Open source intellectual property fears rise

Intellectual property indemnification is being seen as an IT management issue

In the wake of SCO's controversial attempts to claim ownership of key elements of the Linux operating system, industry watchers have noted that senior IT executives are becoming much more worried about open source intellectual property indemnification.

According to a newly released IDC survey of 200 US-based IT professionals, intellectual property indemnification is being seen as an IT management issue rather than an open source issue.

The study predicts that effective intellectual property management will become an increasingly important and differentiating issue for software vendors over the next five years.

During this time end users will continue to push for standardisation, education, clarity and consistency around vendor indemnification policies.

"End user organisations should be concerned about the potential cost and disruption to their business if they need to replace a technology, the potential distraction of management attention in defending the company against an intellectual property infringement claim, and the potential effects on suppliers entangled in intellectual property litigation," said Stephen Graham, group vice president for IDC's Global Software Business Strategies.

Faced with the prospect of a legal battle, the analyst firm found that IT executives are most concerned with the negative impact on software innovation and the financial impact of replacing existing software.

Once a company is threatened with intellectual property infringement litigation, costs are typically incurred to secure legal counsel, at which point the company must weigh the potential risk to its IT investment and take appropriate action.

Over 30 per cent of respondents participating in IDC's survey currently have or are developing an indemnification policy.

IDC warned that the number and proportion of software patents is rising dramatically as companies are motivated to acquire patents, and in some cases use them as a competitive instrument.

Due to their greater resources, larger companies are likely to be the primary targets for intellectual property indemnification lawsuits, and will be the group to watch in regards to developing indemnification and management approaches.

"IDC believes that addressing customer or partner solution development issues is the most significant area for vendors to develop competitive advantage in intellectual property indemnification," explained Graham.

"Our research shows that this issue is not just hype from media coverage about recent indemnification litigation, but a concern deeply rooted in industry issues that will continue to develop in the near future."