Start-up to sell open source insurance

A New York company has spotted a new business opportunity in The SCO Group’s legal battle with the Linux community: open source insurance.

Open Source Risk Management LLC (OSRM), a start-up company that last month hired Pamela Jones, former editor of the popular Groklaw.net Web site, as director of litigation risk research, plans to soon begin offering insurance policies to companies using open source software but fear that they may be sued, according to a company spokeswoman.

The company now offers a variety of professional services, including software certification and strategic consulting on open source software insurance. It is also planning a series of training sessions on how best to mitigate the risk of using open source software. The first such session will be held April 27 in Santa Clara.

SCO claims that the Linux operating system violates its Unix copyrights, a claim hotly disputed by the Linux community, and has sued a number of IT vendors and even two Linux users – DaimlerChrysler AG and auto parts retailer AutoZone – in connection with its intellectual property claims.

Though some Linux vendors like HP and Novell have already began to offer indemnification for their customers, these programs are “kind of limited,” said Heather Meeker, a partner with the Miami law firm Greenberg Traurig LLP, who is working with OSRM on the training sessions. Some indemnification programs, for example, no longer cover users who modify their Linux software – a key feature of open source – she said.

While there may be riskier areas in high technology – companies have lost billions of dollars because of computer security breaches, for example – the intense amount of publicity generated by the SCO lawsuit has created interest in open source software insurance, Meeker said.

Part of the reason for the concern over SCO is that the Lindon, Utah, software company has acted differently from companies in proprietary IP disputes. “One of the things that SCO did that raised concerns is they started sending letters to users of the software,” Meeker said.

OSRM is not simply responding to SCO, but actually providing a service that all software users should have, said Bruce Perens, an open source advocate who has had discussions with the company. “Software risk management is something that all software needs, and is something that’s not provided adequately for proprietary software,” he said.

SCO itself did not seem displeased to learn of OSRM’s offerings. “I guess this kind of thing was bound to creep up,” said SCO spokesman Blake Stowell. SCO believes that its $699 per processor Intellectual Property License for Linux, however, is a better idea. “Ours is certainly the most reasonable way to go and certainly the safest way to go,” he said.