mononpoly prices in the future. The court observed the anomalous thinking behind any conclusion that it would, 'when the GPL keeps price low forever and precludes the reduction of output that is essential to monopoly.'"

InfoWorld's Matt Asay writes in the Open Sources blog:

Besides a weak understanding of the law, Wallace is unfortunately mired in the proprietary past. His economic reasoning actually resembles that of the proprietary software vendors today. They may actually be dumbfounded by Easterbrook's reasoning. :-)

But let me state it clearly for the record: open source does not mean you have a divine right to profit margins or revenues. It's about freedom. The ability to make money from it is something you have to earn.

Actually, Matt Asay's entire post - titled "The GPL doesn't violate US antitrust law (Duh!)" - is well worth a read - access it here.

[Updated] The ILB took a look at some of the briefs in this case, available here (06-2454). Defendant-Appellee IBM was represented by Barnes & Thornburg, Defendants-Appellees Red Hat and Novell were represented by Ice Miller. There appears to be no brief on file for Plaintiff-Appellant Daniel Wallace.

Posted by Marcia Oddi on November 11, 2006 08:08 AM
Posted to Ind. (7th Cir.) Decisions