gnu-misc-discuss
[Top][All Lists]
Advanced

[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

Wallace's reply brief (was: IBM's appellee brief in Wallace case)


From: Alexander Terekhov
Subject: Wallace's reply brief (was: IBM's appellee brief in Wallace case)
Date: Tue, 01 Aug 2006 20:31:14 +0200

i
TABLE OF CONTENTS
TABLE OF CONTENTS 
.......................................................................... i
TABLE OF AUTHORITIES 
..................................................................... ii
ARGUMENT 
.........................................................................................
 1
ANTITRUST 
INJURY..................................................................... 1
UNREASONABLE RESTRAINT...................................................... 3
ESTOPPEL...................................................................................
 6
CONCLUSION 
......................................................................................
 8
CERTIFICATE OF COMPLIANCE WITH F.R.A.P. RULE 32(a)(7) ............ 10
CERTIFICATE OF 
SERVICE................................................................. 11
SUPPLEMENTAL 
APPENDIX................................................................ 12
ii
TABLE OF AUTHORITIES
Cases
324 Liquor v. Duffy, 479 U.S. 335 (1987) 
............................................... 6
Assessment Technologies of WI, LLC v. Wiredata. Inc., 350 F.3d 640
(7th Cir. 2003) 
......................................................................................
 7
Broadcast Music, Inc. v. CBS, 441 U.S. 1 (1979) 
.................................... 5
Broadcast Music, Inc. v. CBS, 441 U.S. 1 (1979) 
.................................... 5
Brooke Group LTD. v. Brown & Williamson Tobacco Corp., 509 U.S. 209
(1993) 
................................................................................................
 2,3
California Liquor Dealers v. Midcal Aluminum, 445 U.S. 97 (1980) .......... 6
Cargill Inc. v. Monfort of Colorado, Inc., 479 U.S. 104 (1986) 
.................. 1
Eastman Kodak v. Image Technical Servs., 504 U.S. 451 (1992) ............. 2
EEOC V. Waffle House, Inc., 534 U.S. 279, (2002) 
................................ 4
Frederiksen v. City of Lockport, 384 F.3d 437 (7th Cir. 2004) ................ 8
Israel Travel Advisory Service, Inc. v. Israel Identity Tours, Inc., 61 F.3d
1250 (7th Cir. 1995) 
............................................................................. 2
LePage's Inc. v. 3M Co., 324 F.3d 141 (3d Cir. 2003)) 
............................. 3
Matsushita Elec. Industrial Co. v. Zenith Radio, 475 US 574
(1986] 
..................................................................................................
 3
ProCD Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996)) 
........................ 4
Spectrum Sports v. McQuillan, 506 U.S. 447 (1993) 
............................... 1
United States v. New Wrinkle , Inc., 342 U.S. 371 (1952) ...................... 
3
United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 226 n.59
(1940) 
................................................................................................
 2,6
iii
United States v. TOPCO Associates, 405 U.S. 596 (1972) ....................... 6
Zenith Radio Corp. v. Hazeltine Research, 401 U.S. 321 
......................... 7
Statutes
15 U.S.C. §1 (Sherman Act §1) 
..................................................... 1,2,3,6
15 U.S.C. §2 (Sherman Act §2) 
........................................................... 1,2
15 U.S.C. §15 (Clayton Act §4) 
........................................................... 1,2
15 U.S.C. §26 (Clayton Act §16) 
........................................................ 1,2
Other Authorities
F.R.Civ.P. 12 
........................................................................................
 8
1
ARGUMENT
Defendant-appelles IBM et al. raise claims asserting lack of
antitrust injury, lack of unreasonable restraint in trade and further claim
collateral estoppel.
Antitrust injury
It should first be noted that the nature of the antitrust injuries
recognized under §16 of the Clayton Act is broader than injuries
addressed under Clayton §4.
For example, 4 requires a plaintiff to show actual injury, but 16 requires
a showing only of "threatened" loss or damage; similarly, 4 requires a
showing of injury to "business or property," cf. Hawaii v. Standard Oil
Co., 405 U.S. 251 (1972), while 16 contains no such limitation. . .
Although these differences do affect the nature of the injury cognizable
under each section, the lower courts, including the courts below, have
found that under both 16 and 4 the plaintiff must still allege an injury of
the type the antitrust laws were designed to prevent.; Cargill Inc. v.
Monfort of Colorado, Inc., 479 U.S. 104, 111 (1986).
Wallace has filed for relief under the Clayton Act §16 for violations
of Sherman §1 where the threshold for standing is a showing of future
“threatened” loss or damage and not “actual injury”.
IBM et al.s’ resolute attempts [IBM Brief at pp. 10-11] to mischaracterize
this case as a Sherman Act §2 monopolization claim
involving §4 treble damages cannot succeed. This case is a conspiracy
claim requesting equitable relief.
In the past, the Supreme Court has noted, “(M]oreover, single firm
activity is unlike concerted activity covered by §1, which ‘inherently is
fraught with anticompetitive risk.’ Copperweld, 467 U. S., at 767-769 “
2
(Spectrum Sports v. McQuillan, 506 U.S. 447) (1993)) as well as "[T]he
crime under Section 1 is legally distinct from that under Section 2 . . .
though the two sections overlap in the sense that a monopoly . . . is a
species of restraint of trade under Section 1." (United States v. Socony-
Vacuum Oil Co., 310 U.S. 150, 226 n.59 (1940)).
Market power is not an essential element to a claim of price fixing
under Sherman §1.
Some antitrust offenses do not depend on proof of market power. Price
fixing and market allocation, for example, are illegal per se whether or
not the firms have any hope of success. Palmer v. BRG of Georgia, Inc.,
498 U.S. 46 (1990); FTC v. Superior Court Trial Lawyers, 493 U.S. 411
(1990); Blackburn v. Sweeney, 53 F.3d 825 (7th Cir. 1995); Israel Travel
Advisory Service, Inc. v. Israel Identity Tours, Inc., 61 F.3d 1250, 1256
(7th Cir. 1995)
The Supreme Court emphasized the Robinson-Patman Act and
Sherman §2 monopolization claims under Clayton §4 when considering
predatory claims in Brooke Group LTD. v. Brown & Williamson Tobacco
Corp., 509 U.S. 209 (1993).
Accordingly, whether the claim alleges predatory pricing under 2 of the
Sherman Act or primary-line price discrimination under the Robinson-
Patman Act, two prerequisites to recovery remain the same. . . "Low
prices benefit consumers regardless of how those prices are set, and so
long as they are above predatory levels, they do not threaten competition.
. . .; Brooke at 223, 224.
There is no rigid Brooke Group Ltd rule for establishing antitrust
injury under the Sherman Act §1 and Clayton §16. (“Legal presumptions
that rest on formalistic distinctions, rather than actual market realities,
are generally disfavored in antitrust law. This Court has preferred to
resolve antitrust claims on a case-by-case basis, focusing on the
3
‘particular facts disclosed by the record.’ ”) (Eastman Kodak v. Image
Technical Servs., 504 U.S. 451, 467 (1992)).
A Sherman §1 predatory pricing claim entails pricing products
below an appropriate measure of cost in a targeted market for the
purpose of eliminating competition. Some plausible strategy is required
to recoup those below cost losses. See Matsushita Elec. Industrial Co. v.
Zenith Radio, 475 US 574 (1986).
Unlike the claim in Brooke Group Ltd, this §1 action alleges the
sharing of the cost of intellectual property development among
thousands of individual authors. The pooled software is subsequently
distributed at “no charge”. Commercial firms such as IBM et al. then
recoup those vastly diluted development costs in ancillary markets
through bundling and mixed bundling of complimentary products and
services. Bundling or mixed bundling of complimentary products is
certainly a plausible strategy to recoup profits lost in a targeted market.
See LePage's Inc. v. 3M Co., 324 F.3d 141 (3d Cir. 2003).
The antitrust injury that results from the distribution of an
immense and continuously growing pool of intellectual property price
fixed at “no charge is obvious -- an entry barrier that any new “for profit”
developer of intellectual property can never hope to breach.
Unreasonable restraint
IBM et al. cite to United States v. New Wrinkle , Inc., 342 U.S. 371
(1952) and claim “the GPL, however, does not seek to extend intellectual
4
property rights beyond those conferred by Congress”. [IBM Brief at 15,
¶2] but the GPL does attempt to extend the copyright monopoly.
An original licensor who offers his copyrighted intellectual property
under GPL terms demands that everyone accepting his offer must license
their exclusive intellectual property under identical terms. (“You must
cause any work that you distribute or publish, that in whole or in part
contains or is derived from the Program or any part thereof, to be
licensed as a whole at no charge to all third parties under the terms of
this License”) [Ex A (GPL)§2(b) at 2]. The condition “under the terms of
this license” is recursive and requires all future third parties ad infinitum
to use the same license terms. (“[T]he intent is to exercise the right to
control the distribution of derivative or collective works based on the
Program.”) [Ex A (GPL)§2].
By definition a third party is a stranger to a contract. (“It goes
without saying that a contract cannot bind a nonparty.”) (EEOC V.
Waffle House, Inc., 534 U.S. 279, 294 (2002)). The contract term that
purports to control (without privity) the distribution rights of all “all third
parties to their own exclusive contributions in derivative and collective
works creates a “right against the world” ? that is, in essence, a new
copyright regulation. (“A copyright is a right against the world. Contracts,
by contrast, generally affect only their parties; strangers may do as they
please, so contracts do not create "exclusive rights.") (ProCD Inc. v.
Zeidenberg, 86 F.3d 1447, 1454 (7th Cir. 1996)).
5
IBM et al. state [IBM Brief at 15, ¶1] “The ownership interests
contributors to software licensed under the GPL might have in their
modifications are seriously limited, given that any distribution of those
modifications must be done under the terms of the GPL”. This statement
constitutes a mea culpa with respect to the extension of “intellectual
property rights beyond those conferred by Congress” [see IBM Brief at 15,
¶2].
The contractual extension of control to the copyrights of all third
parties who accept the GPL offer is an egregious misuse of copyright that
may rise to the level of an antitrust violation. (“[W]e left open the question
whether copyright misuse, unless it rises to the level of an antitrust
violation. . .”) (Assessment Technologies of WI, LLC v. Wiredata. Inc., 350
F.3d 640 (7th Cir. 2003)).
The GPL purports to extend it’s intellectual property control to all
third parties’ software patents as well as copyrights. (“Finally, any free
program is threatened constantly by software patents. . . To prevent this,
we have made it clear that any patent must be licensed for everyone's
free use or not licensed at all.”) [Ex A (GPL) at 1].
The blanket license IBM et al. refers to in Broadcast Music, Inc. v.
CBS, 441 U.S. 1 (1979) [IBM Brief at 14, ¶2] involved licensing multiple
copyrights to a third party for vending efficiency, which is a profit
maximizing function. In the case of the GPL license there can be no
6
competitive purpose for distributing a immense pool of intellectual
property price fixed at “no charge” except to destroy competition.
The GPL fixes license fees at every level of the product distribution
chain (manufacture, wholesale and retail). This is equivalent to industry
wide resale price maintenance. See California Liquor Dealers v. Midcal
Aluminum, 445 U.S. 97 (1980), 324 Liquor v. Duffy, 479 U.S. 335 (1987).
IBM et al. extoll consumer benefits [IBM Brief at 9, ¶1] flowing from
the GPL license but that is no defense to naked price fixing. (“The
effectiveness of price-fixing agreements is dependent upon many factors,
. . . Whatever economic justification particular price-fixing agreements
may be thought to have, the law does not permit an inquiry into their
reasonableness.”) (United States v. Socony-Vacuum Oil Co., 310 U.S. 150,
226 n.59 (1940)). See also (“[T]he Court has consistently rejected the
notion that naked restraints of trade are to be tolerated because they are
well intended or because they are allegedly developed to increase
competition.”) (United States v. TOPCO Associates, 405 U.S. 596, 610
(1972)).
Estoppel
Wallace requested injunctive relief under §16 of the Clayton Act for
“threatened harm” in violation of the Sherman Act §1 conspiracy statute.
In a continuing conspiracy, individual coconspirators perform
different roles based upon different acts but remain liable for acts
committed by all (Pinkerton Doctrine) and multiple causes of action may
7
accrue. (“In the context of a continuing conspiracy to violate the antitrust
laws, such as the conspiracy in the instant case, this has usually been
understood to mean that each time a plaintiff is injured by an act of the
defendants a cause of action accrues to him to recover the damages
caused by that act. . . “) (Zenith Radio Corp. v. Hazeltine Research, 401
U.S. 321, 338).
The fact that a single coconspirator such as the Free Software
Foundation, Inc. was found not liable in one proceeding involving a
continuing conspiracy, where there are multiple alleged coconspirators,
does not bar the possibility that two or more remaining coconspirators
could be found liable in a separate cause of action based upon different
future acts. The Zenith holding is especially cogent in the present case in
view of the allegation of “thousands” of coconspirators.
IBM et al.’s "estoppel" argument was never made to or addressed
by the district court and, therefore, should not be made for the first time
in this Court. By raising the doctrine of estoppel for the first time on
appeal at this stage of the proceedings, Wallace was prevented from
adequately preparing the record and arguments in this appeal
The parties to this suit (Wallace v. IBM et al.) and the prior suit
(Wallace v. Free Software Foundation, Inc)., met in pre-trial conference
[Wallace v. IBM et al. Supp. App. dkt. #44] on August 18, 2005. Matters
were discussed at pre-trial conference concerning Wallace v. Free
8
Software Foundation, Inc. in conjunction with Wallace v. IBM et al.
concerning joinder that would have barred claims of estoppel.
ENTRY FOR AUGUST 18, 2005
MAGISTRATE JUDGE V. SUE SHIELDS
Plaintiff appears in person and defendants appear by counsel for pretrial
conference. Conference held and concluded during which the
“companion” case, Wallace v. Free Software Foundation, Inc., 1:05-cv-
618-JDT-TAB is discussed in conjunction with this case. Order to follow.
Judge Young ordered the agreements implemented on
November 28, 2005 [Wallace v. IBM et al. Supp. App. dkt. #47].
Entry Concerning Selected Matters
The court, having considered the above action and the matters which are
pending, makes the following rulings:
1. With respect to the status conference conducted on August 18, 2005,
the parties shall proceed as directed and agreed at that conference.
The agreement at that pretrial conference concerning joinder of the
defendants in the two separate cases would be fatal to the present claim
of estoppel. To allow IBM et al. to raise estoppel on appeal for the first
time in lieu of first arguing to the district court would inflict a manifest
injustice upon Wallace.
The final judgment in Wallace v. Free Software Foundation, Inc.
constitutes a void judgment under Seventh Circuit precedent. Judge
Tinder granted dismissal [Red Hat and Novell’s Supp. App. at 12]
pursuant to F.R.Civ.P. Rule 12(b)(6) for failure to state a claim upon
which relief can be granted although the reason given was lack of
“antitrust injury” (lack of standing). In the Seventh Circuit, since the
9
decision in Frederiksen v. City of Lockport, 384 F.3d 437 at 438 (7th Cir.
2004), issues of standing are required to be dismissed pursuant to
F.R.Civ.P. Rule 12(b)(1) for lack of subject matter-jurisdiction.
CONCLUSION
For the reasons above stated, the Court should reverse the order
dismissing plaintiff Daniel Wallace’s complaint and remand for further
proceedings.
Respectfully submitted,
___________________________________
Daniel Wallace, pro se
P.O. Box 572
New Palestine, IN 46163
317-861-6415
10
CERTIFICATE OF COMPLIANCE WITH F.R.A.P. 32(a)(7)
Pursuant to F.R.A.P. 32(a)(7)(C), the undersigned hereby certifies
that the foregoing reply brief of plaintiff-appellant Daniel Wallace, pro se,
complies with the type-volume limitation in F.R.A.P. 32(a)(7)(B)(i) because
it contains less than 3000 words.
___________________________________
Daniel Wallace, pro se
P.O. Box 572
New Palestine, IN 46163
(317) 861 6415
11
CERTIFICATE OF SERVICE
The undersigned plaintiff-appellant Daniel Wallace, pro se, hereby
certifies that I caused two copies of the foregoing reply brief with
supplemental appendix to be served by first-class certified mail, postage
prepaid, on the following counsel of record:
Michael H. Gottschlich
BARNES & THORNBURG LLP
11 South Meridian Street
Indianapolis, IN 46204
(317) 231-7834
Curtis W. McCauley
ICE MILLER LLP
One American Square
Suite 3100
Indianapolis, IN 46282
(317) 236-2388
___________________________________
Daniel Wallace, pro se
P.O. Box 572
New Palestine, IN 46163
(317) 861 6415
Dated: ___________________________
12
SUPPLEMENTAL APPENDIX
TABLE OF CONTENTS OF SUPPLEMENTAL APPENDIX
ENTRY FOR AUGUST 18, 2005 MAGISTRATE
JUDGE V. SUE SHIELDS........................................................... 
Dkt. #44
Entry Concerning Selected Matters............................................ 
Dkt. #47

----------------------------------------------------------------------------------------

regards,
alexander.


reply via email to

[Prev in Thread] Current Thread [Next in Thread]