Lloyd's may offer open-source indemnity

Lloyd's of London is expected to underwrite insurance to protect open-source users from intellectual property infringement claims.

Lloyd's of London, the oldest insurance organization in the world, may soon underwrite open-source software against claims of intellectual property infringement.

The insurance would be available through brokers to companies and organizations worried about being sued over their use of open-source software such as Linux by companies that might claim it infringes their intellectual property rights.

John St. Clair, the chief operating officer of insurance firm Open Source Risk Management(OSRM), said last week that OSRM is working with "a number of" Lloyd's syndicates, which will start offering open-source insurance "within the next few months."

A Lloyd's spokeswoman was unable to confirm details, but St. Clair said the insurance would initially cover the open-source LAMP stack, which consists of the Linux operating system, the Apache Web server, the MySQL database and the Perl, PHP and Python scripting languages. Other open-source products may be added in future depending on market demand.

The insurance would be vendor-neutral and will therefore cover all Linux distributions, unlike the Linux IP indemnification policies offered by Hewlett-Packard, Red Hat and Novell, which cover only specific distributions.

"It will cover the basic commonality among all Linux distributions--at present this is the main legal target because it has the widest use. It might not cover distribution-specific packages," said St. Clair.

St. Clair was unwilling to give details on the expected pricing of the IP insurance, but said the costs would not deter companies from adopting open-source software.

"We are very confident that even with the cost of insurance it will still be less costly to adopt an open-source than a proprietary solution," said St. Clair.

Last year the OSRM commissioned an analysis of Linux, which found that the open-source operating system potentially infringes 283 patents. The results of this study were later used by Microsoft to discourage customers from switching to the open-source operating system.

St Clair said last week that the likelihood of IP infringement in open-source and proprietary software is similar, but customers may worry about being the target of an IP infringement case if they are using open-source software that is not linked to a single vendor.

"Open source does not present a greater risk than proprietary software. But because it doesn't have one owner, there's no single owner that stands between the customer and the IP owner. This can be a challenge for medium to large-sized enterprises that are considering open source," said St. Clair.