Talk about bad timing. Just as The SCO Group Inc. loses its main venture capital investor, seemingly putting another nail in the coffin of its litigious intentions, a start-up launches an insurance scheme to protect Linux users against being sued by the company.
Open Source Risk Management LLC says that it is a "virtual certainty" that following SCO's lawsuits against Linux vendors such as IBM Corp. and users such as DaimlerChrysler AG, others will be sued by companies like SCO trying to enforce their alleged intellectual property in open-source software.
The New York-based firm, which launched its first offering Monday, said that vendor-neutral open-source insurance would protect users against third party claims. It said the "terrible vulnerability" of shared ownership software could cost the hapless user US$150,000 a pop or US$3 million in legal defense fees if sued for patent infringement.
But the scary prospects put forward by the new company have not been well received. Comments on message boards about the offering conclude that users cannot be liable for copyright infringement as they haven't copied anything. Only the vendor would be liable.
Martin Brampton, director of Black Sheep Research, agreed, adding that that was why companies like Hewlett-Packard Co. (HP) automatically protected their customers from being sued as a result of using the company's Linux offering. "Sounds like nice work if you can get it," Brampton says of OSRM. "But I can't see that they've got anything to offer. The kind of people they want to insure aren't really at risk.
"Until SCO has won a big case -- against IBM or HP -- they haven't got a cat in hell's chance against individual users.It could go after people for not paying licence fees but the courts aren't going to do anything. It just isn't going to hit ordinary user companies.
"And now that BayStar is asking for its US$20 million funding back from SCO, that does suggest that they are not expecting a bonanza from these lawsuits. I think that action strongly suggests that people who have access to inside information share the scepticism (of people who think that such lawsuits are going to fail)."
The investor's move is another blow to SCO's public image and potentially to its plans to fight expensive courtroom battles.
BayStar's investment in SCO became a matter of controversy last month when it was revealed that Microsoft had been behind the venture capitalist's interest in the company. SCO had previously denied that the Linux rival had had anything to do with the BayStar deal.
SCO also suffered a set back when IBM asked a judge to throw out the company's claim against it which had alleged intellectual property rights over every version of Unix that Big Blue had ever produced. IBM made it clear that it felt confident that SCO hadn't produced enough evidence to make its case -- and promptly issued a counterclaim of patent infringement for UnixWare.