Pitfalls To Avoid In Indemnification Clauses In Tech Licensing / SaaS Agreements

Indemnity is one of the key issues in any licensing transaction and should be carefully reviewed. A quick overview and some thoughts on this important topic.

When it comes to commercial agreements, a key component that is often included is an indemnification provision. This is essentially an obligation for the licensor to be held responsible for any losses that can happen if an issue arises (sometimes the licensor can get an indemnity from the customer as well, but this is less common). For example, if you were to license a piece of tech, and there was an inherent flaw that ended up causing a data breach, the indemnification clause would clarify that you are responsible for things like legal fees or damages to the third party. While having an indemnification clause is a pretty standard part of tech-licensing contracts, there are some potential parts of a clause that can lead to greater issues. Here are some examples.