Lloyd's to provide open source IP indemnity

Syndicates at Lloyd's of London have finally woken up and smelled the coffee - they may soon begin underwriting open source software

Lloyd's of London, the oldest insurance organisation in the world, is to underwrite open source software against claims of intellectual-property (IP) infringement.

The insurance will be available through brokers to companies and organisations who are worried about being sued over their use of open source software such as Linux by companies who would claim it violates their intellectual-property rights.

John St Clair, the chief operating officer of insurance firm Open Source Risk Management (OSRM), said on Friday that OSRM is working with "a number of" Lloyd's syndicates, who 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 will 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 will be cover all Linux distributions, unlike the Linux IP indemnification policies offered by HP, Red Hat and Novell, which only cover 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 are 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.