A Practical Guide To Software License Agreements: IP Infringement Indemnity And Remedies

Software license agreements often include a provision — known as an "IP infringement indemnity" — that requires the software vendor to provide the customer with limited protection and special remedies if a third party claims that the customer's use of licensed software infringes third party intellectual property rights. Customers should understand the protections and restrictions provided by the provision and consider whether to procure insurance for residual risk.

IP Infringement Indemnity

An IP infringement indemnity provides the customer with limited protection against claims, by persons who are not parties to the contract (known as "third parties"), based on allegations that the customer's use of the licensed software infringes the third party's intellectual property rights (e.g. copyright, patents and trade secrets). An IP infringement indemnity usually imposes two distinct obligations on the software vendor: (1) an obligation to defend the customer against IP