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4 comments

Comment from: Ed Simpson [Visitor]
Ed Simpson

Good article Larry. For my part I would never ever EVER advise a licensor to accept this type of indemnification, and it would be a deal breaker if the licensee insisted on it. You’ve identified the pertinent risks and they’re just too big. I major on your 3rd bullet as the best reason why it’s an unreasonable ask, and would expect the licensee to do its own freedom to operate due diligence.

07/23/14 @ 04:04
Comment from: Joyce [Visitor]
Joyce

Now me, I would have picked the licensor’s implementation of the technology as the trickiest part. It’s difficult to draft an agreement that says, "We indemnify the technology on paper, but not once it’s in a box that you built."

07/24/14 @ 08:23
Comment from: Gary [Visitor]
Gary

Here is another way of looking at this question from the licensee’s vantage point. If this example involved for example taking advantage of open source or a free transfer of rights, then I understand. When a licensee pays something of value for the rights and the licensor says you are on your own if the right I licensed to you infringes on a third parties rights, that may not be commercially balanced. There are ways to address a situation where the licensee makes changes in the IP or comingles it with some other IP and that action causes the infringement. However, where the licensee is simply using the licensed technology "as is" without making changes and has paid for that right then it seems commercially balanced and appropriate for the licensor to bear some risk in protecting the licensee. Otherwise what the licensor is saying in the context of purchasing goods example you are self insured if something goes wrong. Part of what the licensee is paying for is the peace that I can use the technology with you protecting me if there is an infringement. If the licensee has no indemnity or one subject to a tiny cap, I would factor that in to what I would pay for the right to use the technology and check what alternatives may be available that are more commercially balanced.

07/28/14 @ 14:16
Comment from: Victoria [Visitor]
Victoria

With respect to the last bullet point, even if the licensor has cleared patent for a product, that does not necessarily mean the product will not be subject to an infringement claim nonetheless, for a number of reasons, e.g. continuations, pending claims, someone disagrees with licensor’s noninfringement assessment. This is really a risk allocation issue more than anything else, because not everything is within licensor’s control.

04/19/17 @ 15:10