Source: http://williampatry.blogspot.com/2006/11/gnu-gnu.html
Timestamp: 2019-04-24 19:49:28+00:00

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Nu Nu is the name of a vacuum cleaner in the deeply annoying TeleTubbies show for children. GNU is something else, it refers to a license distributed by the Free Software Foundation. An unusual antitrust claim was made about it, and rejected in a pithy opinion by Judge Easterbrook. Here is the opinion in full.
INTERNATIONAL BUSINESS MACHINES CORPORATION; Red Hat, Inc.; and Novell, Inc., Defendants-Appellees.
Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:05-cv-678 RLY-VSS-Richard L. Young, Judge.
Daniel Wallace, New Palestine, IN, pro se.
Michael H. Gottschlich, Kendall H. Millard, Barnes & Thornburg, Philip A. Whistler, Curtis W. McCauley, Ice Miller, Indianapolis, IN, for Defendants-Appellees.
Before EASTERBROOK, KANNE, and EVANS, Circuit Judges.
One prominent example of free, open-source software is the Linux operating system, a derivative of the Unix operating system written by AT & T in the 1960s and now available without cost. (Unix® is a trademark of The Open Group, but the source code to many variants of AT & T's work is freely available.) Linux is one of many modern derivatives of Unix-which is not itself under the GPL. Thus Apple Computer, which uses the Berkeley Software Distribution variant of Unix as the foundation for the Mac OS X operating system, is entitled to charge for its software. Linux, initially the work of Linus Torvalds, is maintained by a large open-source community. International Business Machines offers Linux with many of its servers, or customers can install it themselves. IBM has contributed code to the Linux project and furnishes this derivative work to anyone else with an interest. Red Hat, Inc., sells media (such as DVDs), manuals, and support for the installation and maintenance of Linux. The GPL covers only the software; people are free to charge for the physical media on which it comes and for assistance in making it work. Paper manuals, and the time of knowledgeable people who service and support an installation, thus are the most expensive part of using Linux.
Daniel Wallace would like to compete with Linux-either by offering a derivative work or by writing an operating system from scratch-but maintains that this is impossible as long as Linux and its derivatives are available for free. He contends that IBM, Red Hat, and Novell have conspired among themselves and with others (including the Free Software Foundation) to eliminate competition in the operating system market by making Linux available at an unbeatable price. Under the GPL, which passes from user to improver to user, Linux and all software that incorporates any of its source code will be free forever, and nothing could be a more effective deterrent to competition, Wallace maintains. The GPL is the conspiracy as Wallace sees things; it is a joint undertaking among users and creators of derivative works to undercut the price of any potential rival. But the district judge dismissed the complaint, ruling that Wallace does not suffer antitrust injury, see Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977), because he is a would-be producer rather than a consumer.
*2 Although antitrust law serves the interests of consumers rather than producers, the Supreme Court has permitted producers to initiate predatory-pricing litigation. See Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986). This does not assist Williams, however, because his legal theory is faulty substantively.
Predatory pricing is a three-stage process: Low prices, followed by the exit of producers who can no longer make a profit, followed by monopoly prices. The law's worry is the final period in which the survivor (or cartel of survivors) recoups losses incurred during the low-price period. When exit does not occur, or recoupment is improbable even if some producers give up the market, there is no antitrust problem. So the Court held in both Brooke Group and Matsushita. See also, e.g., R.J. Reynolds Tobacco Co. v. Cigarettes Cheaper!, 462 F.3d 690 (7th Cir.2006); Schor v. Abbott Laboratories, 457 F.3d 608 (7th Cir.2006). Either prices will stay low (reflecting efficient production and enduring benefits to consumers) or the practice will be self-deterring (because the predator loses more during the low-price period than it gains later, and consumers are net beneficiaries). When monopoly does not ensue, low prices remain-and the goal of antitrust law is to use rivalry to keep prices low for consumers' benefit. Employing antitrust law to drive prices up would turn the Sherman Act on its head.
Wallace does not contend that software available for free under the GPL will lead to monopoly prices in the future. How could it, when the GPL keeps price low forever and precludes the reduction of output that is essential to monopoly? “[I]f a manufacturer cannot make itself better off by injuring consumers through lower output and higher prices, there is no role for antitrust law to play.” Schor, 457 F.3d at 612.
Software that is not maintained and improved eventually becomes obsolete, and the lack of reward may reduce the resources devoted to maintenance and improvement of Linux and other open-source projects. If that occurs, however, then proprietary software will enter or gain market share. People willingly pay for quality software even when they can get free (but imperfect) substitutes. Open Office is a free, open-source suite of word processor, spreadsheet and presentation software, but the proprietary Microsoft Office has many more users. Gimp is a free, open-source image editor, but the proprietary Adobe Photoshop enjoys the lion's share of the market. Likewise there is a flourishing market in legal treatises and other materials, plus reference databases such as LEXIS and Westlaw, even though courts give away their work (this opinion, for example, is not covered by copyright and may be downloaded from the court's web site and copied without charge). And so it is with operating systems. Many more people use Microsoft Windows, Apple OS X, or Sun Solaris than use Linux. IBM, which includes Linux with servers, sells mainframes and supercomputers that run proprietary operating systems. The number of proprietary operating systems is growing, not shrinking, so competition in this market continues quite apart from the fact that the GPL ensures the future availability of Linux and other Unix offshoots.
*3 It does not help to characterize people who accept the GPL as “conspirators.” Although the antitrust laws forbid conspiracies “in restraint of trade,” 15 U.S.C. § 1, § 26, the GPL does not restrain trade. It is a cooperative agreement that facilitates production of new derivative works, and agreements that yield new products that would not arise through unilateral action are lawful. See, e.g., Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1 (1979); Polk Bros., Inc. v. Forest City Enterprises, Inc., 776 F.2d 185 (7th Cir.1985). Cf. Texaco Inc. v. Dagher, 126 S.Ct. 1276 (2006).
Nor does it help to call the GPL “price fixing.” Although it sets a price of zero, agreements to set maximum prices usually assist consumers and therefore are evaluated under the Rule of Reason. See State Oil Co. v. Khan, 522 U.S. 3 (1997). Intellectual property can be used without being used up; the marginal cost of an additional user is zero (costs of media and paper to one side), so once a piece of intellectual property exists the efficient price of an extra copy is zero, for that is where price equals marginal cost. Copyright and patent laws give authors a right to charge more, so that they can recover their fixed costs (and thus promote innovation), but they do not require authors to charge more. No more does antitrust law require higher prices. Linux and other open-source projects have been able to cover their fixed costs through donations of time; as long as that remains true, it would reduce efficiency and consumers' welfare to force the authors to levy a charge on each new user.
I'll paraphrase a comment I made to Luis Villa's blog.
The GPL does not prohibit any licensee from charging any price they like for copies of the original work, nor for publication or copies of derivative works.
The GPL is a matter of restoring liberty to the licensee and their licensees. And that liberty inlcludes the freedom for a licensee to set a price of their choosing.
This judgement may have a desirable outcome, but it is not based on a correct understanding of the GPL license.
How can you maintain confidence in a judgement (even if you like it) if the judge is not fully informed concerning the difference between an assurance of liberty and a restraint of trade?
There is probably some special term (possibly lexa sinusest) that applies to a case where some of the facts are in error, yet because all the sideline judges have an opinion that the judgement would be the same even if the errors were rectified, they let it stand because they don’t want to embarrass the old bluffer.
Wow. Thanks Crosbie, for pulling out those obvious misunderstandings of the GPL.
I'm sitting here wondering myself how someone - as a judge of law - can actually state such obvious misinformation. If the GPL actually did what the judge claims it did, I would walk out on the GPL today.
It's interesting to note that the original license for the Linux kernel actually restricted anyone from charging money to distribute it. Fortunately, Linus was awakened by those who saw the problems with restricting commercial use of free software and suggested the GPL - which he eventually adopted.
I've been thinking about this a bit more. I suppose the judge actually could be correct in this case. As I understand it, in a very specific sense you can't charge people for the copy of a GPL program itself, but you can charge for the work of providing a copy. This is in the spirit of pointing out and propagating the obvious - that copyright is copyright - not intellectual "property" as many in the industry and law are conditioned to think.
I wish I knew if the judge was aware of that distinction or not. It doesn't appear that we can discern this from the opinion posted here.
Anyway, because I cannot tell, I take back my criticism of the judge's opinion. He may well understand though if he does, he should make clear the distinction as the subtlety of this matter can be confusing even to the most critical of eyes.
I CAN buy a copy of RedHat for $500 and charge you $4,567 for my copy, or any number of copies or derivatives I've made myself.
You may well be happy to pay this, especially if you were a rich heliskier wintering in a log cabin in Alaska and I just happened to be passing by.
The GPL is perfectly fine about this.
Try to remember the motto "Free as in freedom, not as in beer".
Why is freedom such a difficult concept for people to grasp?
Even copyright itself says nothing about whether anyone can charge or not charge for making copies.
The GPL restores your liberty.
Nothing to do with charging money, or selling, etc.
So this guy sues, loses on summary judgment (or 12(b)(6)?), appeals, then loses the appeal 3-0 in an opinion that takes just 2 weeks to write, runs less than 6 pages, and completely dismisses his arguments. Did the defendants ask for attorneys' fees? Seems like they have a good case.
Was there oral argument in this case? I can't find the recording on the Seventh Circuit's web site. Perhaps there wasn't because the plaintiff was pro se.
"Even copyright itself says nothing about whether anyone can charge or not charge for making copies."
Yes, though there is a difference between charging for the copy itself and the act of "making" a copy.
I am mistaken about the GPL. It does not restrict you from charging for the copy itself. After discussing this with RMS, he views both the act of selling the copy and the act of charging for the service of making a copy the exact same thing. In a practical sense, there would be no reason to distinguish the two though perhaps there is something to be said about considering the notion of selling a copy absurd. After all, software is a non-rivalrous idea. It is not a "thing" and so treating it exactly like "property" makes little sense.
And finally, the term "selling software" is covered here. I think I'll avoid using this term as the folks at GNU make a good argument against it.
The judge's opinion is only that the GPL prohibits charging royalties. That's true. His wording may not be perfct, but that's the thrust of the matter.
And the GPL does prohibit charging royalties. You are allowed to charge "for the physical act of making a copy," etc., but royalties are clearly prohibited.
Let's not get sophisticated about language, nor avoid using common words simply because IP maximalists are trying to hijack them to mean different things.
When you buy a book, you buy the book, you do not buy a license to read it and/or sell it.
This applies to software as well.
I can sell an unpublished book I've written to a publisher. I can sell a photocopy of a book to a friend (legitimacy subject to copyright).
In neither case am I selling liberty to anyone. I am either selling my labour or I am selling a copy of it.
The GPL restores people's liberty to buy and sell software, and derivatives thereof - whether unpublished derivative works to publishers, or copies of published works to the public.
Let's not prohibit use of the word buy/sell, just because some corporations would redefine those words to apply to a license rather than the work itself.
The GPL doesn't really prohibit charging for royalties, it explains that this is a consequence of assuring the liberty of purchasers to make and distribute whatever copies they want.
Copyright suspends this liberty, and the copyright holder can choose to sell this liberty back to a licensee in exchange for money, e.g. in proportion to the number of copies made.
I could sell a GPL work and invite the people I sold it to, to consider paying me a royalty on any copies they sold. They could pay me such a royalty if they wanted, but they wouldn't be obliged to. So royalties aren't exactly prohibited.
It is liberty that is assured, and it is the suspension of liberty that is consequently prohibited.
The arcane mental gymnastics necessary to infer the judge's 'imperfect' wording nevetheless reveals his correct understanding of the GPL is an obsequious level of forgiveness.
And let's not outlaw the sale of copies simply because some people think it absurd.
What is absurd is outlawing the making of copies.
Just as a note to crosbie fitch, the GPL does license the software and does not "sell" it. There are lots of reasons why "sale" of software is not really what you intend. "Sale" would imply an "assignment" to another person of all right, title and interest in the software. In effect, the assignee could then stop you, as the creator, from using your own software.
In effect, what GPL does, however, is far more different than the selling a book analogy lets on. It's true, GPL on a very cursory level allows one to "sell" the media (or charge for the medium used to transfer the software) like a publisher can "sell" a book containing copyrighted material. However, under GPL and unlike the book case, the person can then make copies and redistribute them freely. You can't take a book to the photocopy machine and then sell your runoff version of the software.
Something tells me the judge read the GPL and has a pretty good understanding of what's in there. It may be that the judge wrote the opinion as a "for the sake of argument" kind of thing: Wallace is claiming that you can't sell GPL softwae even though Red Hat, Novell, MySQL and others do. The judge could correct Wallace, and leave the door open to an appeal. Or the judge could say "the GPL doesn't let you sell the software it covers, this is not an anti-trust violation" and move on.
Could Wallace then use this opinion in a future lawsuit saying "it's on a court record that the GPL doesn't let you sell the software"? Not really. Why not? Think "repressed memories," "misdiagnosed illnesses" and "experts for hire." It's very possible to file a lawsuit before doctors or scientists have shown that whatever you suffer from is actually physically posible (or to file a lawsuit based on "repressed memories" before psychiatrists determined that most repressed memories never happened). If you're trying to prove "more likely than not" -- preponderance of the evidence -- then it's even possible to win lawsuits on lots of junk science.
Because of this, even "settled" questions of fact can be revisited in future trials. I don't know how hard it is, but I do know it's possible. It's the only hope some drug companies have right now.
The two kings have finally united. This is a great partnership for not only Microsoft and Novell, but also the consumer, and should bring together the benefits of proprietary and open source software once and for all.
When you sell a book you bought from someone else you don't sell authorial rights in the book, nor even provide a license to the purchaser - that would be silly.
The same happens with a copy of software.
I can walk into a shop buy a copy of RedHat, visit you in Alaska and sell it to you for 10x the price without having to become a licensee or having to provide you with a license.
The GPL is already offered by RedHat for those potential licensees who may wish to enjoy liberties suspended by copyright.
I only have to provide my customers licenses if I would otherwise be infringing copyright, and my customers only need these licenses if they would otherwise infringe copyright.
When we talk of buying and selling GPL software. It is obviously the software we're selling (only an IP maximalist would try to persuade you otherwise). No authorial rights are being assigned. No licenses are being bought or sold. A license to liberty is guaranteed.
When you buy a copy of GPL software you can do absolutely anything you want with it. Duplicate it a million times or create a million derivatives. What's more, you don't have to publish your modifications no matter what benefits you enjoy from the use of them. You can also sell it, or any copies or derivatives for any price you can get.
All the GPL requires is that if you enjoy its liberty you don't suspend it from people you sell (or give) your software to.
By nullifying copyright the GPL obviates the need for any additional license given it restores every liberty otherwise suspended.
If the judge needs to make a judgement on a hypothetical then it wouldn't hurt him to make it clear, e.g. "Though it does not, if the GPL did prohibit licensees from selling or charging money for derivatives (or copies thereof) of the licensed software...."
Errr... um... I'm not sure how GPL nullifies copyrights. It, in fact, is based upon them. If you violate the terms of the LICENSE, you don't get the right to distribute the software.
As to the point about the book not requiring a license, in fact, you are given an implied license to "use" the single copy of the book you purchased. That implied license to use is usually understood to give you the right to distribute that copy. You know it's a limited license because you do not by virtue of purchasing the book get a right to publicly perform it, duplicate it or create derivative works.
As far as charging for it, you're correct--as was the Judge. Nothing prohibits charging for the software. Again, though, this is by virtue of Section 1, paragraph 2: "You may charge a fee for the physical act of transferring a copy, and you may at your option offer warranty protection in exchange for a fee". That makes perfect sense.
However, where you're not correct when you say that you do not have to license GPL software. Indeed, you are required, among other things, to provide a copy of the license to the people you distribute the software.
Finally, the reason you can duplicate and create derivative works is because you're LICENSED to do so. Not because of some magic that happens. Copyright rights remain in tact, without them, there'd be no way to enforce the obligations under the agreement--except, perhaps, by contract.
Sorry, 'anonymous', I use 'nullifies copyright' as shorthand for "nullifies copyright's suspension of the public's liberty".
Irrespective of whether some peculiar publishers now include a license in their books, books do not need licenses, nor do their purchasers need to accept them before reading or even turning the pages or selling the book.
And believe it, or don't believe it, but copyright law doesn't have a special section for software that stipulates purchasers must be provided with a license that they must accept prior to purchase or use of the software, nor that it is a condition of sale that purchasers must provide licenses to whoever they sell the software on to.
Moreover, the GPL is not an exception to this.
I do not need to accept or observe the GPL when I buy a copy of RedHat, nor make any special effort to advise whoever I sell that copy to that it is GPL software.
Sorry crosbie fitch, but I'm not sure you're correct.
You are correct that one could offer software without any license, but chances are that unless you've dedicated it to the public, some license will be implied in your offer. For example, if someone took your software and modified it and resold it, you would probably still have a cause of action for copyright infringement (assuming you subsequently registered it). A good example of this occurs all the time on the Internet with webpages.
The fact that there isn't a special section covering software is meaningless. Copyright protects original works of authorship fixed in a tangible medium. Software qualifies (it may also qualify for patent protection and there isn't a special "software patent" section either).
"You may copy and distribute the Program's source code... provided that you... give any other recipients of the Program a copy of this License along with the Program."
I'm not sure how you believe that you don't have to follow the GPL. That, I'm sure, is simply a misunderstanding of how the license works.
It is true, however, that the license does not impose restrictions on the types of modifications to or "uses" of the Software. It certainly does restrict lots of other things, including duplication and distribution.
If we met, we could walk along a street. I could pop into a shop, buy a copy of Red Hat Linux and walk out again. No crime or copyright infringement committed so far ok?
You could have several lawyers, policemen, and officers of the FBI present for that and the next step.
I will offer you this copy of software I've just purchased for 10x the retail price I just paid. I will not bring your attention to the GPL. I will completely ignore the GPL and won't even accept its terms.
You hand me the money. I hand you the copy I've just purchased.
On what grounds can you legitimately arrest me or sue me?
Oh, and feel free to consider yourself a representative of RedHat, the FSF, the copyright owner, the author, the publisher, the shopkeeper, the licensor or anyone else you think could have a grievance against me - or even to have such a person witness our transaction and take legal proceedings against me.
First, it's unlikely your breach is going to be arrestable. However, assuming the license is simply the GPL, the most obvious causes of action would be for breach of contract under section 1 and copyright infringement--unauthorized distribution, since your right to distribute the software is licensed by the contract.
Now, I assume that red hat probably has the license agreement embedded into the software too. So to remove that you've modified it and therefore your distribution of that is also going to be breach and another infringement.
As a practical note, there are really good reasons to include a license regardless of your aversion to licenses and it's a point made specifically in the GPL: to disclaim any warranties. In addition, other license provisions that developers often find themselves in trouble regarding are unlimited liability and also liability for export control violations.
Anonymous, you wouldn't by any chance be a lawyer specialising in IP law?
Find me one of your brethren that, unlike you, would dare put a name to a similar judgement to yours.
/* I only have to provide my customers licenses if I would otherwise be infringing copyright, and my customers only need these licenses if they would otherwise infringe copyright.
In the hyothetical of reselling a Red Hat CD for 10X retail, you've got the doctrine of first sale (in the US at least), which means no copyright license is required.
/* When we talk of buying and selling GPL software. It is obviously the software we're selling (only an IP maximalist would try to persuade you otherwise).
When we talk about legal transactions, lawyers have a tendency to use their own (established and agreed upon) definitions ofr words. So it's common to make the distinction, even if the distinction isn't needed. And it's common to assume "can't charge for GPL software" to mean "can't charge royalties. ..."
/* All the GPL requires is that if you enjoy its liberty you don't suspend it from people you sell (or give) your software to.
That's true. And one of those terms that you can't suspend (and which, from your posings, you clearly understand this) is that there can't be some kind of "use tax." Crosby writes software, I modify it and sell it to Anonymous. Anonymous sends it to Professor Patry. I cannot (under the terms of the GPL) send Professor Patry an invoice for the IP I put in that software (because when I put the IP in that software I did so under the terms of the GPL, one of which was I wouldn't do this). Or raher, as Crosbie say, I can *send* the invoice, but Professor Patry has no legal obligation to pay it.
Aargh. I seem to have forgotten a few letters, but at least I didn't add too many that weren't needed.
And it's common to assume "can't charge for GPL software" to mean "can't charge royalties. ..."
That may be common in some circles, but it results from a confused notion of what the heck software is, and that is to drink the IP maximalists' kool aid that says that the only property being transacted is a 3rd party's license to enjoy the use of their intellectual property rights.
You need to get de-programmed and realise that copyright is an illusion, and that sale of its suspension is doubly so.
Intellectual property is a figment of the imagination.
It ceases to be private property the moment it leaves your private domain.
Copyright is merely a gentleman's agreement between publishers to PRETEND it remains subject to the control of the copyright holder (originally the author). And yes, backed up by the force of the law, which like Canute is nevertheless unable to actually subjugate the intangible.
Software is a set of instructions designed for a machine able to obey them.
A judge that repeats the deluded litany of IP maximalists remains nevertheless in egregious error.
Obviously crosbit fitch is a troll, but I'll feed the sorry thing anyway.
Copyright (and patents) are a constitutional provisions, at least here in the US. So to the same extent that free speech or the right to bear arms are "figments of imagination" or "gentlemen's agreement", crosbie fitch is correct.
Also, as a former programmer (actually a web developer, if that counts, with a CS degree (again if that counts)), and now a transactional/ip lawyer, I have a pretty good grasp of "what software is." I'm not entirely sure what crosbit is getting at.
Crosbie Fitch is arguing from a philosophical perspective.
There is a good reason why a chair is property - only one person (in the traditional sense of the word) can have the use of it at any one time.
The right to free speech also has a natural-rights based justification.
Intellectual Property does not - there simply is no rigorous justification for calling Intellectual Property actual property (outside of fiat). That it happens to be enshrined in law is besides the point.
OK, I'm retarded. The argument for Intellectual Property is Utilitarian. However, Utilitarians, in general, don't believe in property rights; the result is the same.
you may at your option offer warranty protection in exchange for a fee."
crosbie, first, I have been trying to post at your site for a few days and it keeps failing at a blank screen.
"The GPL does not prohibit any licensee from charging any price they like for copies of the original work, nor for publication or copies of derivative works."
What the GPL does do is require that you license at to charge, to all third parties, the whole of any work that you "distribute or publish" "that in whole or in part contains or is derived from the Program or any part thereof."
So the thing that confuses people is that you have to license derivatives at no charge even though you can charge for (sell) "the physical act of transferring a copy" as section 1 puts it.
You can make copies for people and charge them for copies that you give them, but you can charge the for licenses for the works.
Does anyone disagree with the outcome that stems from what I have said as opposed to the wording?
Who's Right? West or Me?

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