Intellectual House Indemnity – Usually
Indemnity clauses (often referred to as hold harmless clauses, indemnification agreements, or indemnity agreements) are popular in agreements exactly where 1 celebration wishes to shift particular dangers to yet another celebration. In intellectual home indemnification clauses, the danger is usually linked with patent infringement, trademark infringement, copyright infringement, trade secret misappropriation, computer software concerns, or some other intellectual home (IP) associated danger. An indemnity clause might be restricted to indemnification or it might also contain the obligations to “defend” and/or “hold harmless” the other celebration. Intellectual home indemnity clauses are specifically harmful to vendors for the reason that the fees to defend a standard IP claim could far exceed the payments to the vendor below the agreement.
Intellectual House Indemnity – Limits on Liability
Simply because the possible liability for indemnification obligations, specifically for IP indemnity claims, can be so higher, vendors will usually try to limit or cap their liability. One particular way this can be achieved is which includes a limitation of liability clause in the agreement and expressly applying that clause to cap or limit the indemnification clause. For instance, if the agreement gives a $50,000 charge to the vendor to create and provide a computer software remedy, the vendor could probably be liable for considerably additional if it is essential to defend a third-celebration copyright infringement claim. Even so, if the limitation of liability clause limits the vendor’s total liability to payments really received below the agreement and that limitation applies to the indemnification clause, then vendor’s liability is potentially capped at $50,000 even although the litigation of the claim could price $100,000s. Lots of purchasers with leverage will demand limitless or uncapped intellectual home indemnification. A possible compromise is for the purchaser and vendor to agree that the indemnification liability will be capped at some many of the vendor payments below the agreement.
IP Indemnity – Representations and Warranties
Intellectual home indemnification clauses regularly contain representation and warranties provisions, which present a trigger for indemnification obligations. For instance, computer software purchasers/licensors regularly demand a representation and warranty provision that the computer software deliverable is no cost from claims of infringement by third parties and additional that no third-celebration supplies or supplies for which the developer does not have permission have been incorporated into the computer software deliverable. These provisions are intended to shield the purchaser/licensor in the occasion a third celebration later tends to make a claim for copyright infringement or trade secret misappropriation. If this happens, the purchaser/licensor will probably try to force the developer to defend the claim and spend for any damages or settlements.