Lloyds offers relief for Linux-patent concerns

Lloyd's of London is to offer insurance to protect firms if patent actions arise from their use of Linux and open-source software.

The offer may attract firms that would not be able to afford the costs of a legal action for patent infringement. Experts estimate that the cost of defending a typical patent case in the US is $3m.

The policy from Lloyd's will be offered in conjunction with software insurance specialist Open Source Risk Management (OSRM), which already offers similar policies and says it will charge firms $60 (£35) per server.

OSRM is negotiating with three Lloyd's insurance firms, one of which will be chosen to back the new offering which is slated for launch this autumn.

"Patents pose a financial risk to corporate Linux users," said Dan Ravicher, senior counsel to the Free Software Foundation.

"This heavy cost of proving even weak patents invalid could fall on unprepared end-users who, until now, have often been forced to pay settlements to avoid risking millions on litigation. OSRM's new patent insurance gives such end-users another way to address the issue, as it is a direct competitive alternative to licensing or litigating."

Daniel Egger, chairman and founder of OSRM, said, "Current US patent law creates an environment in which vendors and developers are generally advised by their lawyers not to examine other people's software patents, because doing so creates the risk of triple damages for 'willful' infringement. This studied ignorance leaves the field open to those who would spread fear and disinformation."