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Re: Hey Terekhov: Wallace lost. Who'd guess.... ;)

From: Alexander Terekhov
Subject: Re: Hey Terekhov: Wallace lost. Who'd guess.... ;)
Date: Sat, 25 Mar 2006 17:27:10 +0100

Alan Mackenzie wrote:
> Alexander Terekhov <> wrote on Fri, 24 Mar 2006 18:59:39 +0100:
> > David Kastrup wrote:
> > [...]
> >> So you feel unable to face the facts.
> > The fact is that the GPL price-fixes IP at zero. The fact is that zero is
> > below cost of IP creation and hence is predatory. As for the rest,
> Whatever "IP" might mean.

In the context of Wallace's case, "IP" means (licensing of) copyrights 
and ("software") patents.


"courts recognized that the unique attributes of intellectual property 
licenses made per se treatment of vertical price restraints in software
licenses inappropriate. See LucasArts Entertainment Company vs. Humongous 
Entertainment Company, 870 F. Supp. 285 (N.D.Cal. 1993) (granting summary 
judgment against licensee who claimed that license provision regulating 
resale prices for derivative works violated the Sherman Act)."

Note that it was a summary summary judgment (not Rule 12(b)(6) 
dismissal) and it didn't involve predatory pricing.

Now, here's more on that case cited by the FSF.

In the intellectual property context, however, one federal court held 
that the Cartwright Act did not prohibit, under the per se rule or 
otherwise, a provision in a software licensing agreement which 
prohibited the licensee from selling the licensed program at less than 
a certain price to anyone other than the licensor. LucasArts 
Entertainment Co. v. Humongous Entertainment Co., 870 F. Supp. 285 
(N.D. Cal. 1993). The court relied on a federal decision, United 
States v. General Electric, 272 U.S. 476 (1926), which held that 
patent owners had the power to restrict prices at which licensees 
sold. Although the General Electric case has not been overruled, its 
continuing validity is questionable, as the United States Supreme 
Court has twice split four to four on whether to overrule it and the 
federal enforcement authorities decline to follow it. 


The GE ruling on price-fixing has been heavily qualified but never 
overruled. Any deviation from the GE-Westinghouse single- 
manufacturing-licensee paradigm is virtually certain to be held 
an antitrust violation (and therefore misuse as well). Thus, cross- 
licenses with price restrictions are illegal. So, too, are licenses to 
more than one licensee, which, in effect, put together a price-fixing 
combination among licensees. The Supreme Court has twice divided 4-4 
on whether to overrule GE. United States v. Line Material Co., 333 
U.S. 287 (1948); United States v. Huck Mfg. Co., 382 U.S. 197 (1965). 
The Antitrust Division has for years searched for a vehicle to 
overturn GE but has never succeeded in getting a candidate to hold 
still long enough to grab it. See ABA, Antitrust Law Developments 
3d 822 & nn. 167-68. 

> The fact is, I can go out and buy SuSE Linux, but it'll cost me about 70
> Euros.  I believe Red Hat Linux costs about the same.  Last summer, I


Here, the defendants attempt to conflate the definition of intangible
copyright assets with the physical media in which a work is embodied:
“Ownership of a copyright, or of any of the exclusive rights under a
copyright, is distinct from ownership of any material object in which
the work is embodied. ..”;17 USC sec. 202.

The present claim is for price fixing in the relevant market of
intangible intellectual property assets in computer programs (the Linux
operating system) and not an action concerning tangible media or
“physical acts” involving the distribution of tangible media in which a
copyrighted work may be fixed.


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