Firm to Offer Open Source Insurance

By Michael Singer | March 15, 2004
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UPDATE: A New York-based startup is preparing to offer "open source insurance" to some of the largest corporations in the world in response to legal concerns like the one being played out by SCO Group.

Open Source Risk Management, which provides consulting services as well as vendor-neutral indemnification to clients, is expected to debut an expanded range of business services this week, including insurance against open source litigation. After several months in stealth mode, the VC-backed company is officially launching at this week's Open Source Business Conference in San Francisco.

Already, OSRM has support from top open source leaders, including Eric Raymond, Bruce Perens and Richard Stallman, as well as Groklaw creator Pamela Jones, who has signed on as a director of research. While OSRM executive director John St. Clair said the client list remains confidential, the firm has approached Fortune 500 companies like Charles Schwab.

The need for protection is clear. Linux is the fastest-growing operating system worldwide; but lawsuits like SCO's threaten its viability. And what has happened to Linux could easily spill over to other open source platforms such as Apache or FreeBSD, according to St. Clair. Beyond basic copyright litigation, OSRM says there are also the legal land mines of patent claims, as well as claims of unfair competition and collusion on trade secrets.

"That is where open source is headed, if not there already," John St. Clair said. "There are some opportunities to provide clarity in the market with our company. People by and large are forging ahead with their distributions, but enterprise end users are concerned about moving forward. The question they pose to us usually is, 'Does this represent the first of many incidents? Is SCO a one-off, or is this part of a patent problem?'"

SCO is involved in legal battles over Linux with IBM and Novell, and is seeking licensing fees from European users, as well as Daimler-Chrysler and online automotive parts distributor Autozone. It's important to note that SCO hasn't yet won any cases in court that clearly give it the right to extract fees from Linux users. If patent problems do materialize, open source advocate Bruce Perens predicts they would happen after SCO's Linux lawsuits have worked their way through the legal system.

"So far, I like the concept of insurance rather than indemnification, but I don't want this to seem to be a reaction to SCO," Perens told internetnews.com. "SCO will go away whatever we do, they seem to be on the way out already. Without SCO in the picture, risk management is still a desirable thing for some companies. And it's not a problem unique to Free Software."

OSRM founder Daniel Egger is expected to highlight the company's offerings during a panel discussion about the legal issues surrounding open source on Wednesday.

Editor's note: OSRM executive director John St. Clair was incorrectly quoted in a previous version of this story.