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Ethics continues to be a central question in the sales.

Paying $75,000 for vulnerability research likely means that the buyer is a government agency, and not a private company, said Terri Forslof, manager of security response for 3Com's TippingPoint. And that raises a number of questions that should concern any ethical researcher, such as which government and whether the software vendor is notified of the vulnerability.

"When you are paying $75,000 for a vulnerability, that tells me that you are not reporting it to a vendor," Forslof said.

Because vulnerability information has a very short lifespan, recouping tens of thousands of dollars spent on buying a security flaw is difficult. However, by not telling the software vendor, it's likely that the value of the information can be preserved longer.

That fact leads to a trade off between ethics and profit for most researchers. Under the accepted responsible disclosure timeline, the flaw finder could notify the software vendor, pressure it to fix the flaw, wait months for a patch to come out and, perhaps, get acknowledged in the advisory. On the other hand, the researcher could sell the information for a significant price and not ask questions about the buyer.

"The buyer with the highest price often wins, but ethics do come into play when the business of the buyer can't be verified," Metasploit's HD Moore said in an e-mail interview.

Currently, the gray market does not seem to necessarily compete with government buyers. Rewards can be higher on the gray market compared to 3Com's and VeriSign's programs, with typical offers for client-side vulnerabilities ranging from $5,000 to $50,000, he said. However, government purchasers will generally bid higher.

Raimund Genes, chief technology officer for antivirus firm Trend Micro, has also seen offers for zero-day flaws between $5,000 and $20,000 in the gray market. More often, however, buyers attempt to trade credit-card numbers or goods, he said.

A notable exception occurred last month, when a researcher attempted to sell an alleged vulnerability in Microsoft's Windows Vista operating system for $50,000, according to Genes. That could be a sign that criminal enterprises are willing to compete for vulnerabilities.

"Definitely, they guy who was offering to sell (the flaw) though it might be possible," Raimund said. "It might not be out of range."

Fraudsters and spammers could turn a significant vulnerability into a widespread collection of compromised PCs - a bot net. Spammers have netted significant profits from stock-touting campaigns, while fraudsters have used bot nets to launch denial-of-service attacks as part of an extortion campaign or harvest valuable data from the systems.

Companies, on the other hand, have to justify the expense of buying vulnerabilities through enhanced services or penetration tests bolstered by sure-fire 0-day exploits.

For 3Com's TippingPoint, the Zero Day Initiative (ZDI) gives its researchers a leg up on attackers and competitors, because having the flaw information means more time to create and test the filters for exploits using the vulnerability. The company also gets publicity and a selling point for its services.

Still, it's not always an easy sell, 3Com's Forslof said.

"We continually have to justify where we recoup the cost," she said. "Mainly, we consider that we recoup it in research - look how much you would have to pay a top-notch researcher."

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