Computing Without a Net?'s Linux & Open-Source Center Editor Steven Vaughan-Nichols doesn't think intellectual property indemnification, for open-source or proprietary software, is worth much for most companies.

Theres a wonderful scene in Neil Gaiman and Terry Prachetts novel Good Omens in which a Crowley, a devil, reads an end-user license agreement (EULA) and then sends it on to his fellows in hell with a one-word memo attached: "learn."

If youve ever read a EULA closely, you have to love it since your typical one guarantees absolutely nothing up to and including that the product will even run. The same is true of most software indemnification clauses.

Recently though, thanks to the SCO vs. Linux fuss, indemnification has become a hot button issue for many corporate software buyers. So lets go over exactly what indemnification is, what it isnt and what kind of guarantees are actually out there for any software.

Indemnification clauses and contracts are a kind of insurance policy. The software vendor is agreeing to compensate you for some potential loss or damage resulting from your proper use of their software. Note that I say "proper" use. If you dont use the software in exactly the way the indemnification clause spells out, youre as unprotected as a naked baby.

GPL software, like Linux, doesnt come with any such indemnification clause. Most software doesnt. For example, if you buy a five-user package of Microsoft Small Business Server 2003, youre not going to get any indemnification protection. This isnt a knock on Microsoft—most proprietary software companies, including IBM, dont offer such protection either as a matter of course.

Its not just box software either. To cite a December 2003 Aberdeen Group study, Computing without Indemnification and Warranty Contract by Bill Claybrook, the following is the indemnification policy from Microsoft governing a companys right to access the Microsoft OEM System Builder Web site: "Company agrees to indemnify, defend, and hold Microsoft, Microsoft Licensing, GP, their suppliers, and all of their officers, directors, owners, agents, and information providers (collectively, the "Indemnified Parties") harmless from all liability and costs incurred by the Indemnified Parties in connection with any claim arising out of any breach of the Agreement by Company or any Site User, including without limitation, reasonable attorneys fees. Company shall cooperate as reasonably required by Microsoft in the defense of any claim. Microsoft reserves the right to assume the exclusive defense and control of any matter otherwise subject to indemnification by Company." In short, good luck guys, youre on your own!

Now what you can do, especially if youre a big IT buyer, is to arrange a deal for indemnification protection. Or, even if youre only buying a dozen copies of a program, you can still ask. Many software companies will offer some kind of minimal intellectual property (IP) indemnification protection if you ask for it.

Next page: How much help is indemnification really?