The court decided that "The GPL and open source software have nothing to fear from the antitrust laws."

Wallace was suing on the basis of price-fixing - contending that Linux was a "no cost" deterrent to competition - and charging IBM, Novell, Red Hat and the Free Software Foundation, which wrote the GPL, as conspirators to the price-fixing.

His first mistake was attacking the GPL as a would-be competitor rather than a consumer. That basically got him and his original two cases bounced out of district court.

In a six-page decision handed down last week, the appeals court gives equally short shrift to his arguments. "A 'quick look' is all that's needed to reject Wallace's claim," it decided.

It found that Wallace was premature, suggesting that if he was going to charge predatory pricing, as he did, he should have waited until low prices forced producers out of the market so that the survivor or cartel of survivors could jack prices up until they reach monopoly levels.

"When exit does not occur," it said, "or recoupment is improbable even if some producers give up on the market, there is no antitrust problem," adding that "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."

The court finds it inconceivable that the GPL could ever lead to monopoly prices. "How could it," it wrote, "when the GPL keeps price low forever and precludes the reduction of output that is essential to monopoly?"

The court may be skating on thin ice when it next contends that - because more people still use Windows, Apple or Solaris than Linux - "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."

Having come to this conclusion, the court proceeds to say, "It does not help to characterize people who accept the GPL as 'conspirators'" since 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."

The court also sounds a tad Pollyanna when it says that it doesn't help to call the GPL price-fixing since "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."

The court suggests that Wallace should have contended that "Linux has such a large market share, or poses such a threat to consumers' welfare in the long run, that evaluation under the Rule of Reason could lead to a condemnation…unless a firm with market power can increase its profits by curtailing output, the practice is lawful under the Rule of Reason."

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