Information Technology FEBRUARY 2004 Dealing with Possible “Open Sores” of Open Source Software Does your business use the Linux operating system? Are you considering using Linux or other so-called open source software programs? If so, you should be aware ofand you may want to take steps to protect againstthe risk that you may be sued for intellectual property infringement. Recent lawsuits by a Utah software company known as the SCO Group against IBM and Novell have gained considerable notoriety. The SCO Group claims infringement of its alleged intellectual property rights in part of the computer code that makes up the Linux operating system. The SCO Group is claiming damages in the billions of dollars, and it has threatened to bring similar suits against other Linux users. Whether or not the SCO Groups claims have any merit, they have raised the specter that businesses using Linux may incur considerable expenses simply responding to and defending against copyright or other infringement claims. All users of open source software may want to review their software license or acquisition agreements to determine whether a claim of intellectual property infringement would be covered by a warranty or indemnification agreement from their software or hardware vendor. Some large vendors, including HP, Novell and Red Hat, have announced Linux-related indemnification and other assurance programs for their customers. Businesses considering using Linux or other open source programs should carefully review the warranty and indemnification provisions offered by prospective vendors to ensure they cover claims of intellectual property infringement. Businesses that outsource technology or other functions to service providers, or that rely on service providers to host websites, databases or other applications, should check with their service providers to determine if they use Linux or other open source programs. If so, contracts with the service providers should be reviewed to determine if they contain warranty or indemnification protections against third party infringement claims brought against the service recipient relating to the service providers use of open source software. Where possible, new hosting, outsourcing and application service provider agreements likewise should be negotiated to include, for the benefit of the service recipient, warranty and indemnification protections against third party infringement claims. A typical noninfringement warranty might provide, as a remedy for breach of the warranty, that the vendor will supply a replacement or work-around for the infringing item. The noninfringement warranty might also include an option for the licensee or service recipient quickly or immediately to terminate the license, outsourcing, service provider or other agreement if the infringement is not promptly remedied. Kirkpatrick & Lockhart LLP A typical indemnification provision would obligate the vendor or licensor of the infringing item, or the service provider using the infringing item, to indemnify the buyer, licensee or service recipient against all costs and expenses, including court costs and attorneys fees, of defending against and resolving or settling infringement claims. insurance policies, which may cover both liability amounts and defense costs incurred in connection with the claims. Although sometimes overlooked in these circumstances, a companys comprehensive general liability policies may provide coverage for lawsuits alleging infringement of copyright or other intellectual property rights. In addition to direct contractual protections against infringement claims, businesses may be able to obtain coverage for these claims under existing BRUCE H. NIELSON 202.778.9256 [email protected] For more information on steps your business can take to protect against intellectual property infringement claims involving open source software, please contact one of our attorneys listed below: Bruce H. Nielson Leslie A. Sowle Henry L. Judy Marc S. Martin A. Thomas Morris Susan P. Altman Franklin B. Molin 202.778.9256 202.778.9472 202.778.9032 202.778.9859 202.778.9376 412.355.8261 412.355.6251 [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Kirkpatrick & Lockhart LLP Challenge us. www.kl.com BOSTON n DALLAS n HARRISBURG n LOS ANGELES n MIAMI n NEWARK n NEW YORK n PITTSBURGH n SAN FRANCISCO n WASHINGTON ............................................................................................................................................................ This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. © 2004 KIRKPATRICK & LOCKHART LLP. ALL RIGHTS RESERVED.