What’s So Great about Nothing? The GNU General Public License and the Zero-Price-Fixing Problem

In 1991, Linus Torvalds released the first version of the Linux operating system. Like many other beneficiaries of the subsequent dot-com boom, Torvalds worked on a limited budget. Clad in a bathrobe, clattering away on a computer purchased on credit, subsisting on a diet of pretzels and dry pasta, hiding in a tiny room that was outfitted with thick black shades designed to block out Finland’s summer sun, Torvalds programmed Linux. Like some other beneficiaries of the subsequent dot-com boom, Torvalds created a product that is now used by millions. He owns stock options worth seven figures. Computer industry giants, such as IBM, Novell, and Sun, have invested time and energy in his work. But unlike many other beneficiaries of the subsequent dot-com boom, Torvalds gave Linux away for free. This Note argues that Section 2(b) of the GPL, which requires that sublicenses be granted at no charge, is a permissible price restraint. The justification for this is … nothing. Or, rather: a price of nothing on future distributions can and should be distinguished from non-zero prices. Although the vast majority of price-fixing is per se illegal, restraints on price that are necessary to achieve important procompetitive goals may be evaluated under the less restrictive rule of reason, which weighs the anticompetitive consequences of a practice against the procompetitive results. Part I demonstrates that GPL-based software could not be freely shared and modified without Section 2(b)’s restriction on price. The import of this is that Section 2(b)’s restraint on price is ancillary to goals that serve competition, and thus a per se rule should not be applied. The prohibition on price-fixing arises out of two separate concerns about competition. First, antitrust law seeks to protect consumers from higher prices fixed by cartels rather than by a competitive market. Second, antitrust law relies on market competition to produce higher-quality products. The remainder of this Note demonstrates that the use of the GPL is consistent with the goals of antitrust law. Establishing that the restraint is ancillary to other considerations does not determine whether the agreement violates antitrust law; instead, the restraint’s effect on competition must be evaluated.