Insurance co to vouch for Linux

By : |April 19, 2004 0



Eric Auchard


NEW YORK: A new company said it can certify that the basic code in the Linux operating software is free of copyright infringement and it will offer standard product liability insurance to developers and users.


The move would fill a gap in legal responsibility that has stoked fears over the risks of Linux, an open-source software in which the underlying code is available to users to modify as they see fit.

Software company SCO Group Inc. has been waging an aggressive legal battle against Linux, claiming that the product is based on its Unix software. SCO has filed lawsuits against AutoZone and DaimlerChrysler and threatened hundreds of other users with legal action, along with its copyright infringement suit against International Business Machines.



The new company, Open Source Risk Management (OSRM), set up by lawyer and venture capitalist Daniel Egger, plans to offer standard product liability insurance to major Linux vendors, big corporate users and individual developers of Linux.

“After a rigorous six-month process of examining the individual software files in the Linux kernel and tracing their origins, OSRM found no copyright infringement in kernel versions 2.4 and 2.6,” Egger, OSRM’s chairman, said in an interview. He was referring to the two most commonly used versions of the Linux operating system.

Roughly 1,500 corporate Linux users have received letters threatening legal action for using software that SCO says infringes on its intellectual property.


The battle over Linux, the most popular form of open-source software, has raised questions about who to hold responsible for the underlying code created through a combination of public collaboration and private initiative.

Linux marks a distinct break with the practice of Microsoft and other more traditional software developers who keep their code secret.


The New York company’s business model combines intellectual property technical research with a legal defense strategy. It is backed up with a form of product liability insurance for open source users.


OSRM is also looking beyond the legal battles with SCO to future intellectual property battles that may arise.

In the next two months, OSRM plans to begin offering insurance to corporate customers. It will charge standard liability insurance rates of around 3 percent of the cost of the potential liability, or $30,000 for $1 million worth of coverage.

OSRM is working to sign contracts with unnamed players in the liability reinsurance market, said Egger.


The company also said it has set up the Open Source Legal Defense Center in Washington, D.C., and plans to work with law firms already working on behalf of Linux vendors and corporate customers. The center will act as a clearinghouse for Linux defense strategies.

OSRM plans to charge $100,000 annually to provide legal defense to corporate Linux users. It will charge $250 to individual Linux developers for legal backing up to $25,000 in court costs.



© Reuters

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