WabiSabi Labi, a Swiss startup that caused a stir with the creation of an eBay-like marketplace for software vulnerabilities, plans to offer an intrusion-detection system and will open up its auction site to a wider range of intellectual property, according to a company executive.

"We are signing an agreement with a hardware producer and we are building, I can't say by when, but we will provide an intrusion detection system device based on zero-day signatures," said Roberto Preatoni, the company's strategist, during an interview on the sidelines of the Hack In The Box conference in Kuala Lumpur, Malaysia.

WabiSabi Labi allows security researchers to submit unpatched software vulnerabilities, called zero-days, for sale on the company's auction site where qualified buyers can bid on them. The vulnerabilities can be purchased using an exclusivity option, which prevents them from being sold to anyone else, or they can be sold repeatedly to different buyers.

In addition, WabiSabi Labi is close to announcing an alliance with "a very well-known security research company" to market its products through the auction site, Preatoni said. He declined to name the company before the deal is made public.

"The next step will be to open up the marketplace to any sort of intellectual property, not just security research," he said.

The premise behind WabiSabi Labi's zero-day marketplace is that ethical disclosure -- in which security researchers warn vendors about vulnerabilities in their software before disclosing them -- is unfair, because the researchers are not compensated for the work they do. The startup wants to end the "free ride" that software vendors have enjoyed and see that hackers and researchers get paid a market rate for their efforts.

WabiSabi Labi isn't the first to offer hackers and researchers a way to earn money for the vulnerabilities they discover. Several security companies, including 3Com's TippingPoint division, VeriSign's iDefense Labs, and Immunity, pay researchers for zero-days.

WabiSabi Labi now hopes to combine its efforts to see researchers compensated for the work they do with aspirations of being a security vendor in its own right.

Its planned intrusion detection system, a tool that monitors a network or server for suspicious activity, will be based on a database of zero-days sold through the company's auction site, and researchers will receive continuing payments when vulnerabilities they discover are included, Preatoni said. The only vulnerabilities that won't be included are those that are purchased using the exclusivity option.

Getting to the point where WabiSabi Labi's zero-day database contains enough signatures for an intrusion detection system will take a couple of years, and requires the company to convince security researchers to sell vulnerabilities they discover through its auction site.

That won't be easy. WabiSabi Labi executives face an uphill struggle to win over skeptics who believe ethical disclosure is still the best way to report software vulnerabilities and protect users.

"By releasing this zero-day information you put customers at risk," said Alexander Kornbrust, the managing director of Red Database Security and a researcher credited with uncovering dozens of security holes in Oracle databases.

Others are worried about how zero-day sales will affect public perceptions of security researchers and hackers.

"Having a zero-day eBay is dangerous for the community because it will enforce the idea that hackers are criminals," said Alessio Pennasilico, a security evangelist at Alba S.T. who has uncovered vulnerabilities in the software used to control industrial equipment found in factories and power plants.