OSRM Debuts Linux Legal Insurance

Joining the ranks of Linux distributors HP (NYSE: HPQ), Novell and Red Hat, a company named Open Source Risk Management (OSRM) has launched a program to protect large and small users from legal entanglements arising from adoption of the open-source operating system.

According to OSRM, its move into the indemnification business comes after a rigorous six-month evaluation of the files in the Linux kernel -- and a finding that there are no copyright infringements in versions 2.4 and 2.6 of the operating system.

"We decided to go straight to the heart of the matter and evaluate whether we could defend the Linux kernel," OSRM founder and chairman Daniel Egger said in a statement. "We determined that we can; and we will. Our clients will receive legal protection equal to, if not beyond, what they receive with proprietary software licenses."

Vendor-Free Protection

Unlike some other indemnification programs, users need not be wedded to a particular Linux vendor to obtain OSRM coverage.

Neither is there a limit on the coverage. Businesses can buy as much coverage as they want for a fee of 3 percent of the coverage amount -- a rate, according to OSRM, comparable to that found in insurance policies covering intellectual-property lawsuits. So, if a company wanted US$1 million in coverage, it would pay $30,000 per year for it.

A legal defense center is also being set up by OSRM where individual users can get legal assistance on Linux matters for $250 and corporations can do so for $100,000.

Best Practices

According to a statement by OSRM, its indemnification program differs from a typical insurance policy because it "works with clients to assess and mitigate their risks, and then helps implement a set of best practices for mitigating legal risks around their use of Open Source."

Also, rather than pay for a client's lawyers, OSRM hires and provides specialized lawyers for its clients. "These lawyers are chosen from OSRM's carefully selected panel of leading intellectual property defense litigators; all of whom have extensive experience with the many highly technical Open Source legal issues," the company explained.

The rise of a number of indemnification programs for Linux is largely a reaction to copyright-infringement lawsuits filed by The SCO Group against IBM (NYSE: IBM), AutoZone and DaimlerChrysler.

SCO Case Weak

"Along with many others, we agree that lawsuits like SCO's are legally weak; but we recognize the business issue for Linux users is that even cases without merit cost significant time and money to defend," Egger said.

"This is not about bad software; there is nothing inherently more risky about using Open Source," he added. "This is about providing a united defense against those trying to profit from a legal system that permits frivolous but expensive claims."

Laura Koetzle, a senior analyst at Forrester Research in Boston, told TechNewsWorld: "The data that we've collected shows that a lot of end customers are worried about the SCO lawsuit. They're worried that if SCO wins, they'll be liable for back licensing fees."

Anxiety Relief

"These programs are a way for customers who are chary of the lawsuit turning out the way they don't want it to turn out to go ahead and use Linux and not worry about it so much," Koetzle added.

While indemnification programs offer a measure of protection for Linux users, they may have broader implications for the open-source community as a whole, according to Laura DiDio, a senior analyst with the Yankee Group.

"What it all boils down to is that we're seeing the rapid commercialization of Linux," DiDio told TechNewsWorld. "It is very quickly being transformed from a sort of free hobbyists' toy to a real commercial enterprise, with all the attendant fees and costs associated with a commercial desktop and server operating system."

Big Bets Off

"Companies have shown a reluctance to bet big on Linux," Novell spokesperson Bruce Lowry told TechNewsWorld. "We have a variety of things that we think will help get a CIO beyond the concerns he or she may have about Linux, and our indemnification progam is a piece of that."

DiDio maintained that users who opt to participate in indemnification programs may find them an expensive proposition. "At the end of the day, this could end up being much more expensive than the monies that companies are spending on Microsoft (Nasdaq: MSFT) licenses right now, because you have to keep buying it every year," she asserted.

Moreover, she added, Microsoft offers one-year warranties for all of its volume-licensed customers, and those warranties offer unlimited indemnification. "There is no cap on liability," she said. "If you get sued for $150 million, Microsoft will pay for it."