Copyleft Licensing and EC Competition Law

Abstract

The growing popularity of open source software has ignited numerous legal studies on open source licenses. Most of them have focused on copyright and patent law. This article adds to the literature by studying open source licenses from EC competition law perspective. The question is, what competition law issues are relevant when open source products enter particular software markets. One can think of two kinds of anti-competition arguments: (1) those presented by proprietary companies against the licensing terms of open source products and (2) those presented by open source companies against the licensing terms of proprietary products. First, one can argue that several open source licenses - most notably GNU General Public License (GPL) used in Linux and other popular open source products - restrict competition in the software industry through price-fixing and grant back requirements. Some could even argue that open source licenses illegally extend beyond the subject matter of copyright law. These licenses have a reciprocal requirement - commonly called as copyleft - to grant back all development improvements to other market participants royalty-free. In effect, such requirements can erode the possibilities of any open source licensee - including proprietary companies - to offer other than royalty-free products. Second, one can construct arguments against the license terms of proprietary products. If dominating proprietary companies refuse to license a standard necessary for interoperability with compatible terms, they can create entry-barriers to open source products. Since open source licenses with copyleft clause require that no one can charge royalties for the use of open source products, royalty requirements based on use - may they be reasonable and non-discriminatory - effectively restricts competition from open source companies. This article proceeds as follows. First, the article presents the controversial copyleft clause used in many open source licenses. Then, the article discusses whether copyleft could be read as an anti-competitive price-fixing or grant back clause and whether copyleft illegally goes out of the scope of copyright's subject matter in the light of EC competition law. Further, the article discusses whether refusal to license dominating proprietary standards with fair terms could be held anti-competitive when copylefted products can't enter the markets and whether compulsory royalty-free licenses could be imposed in this kind of situations. Finally, implications to legal policy are discussed.