Patent Infringement Indemnification Clause

Indemnity is a form of risk preparedness and disaster management option and is considered to be similar to a product warranty or insurance. When a patent indemnity clause is added to a contractual agreement, it usually facilitates the sale of a patent assets of the seller at the same price at which it was obtained.

Contractual indemnity is an agreement that serves as an assurance that the indemnitor would protect and secure the indemnitee against any possible damage, loss, or injury so that the indemnitee does not suffer from the legal consequences of an act or forbearance. Under an identification provision of a contract, one party normally agrees to bear or reimburse all costs, expenses, legal fees, and related damages owed or paid by another party. In simple terms, patent indemnity, means that the indemnitor agrees to defend a lawsuit; pay for any damages; and reimburse expenses including attorney fees, where the case is premised on the indemnitee’s use of the product sold by the patent seller.

Before the large sum of money paid by the patent licensee exchanges hands with the patent licensor, the licensee wants the licensor to hold him harmless in the event of any unforeseen loss or damage resulting from the ‘sold patent’. However, there is no compulsion and therefore, a party can even refuse to accept the indemnity clause.