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FSF Moves to Dismiss Wallace and for Stay on Filing Briefs on Summary Judgment Motion
Wednesday, June 22 2005 @ 11:06 PM EDT

The Free Software Foundation has moved to dismiss Daniel Wallace's complaint, as expected, and they have also moved for a stay on filing any more briefs on Wallace's Motion for Summary Judgment, until their motion is decided.

There has been a lot of speculation about what would happen to this case, with strong opinions being presented on various message boards. Read the FSF's Brief in Support of Motion to Dismiss and ask yourself: did you read the strongest points they make in the speculative opinions on message boards? I didn't either. I'm thinking particularly of this argument:

Moreover, even before State Oil v. Khan, 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 against licensee who claimed that license provision regulating resale prices for derivative works violated the Sherman Act).

If someone made that point, I missed it. Note also footnote 2. My point is this: reading a case you find somewhere isn't the same thing as being a lawyer. The law is deep, and you can't do it without training and some experience to boot. I can't stress that enough.

Doing research and finding historical and technical material that bears on a case is very different, but I hope none of you ever think that one can know the law the way a lawyer does without going to law school, because it's not possible. I have no experience in antitrust law, so I have expressed no opinion publicly on what will happen with this case. I have one, but modesty prevents me from sharing it, knowing this isn't my field of expertise.

I'm putting it strongly, because I want to spare you the embarrassment of filing a stupid lawsuit pro se down the road, thinking it's a breeze, because you read a book. I'm not saying it can never work out. The courts usually do bend over backwards for pro se litigants, but only up to a point. If you file a totally meritless suit, it just annoys busy people and wastes the court's precious time.

Having a lawyer will help you in many ways. One of the most important is, he'll tell you when your ideas are legally wacko. Of course, if all you wish to achieve is to use the courts to harrass, you may not care, in which case please ignore my advice, by all means, as it isn't targeted at you, and do make a fool of yourself in public as much as you please. Actually, don't. The court system isn't supposed to be used for harrassment purposes.

But assuming you do care about a good name, at least hire an hour of an attorney's time to discuss your ideas before you file something so beyond the pale you end up embarrassing yourself.

Hmm. Perchance you will discern my private thoughts, despite my best efforts, if I continue, so I'll stop right here.

Here's the Brief in Support of Defendant's Motion to Dismiss the Complaint (as text below also), Exhibit A, the GPL, the Motion to Dismiss the Complaint, and their Motion to Stay Briefing on Plaintiff's Motion for Summary Judgment, all PDFs. Enjoy.








Case No. 1:05-cv-618-JDT-TAB




Since it is difficult to determine from the single substantive paragraph of the Complaint precisely what Plaintiff's claim is, Defendant has resorted to Plaintiff's Motion for Summary Judgment to better understand Plaintiff's legal theory, which appears to be that by promoting the growth of "open source" computer software, which competes with "proprietary" computer software, Defendant has "foreclosed competition" in the market for "proprietary" software. Completely absent from the Complaint, however, is any allegation that this promotion of competition between "open source" and "proprietary" software injures consumers. This absence of an allegation of harm to consumers is fatal to the Complaint. Moreover, even if it were possible for Plaintiff to allege some harm to competition in the abstract, Plaintiff has not alleged injury to himself, and thus lacks standing. For all these reasons, the Complaint is fatally flawed and should be dismissed with prejudice.




Defendant Free Software Foundation, Inc. ("FSF") is a not-for-profit corporation whose purpose is to promote the use and development of free software, that is computer software that may be freely copied, modified and redistributed by its users. 1 FSF writes and distributes free software of its own and also publishes licenses to facilitate free software distribution by others. One such free software license is known as the GNU General Public License ("GPL").

The GPL provides a legal framework under which developers of free software can make the source code for the software available to the public without concern that other developers might appropriate their work for use in proprietary software. In pertinent part, the GPL provides that, if a licensee of computer software under the GPL modifies that software or creates a derivative work from it, that subsequent work, when distributed, must be licensed to all third parties at no charge under the same terms and conditions. 2 The license provision in question, Section 2(b) of the GPL, states: "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." See Exhibit A.

The developers of free software projects make their source code available to the public, allowing anyone to review and suggest improvements to the code. The GPL assures that their work will not be appropriated by others and incorporated into proprietary software, the source code for which is generally not open to the public. The open distribution of the source code


under the GPL thus facilitates the refinement and improvement of software by a large population of programmers, so that ultimately consumers benefit by receiving a superior product at less cost. The GNU/Linux operating system is probably the best known example of a computer program that has been developed using the free software model, and is licensed pursuant to the GPL.



One would think that from the standpoint of the antitrust laws, increased competition which results in greater choice and lower prices to consumers would be desirable. Review of the case law confirms that to be true. Plaintiff has not alleged any agreement of the sort that is condemned by the antitrust laws. Moreover, even if Plaintiff could articulate some harm to competition in the abstract, the allegations of the Complaint show that Plaintiff lacks standing. Plaintiff's own alleged harm flows only from additional competition in the marketplace, which is not the sort of harm with which the antitrust laws are concerned. The Complaint should therefore be dismissed with prejudice.



A. Vertical maximum price restraints are not per se unlawful.

The essence of Plaintiff's Complaint appears to be directed at Section 2(b) of the GPL, which requires licensees of GPL'd software to license any derivative works they create at no charge. Assuming for the sake of argument that Plaintiff has standing to bring this Complaint, this agreement could be analogized to a vertical maximum price restraint, i. e. , a requirement by the licensor that the licensee charge no more than X amount upon relicense. The United States Supreme Court in State Oil Company vs. Khan, 522 U.S. 3 (1997), held that vertical maximum


price fixing agreements are not per se unlawful. Therefore, Plaintiff has plainly failed to allege a per se violation of the Sherman Act.

Moreover, even before State Oil v. Khan, 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 against licensee who claimed that license provision regulating resale prices for derivative works violated the Sherman Act).

The provision of the GPL challenged by Plaintiff does not fall within any category of agreements that are condemned per se under the Sherman Act. It is therefore to be evaluated under the Rule of Reason. Spanish Broadcasting System of Florida, Inc. v. Clear Channel Communications, Inc., 376 F.3d 1065, 1071 (11th Cir. 2004). In cases subject to the Rule of Reason, anticompetitive effect must be specifically alleged. In Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101 (7th Cir. 1984), the Seventh Circuit upheld the dismissal of the plaintiff's complaint on the basis that the plaintiff had not alleged an anticompetitive effect:

The fatal flaw in these pleadings is the absence of any allegation, either direct or inferential, of an anticompetitive effect. In this regard, it is important to note that the egregiousness of the defendants' behavior does not, by itself, constitute a violation of Section 1. Tortious activities in the form, for example, of unfair competition do not contravene the antitrust laws unless accompanied by the requisite anticompetitive effect. Losing business to a competitor is an inevitable consequence of the economic system that the Sherman Act was designed to protect; some enterprises will prevail and others will not, but it is the function of Section 1 to compensate the unfortunate only when their demise is accompanied by a generalized injury to the market. As the Supreme Court has aptly stated, the antitrust laws were designed to protect competition, not merely competitors.

Id. at 1109 (citations omitted). Plaintiff does not allege any facts showing an anticompetitive effect, and this dooms Plaintiff's Complaint.


The Seventh Circuit's opinion in Car Carriers also holds that an antitrust plaintiff must do more than make conclusory allegations like those found in Plaintiff's Complaint:

Thus, in the context of a 12(b)(6) challenge, the question is whether, if we accept all the allegations--including those relating to purpose and intent--as true, the plaintiffs have successfully pleaded a contract, combination, or conspiracy in restraint of trade within the meaning of the Sherman Act. The pleader may not evade these requirements by merely alleging a bare legal conclusion; if the facts "do not at least outline or adumbrate" a violation of the Sherman Act, the plaintiffs "will get nowhere merely by dressing them up in the language of antitrust." When the requisite elements are lacking, the costs of modern federal antitrust litigation and the increasing caseload of the federal courts counsel against sending the parties into discovery when there is no reasonable likelihood that the plaintiffs can construct a claim from the events related in the complaint. A contrary view would be tantamount to providing antitrust litigation with an exemption from Rule 12(b)(6).

Car Carriers, 745 F.2d at 1106-07 (citations omitted).

In short, Plaintiff has completely failed to plead the elements of a violation of the Sherman Act. The Complaint should therefore be dismissed.

B. Plaintiff has failed to allege antitrust injury or show Plaintiff's standing to sue.

The allegations of the Complaint also show that Plaintiff lacks standing to sue because he has suffered no "antitrust injury." This lack of standing and lack of antitrust injury is a separate, and independently sufficient, basis on which to dismiss the Complaint.

The Supreme Court first articulated in the case of Brunswick Corp. vs. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977), the requirement that a plaintiff suing under the Clayton Act establish "antitrust injury." In Brunswick, the plaintiffs were independent bowling alley operators who alleged that they had been injured by the defendant's unlawful acquisition of failing bowling centers in their neighborhoods. Plaintiffs alleged that if the centers had been allowed to fail, or had been acquired by a less well-financed competitor, the plaintiffs would have been subject to less competition, and would therefore have made greater profits. The Supreme Court, in reversing a judgment in favor of the plaintiffs and ordering judgment NOV on


their antitrust claims, explained that a plaintiff who alleges injury by reason of a violation of the Sherman Act must allege more than mere "but for" causation. Such a plaintiff must allege injury that flows directly from the anticompetitive aspect of the challenged activity. The Court reiterated that because the antitrust laws were created for the protection of competition, not individual competitors, a plaintiff does not state a claim under the Sherman Act when he merely complains that increased marketplace competition has diminished his profits.

The Supreme Court has reaffirmed and extended the holding of Brunswick in subsequent cases that are dispositive here.

First, in Atlantic Richfield Co. vs. USA Petroleum Co., 495 U.S. 328 (1990), the Court held that a competitor who alleged that he had lost sales and profits due to his competitor's vertical maximum price fixing scheme lacked standing to sue under the antitrust laws. That is precisely the situation presented by this Complaint. Atlantic Richfield establishes that Plaintiff has no standing to bring this Complaint, even if the alleged vertical maximum price fixing agreement were per se unlawful, which after State Oil vs. Khan it plainly is not.

The fact that Plaintiff seeks only injunctive relief, rather than damages, does not save the Complaint from dismissal. In Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104 (1986), the Court held that the antitrust injury requirement applies equally to plaintiffs seeking injunctive relief under section 16 of the Clayton Act. The Court held that a plaintiff who sought only injunctive relief still needed to show a threat of antitrust injury, and that merely alleging that a merger would result in his competitor's ability to charge lower prices, which would in turn cause the plaintiff to lose profits, had not satisfied that requirement.

In short, under State Oil vs. Khan, Plaintiff has not alleged a substantive violation of the Sherman Act. Moreover, under the Brunswick, Atlantic Richfield, and Cargill cases, Plaintiff has


not alleged any actual or threatened "antitrust injury" of the sort that would give him standing to sue. Therefore, even if Plaintiff had stated the elements of an antitrust violation which he has not the Complaint should still be dismissed.



For all the above reasons, the Complaint should be dismissed, with prejudice, pursuant to Fed. R. Civ. P. 12(b)(6).

Respectfully submitted,


s/ Philip A. Whistler
Philip A. Whistler

s/ Curtis W. McCauley
Curtis W. McCauley
[address, phone]

Counsel for Defendant Free Software Foundation, Inc.

1 This software is often, but from FSF's point of view wrongly, described as "open source software." FSF was founded in 1985 to publicize the cause of software that is "free as in freedom." The phrase "open source" was first used in 1998 to describe the same software licensing pattern pioneered by FSF. This brief therefore refers to "free software" rather than "open source."

2 Note, however, that although the licensing of derivative works, when made, is required to be at no fee, the GPL does not restrict the abililty of persons distributing derivative works of free software to charge fees for either the initial act of distribution or the work involved in making modifications. (See, e.g., GPL Section 2.)



I certify that a copy of the foregoing has been served upon the following by firstclass United States mail, postage prepaid, this 22d day of June, 2005.

Daniel Wallace

s/ Philip A. Whistler
Philip A. Whistler



FSF Moves to Dismiss Wallace and for Stay on Filing Briefs on Summary Judgment Motion | 257 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections, here
Authored by: DaveF on Wednesday, June 22 2005 @ 11:16 PM EDT
If required

Imbibio, ergo sum

[ Reply to This | # ]

OT, Links, etc
Authored by: DaveF on Wednesday, June 22 2005 @ 11:17 PM EDT
Don't forget to make links clickable

Imbibio, ergo sum

[ Reply to This | # ]

Corrections here like...
Authored by: webster on Wednesday, June 22 2005 @ 11:21 PM EDT
Preliminary Statement line four: "complain" sb "complaint"


[ Reply to This | # ]

FSF Moves to Dismiss Wallace and for Stay on Filing Briefs on Summary Judgment Motion
Authored by: Anonymous on Wednesday, June 22 2005 @ 11:25 PM EDT
Since the motion to dismiss is based on defects in the complaint itself, I'd
expect that the court would, even if convinced by the motion, allow Wallace a
chance to amend it to cure the defects at least once.

[ Reply to This | # ]

Is there a copy of Wallace's motion for Summary Judgment Motion
Authored by: Anonymous on Wednesday, June 22 2005 @ 11:43 PM EDT
... hanging around?

[ Reply to This | # ]

PJ and her paean to lawyers
Authored by: rsteinmetz70112 on Thursday, June 23 2005 @ 12:18 AM EDT

I respect and admire what you have achieved with Groklaw.

On The Other Hand, I do not share your apparent awe of lawyers. I have many
lawyers as friends and clients. I have yet to find a lawyer who truly
understands the digital world or in fact the real world of business. The view of
most lawyers is warped by their view as their position as the guardians of

The arrogance of many lawyers is matched only by their ignorance of the facts,
which they are unwilling to investigate, lest it cause them to violate a canon
of the legal profession.

Some lawyers meet your description, most in my experience don't. Everyone should
be careful in selecting a lawyer because all lawyers aren't equal.

We are viewing the top of the legal gene pool.

Does your local lawyer meet PJ's description? I don't advocate going "pro
se" but I do advocate choosing your lawyer carefully and remaining
involved in the case. You are the one whose money is at stake, not the lawyers.


"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

And just look...
Authored by: maxchaos on Thursday, June 23 2005 @ 12:34 AM EDT
at what hiring lawyers has done for TSCOG and their apparently legally sound
arguments about Linux, copyright law, the GPL, & c.

[ Reply to This | # ]

Authored by: stevem on Thursday, June 23 2005 @ 03:17 AM EDT
I note that there has not been any (apparent) claim against Wallace for costs
for this exercise?

Is there any legal reason for not doing so? Or is it more likely one of
"Too much trouble for little gain"?

- SteveM

[ Reply to This | # ]

  • Costs? - Authored by: marbux on Thursday, June 23 2005 @ 05:53 AM EDT
    • Thankyou - Authored by: stevem on Thursday, June 23 2005 @ 07:47 AM EDT
      • Thankyou - Authored by: LocoYokel on Thursday, June 23 2005 @ 09:05 AM EDT
        • Thankyou - Authored by: Anonymous on Thursday, June 23 2005 @ 12:55 PM EDT
        • Thankyou - Authored by: Anonymous on Thursday, June 23 2005 @ 01:22 PM EDT
          • Thankyou - Authored by: Anonymous on Thursday, June 23 2005 @ 02:02 PM EDT
        • Thankyou - Authored by: mr.mighty on Thursday, June 23 2005 @ 01:48 PM EDT
    • Costs? - Authored by: eskild on Thursday, June 23 2005 @ 10:27 AM EDT
      • Costs? - Authored by: Anonymous on Thursday, June 23 2005 @ 11:34 AM EDT
        • Costs? - Authored by: radix2 on Thursday, June 23 2005 @ 06:23 PM EDT
          • Costs? - Authored by: Anonymous on Thursday, June 23 2005 @ 07:05 PM EDT
            • Costs? - Authored by: eskild on Friday, June 24 2005 @ 05:47 PM EDT
Authored by: Anonymous on Thursday, June 23 2005 @ 03:21 AM EDT
Why is the FSF involved in this? The suit is against IBM, Red Hat and Novell.

Does this mean that if I use the BSD license and someone sues me for it, UC
Berkeley has to come and defend me? Why should they and why should I want them
to? Their interests may not be the same as mine.


amiloride53, who has forgotten his login password

[ Reply to This | # ]

FSF Moves to Dismiss Wallace and for Stay on Filing Briefs on Summary Judgment Motion
Authored by: Anonymous on Thursday, June 23 2005 @ 04:49 AM EDT
The impression I get from following this is that Wallace is saying the GPL
prevents him from making money from GPL'd code. So he wants to be classed as

Even if the court found in his favor, nothing can stop someone else releasing
the same code for free, therefore this case seems pointless.

If Wallace is going on about his own code, there is nothing stopping him from
selling what ever licences to people who doesn't want to abide by the gpl, as
long as he uses only his code, and in the case of contributed code, the
contributers agree to allowing other licencing options for their parts of the

[ Reply to This | # ]

FSF Moves to Dismiss Wallace and for Stay on Filing Briefs on Summary Judgment Motion
Authored by: ff5166 on Thursday, June 23 2005 @ 05:52 AM EDT
" least hire an hour of an attorney's time to discuss your ideas
before you file something so beyond the pale you end up embarrassing

Magic, lovely post, made my morning, thanks PJ.

[ Reply to This | # ]

Public water fountains
Authored by: Anonymous on Thursday, June 23 2005 @ 08:12 AM EDT
Public water fountains reduce my sales of bottled water and soda. This is a
clear anti-trust violation.

Have I simplified the argument too much?

[ Reply to This | # ]

"Pro Se" strategy?
Authored by: Anonymous on Thursday, June 23 2005 @ 08:55 AM EDT

I wonder if this is the next strategy. Linux opponents can make pro se arguments
that a real lawyer would be disciplined for. Like Darl's
"unconstitutional" arguments.

They can then point to all the lawsuits against Linux and claim to PHB's,
"why risk a lawsuit?"

[ Reply to This | # ]

FSF Moves to Dismiss Wallace and for Stay on Filing Briefs on Summary Judgment Motion
Authored by: Rann on Thursday, June 23 2005 @ 10:19 AM EDT
Mad Scientist has it correct...

I don't have an issue with my divorce.

What I was trying to show by example was, unlike the parent post I was replying
to, I refuse to paint all lawyers (or other professionals) with the same
brush... because some are very ethical and principled. "Lawyers with good
ethics" does not have to be an oxymoron. In this I do agree with PJ. Far
too many hours were billed for what was a simple penny-anty divorce that NEVER
went to trial!

We have been talking about legal ethics here. I had an experience that showed
both sides of lawyer's ethics in a single case. In many ways, how my settlement
and divorce was handled mirrors what we are currently seeing evolve in the legal
cases we discuss on Groklaw. In the case of my divorce(backed up by other cases
I have learnt about since) my ex's lawyer didn't care a jot about her
feelings/stress level/health, my feelings/stress level/health, our kids'
feelings/stress levels/health or the impact on the backlog of cases already
before the courts ---- it was all about him and how much he could line his
pockets. When a divorce goes bad, we ALL pay through the additional costs of the
courts, law enforcement, and short AND long term social problems. Meanwhile, one
of the causes of all that thinks himself smarter=and-holier-than-thou for the
extra fees he billed.

The more I reflect on it, the more I am convinced that too many cases are
stretched out needlessly by lawyers with few ethics with the only real results
being the lining of some lawyers' pockets and anquish and turmoil to the clients
caught up in the mess. This was amply shown by the fact the judge signed my
divorce order in May, to be effective the end of June... but it was only filed
with the court clerk the following October 31st.... I wonder how many hours of
"highly technical legal work" the lawyer billed in between May and
October while he left the signed order in his outbox?

For those wondering... after I noted the discrepency in dates to my lawyer, she
pointed out the same to His Honour.... Mr. "Line the Pockets" was
suspended the Bar Society as a result.


[ Reply to This | # ]

Sufficiency of Wallace's complaint
Authored by: marbux on Friday, June 24 2005 @ 09:57 PM EDT
On pages 1-2 of his "answer brief" to FSF's motion to dismiss, Mr. Wallace argues that he is entitled to file a cursory complaint, quoting from Judge Richard Posner to the effect that complaints need not be detailed and need only include a "short statement" of the "legal claim:"
All that's required to state a claim in a complaint filed in a federal court is a short statement, in plain (that is, ordinary, nonlegalistic) English, of the legal claim. Form 9 in the forms appendix to the civil rules gives as an example, "On June 1, 1936, in a public highway called Boylston Street in Boston, Massachusetts, defendant negligently drove a motor vehicle against plaintiff who was then crossing said highway"; and Rule 84 states that the forms in the forms appendix "are sufficient under the rules and are intended to indicate the simplicity and brevity of statements which the rules contemplate." The courts keep reminding plaintiffs that they don't to have to file long complaints, don't have to plead facts, don't have to plead legal theories.
Kirksey v. R.J. Reynolds Tobacco Co., 168 F.3d 1039, 1041 (7th Cir. 1999).

It is a curious case to cite for the position Mr. Wallace advocates, since the complaint was dismissed in that case for failure to state a claim under Rule 12(b)(6).

Moreover, Judge Posner's dictum quoted by Mr. Wallace is incredibly misleading to those not versed in the law.

First, recurring judicial statements about the need for brevity in legal pleadings are very rarely the actual grounds of decision, as in Kirksey.

Second, the word claim is one of those "magic" legal terms that import the cumulative nuances of tens of thousands of case decisions. Kirksey itself is an excellent example.

Third, while the Federal Rules now proclaim that "notice pleading" is sufficient (as opposed to the former regime of "ultimate fact pleading"), no one knows what "notice pleading" actually means.

Fourth, Federal Rule 9 sets forth specific exceptions to notice pleading, requiring that certain matters be pleaded with "particularity." E.g., subsections b, f, and g.

Fifth, the case law is riddled with judicially created exceptions to notice pleading that have never been expressly adopted in the rules.

Sixth, the experienced practitioner knows from hard experience that any of those innumerable exceptions to notice pleading can jump out and bite you at any time.

Seventh, insufficient detail can force you to exhibit evidence to fill in the details, transforming the motion to dismiss into a summary judgment motion and raising an unnecesary risk of dismissal on the merits before you have the opportunity for discovery.

Eighth, there are other factors as well.

So the bottom line is that lawyers have a lot of incentives to err on the side of providing too much detail.

Mr. Wallace obviously has not learned such hard lessons. He was served with a proper motion to dismiss for lack of standing. His response should have been one or more affidavits showing that he did in fact suffer the kind of particularized injury the courts require to pursue an antitrust case.

I didn't see any affidavits.

Retired lawyer

[ Reply to This | # ]

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