Intellectual Property Infringement Indemnification Clause

What is Intellectual Property Infringement?

Intellectual property violation is the use, distribution, reproduction and exploitation of the IP assets without the permission of the IP rights owners.

Intellectual property encompasses various forms of creations and innovations, such as inventions, artistic works, designs, and trademarks.

In a nutshell, IP violation will happen in different ways. For instance, it can also depend upon the type of intellectual property that is involved.

Let us look into the important types of intellectual property infringements.

Copyright Infringement

Copyright infringement refers to the theft that occurs when someone publicly displays, uses, distributes, reproduces the copyright works.

The copyrighted works also include the music, films, books and software without gaining any permission from the copyright content owner.

Patent Infringement

Patent infringement will happen when someone sells your products that has a patented invention.

Even if someone sells, produces and imports the content with the patent invention without gaining their permission, you will also be subjected to the patent infringement.

Patent infringement can be direct (using the patented invention as it is) or indirect (contributing to or inducing others to infringe).

Trademark infringement is nothing but the usage of logo, symbol, phrase and name etc.

If any trade symbols or logos are similar to yours, it is connected with the trademark infringement. Also, it will pave a way to deceive the customers and make them confused about the product quality.

This occurs when someone acquires, discloses, or uses a trade secret without authorisation, typically through improper means such as theft, bribery, or hacking.

Trade Secret Infringement

Trade secrets are confidential business information that provides a company with a competitive advantage, like recipes, formulas, or manufacturing processes.

Intellectual property violation will have serious implications for the infringer. The infringer will face the financial damages, legal actions and reputational harm.

As a result, businesses must take proactive measures to protect their intellectual property assets and address potential violations promptly.

Intellectual Property Indemnification Clauses

An Intellectual Property violations Indemnification Clause is a contractual provision included in agreements to protect parties involved from the risks and liabilities associated with IP infringement claims.

The above clause outlines so many things, that includes:

The obligations of indemnitor to defend and hold harmless the other party in the situation of claims.

The lawsuits that come from the allegations of intellectual property violations.

These violations also depend on the services, activities and products that are governed by the agreement

Further Reading: Copyright and Digital Intellectual Property

IP Infringement Indemnity Sample Clause

Below is a sample Intellectual Property Infringement Indemnity Clause that can be included in an agreement.

Please note that this is a general example, and it is essential to consult with legal counsel to draft and tailor a clause that accurately reflects the specific circumstances and requirements of your agreement.

Intellectual Property Infringement Indemnity:

Indemnification: The Indemnitor promises to protect, support, and not hold the Indemnitee and its related parties responsible for any claims, actions, or costs related to intellectual property issues.

The issues such as patents, copyrights, trademarks, and trade secrets, involving the Indemnitor’s products, services, or activities under this agreement.

This includes covering any legal fees and expenses that may arise from such issues.

Notice and Cooperation: The Indemnitee must quickly inform the Indemnitor in writing about any intellectual property issues and reasonably help the Indemnitor in defending against such claims, with the Indemnitor covering the costs.

Control of Defense: The Indemnitor shall have the right, at its sole expense, to assume the exclusive control of the defense and settlement of any IP Infringement Claim.

This is including the selection of legal counsel, provided that the Indemnitee shall have the right, at its own expense, to participate in the defense with counsel of its choice.

Settlement: The Indemnitor must not settle any intellectual property claims without getting the Indemnitee’s written approval beforehand, which shouldn’t be unreasonably denied or delayed.

The settlement shouldn’t require the Indemnitee to admit fault or have any ongoing responsibilities..

Remedies: If there’s an intellectual property issue, the Indemnitor must

(a) pay any damages, costs, or expenses decided by a court or agreed in a settlement;

(b) pay back the Indemnitee’s legal fees and expenses; and

(c) choose to either (i) get a license for the Indemnitee to keep using the disputed intellectual property or (ii) change or replace it so it’s no longer infringing, as long as this doesn’t significantly harm its function, performance, or value.

Further Reading: Digital Piracy and Intellectual Property Infringement

Key Elements of Intellectual Property Infringement Indemnification Clause

1. Scope

The scope of an Intellectual Property (IP) violation Indemnification Clause refers to the extent and contract of the indemnification protection provided by the clause within an agreement.

Clearly defining the scope is crucial to ensure that both parties understand their respective rights and obligations under the indemnification provision.

This helps to avoid misunderstandings and disputes in the event of a violation claim.

When defining the scope of indemnification, consider the following aspects:

Types of intellectual property rights covered: The indemnification clause should explicitly mention which types of IP rights are included, such as copyrights, patents, trademarks, and trade secrets.

This ensures that the indemnification protection extends to all relevant IP rights associated with the products, services, or activities covered by the agreement.

Limitations or exclusions: In some cases, parties may agree to limit or exclude certain types of IP claims from the indemnification coverage.

For example, they might agree to exclude claims arising from the use of open-source software, the indemnitee’s modifications to the indemnitor’s products or services, or the combination of the indemnitor’s products or services with third-party offerings.

By setting out any limitations or exclusions, the parties can tailor the indemnification protection to match their specific risk tolerance and business objectives.

Geographic limitations: The indemnification clause might specify whether the indemnification protection applies to IP claims arising in certain countries or regions.

Particularly if the parties operate in different jurisdictions with varying IP laws and enforcement mechanisms.

Duration: The clause should indicate the duration of the indemnification protection, such as whether it extends indefinitely or terminates upon the expiration or termination of the agreement.

This helps to clarify the timeframe within which the indemnitor is obligated to indemnify the indemnitee for any violation claims.

2. Notice and Cooperation

The “Notice and Cooperation” aspect of an Intellectual Property (IP) Infringement Indemnification Clause sets forth the requirements for communication.

This component is essential to ensure a timely and effective defense against any allegations of IP infringement.

Notice: The indemnitee must provide prompt written notice to the indemnitor as soon as they become aware of a violation claim.

This requirement is important for several reasons:

a. It enables the indemnitor to assess the claim and determine an appropriate course of action quickly.

b. It allows the indemnitor to take control of the defense or settlement negotiations, as provided in the indemnification clause.

c. It helps to ensure that the indemnitor’s legal rights and interests are preserved, as some jurisdictions may impose time limits for responding to violation claims or initiating legal proceedings.

Cooperation: In addition to providing notice, the indemnitee is typically expected to cooperate with the indemnitor in defending against the violation claim.

3. Control of Defense

The “Control of Defense” provision in an Intellectual Property (IP) Infringement Indemnification Clause outlines the roles and responsibilities of the indemnitor and indemnitee in managing the defense against an IP violation claim.

This provision helps ensure that the indemnitor, who is ultimately responsible for indemnifying the indemnitee, has the authority to make strategic decisions and control the defense process.

Read the original version of this article on the Bytescare blog .