Copyright indemnity: Overview, definition, and example
What is copyright indemnity?
Copyright indemnity refers to a legal provision in a contract where one party agrees to protect another party from financial losses, damages, or legal costs that may arise from a third-party claim of copyright infringement. This means that the party providing the indemnity (the indemnitor) promises to cover the legal expenses or any settlements resulting from a situation where the other party (the indemnitee) is accused of violating someone else's copyright. Typically, this indemnity covers the costs of defending the claim, including legal fees, damages, and any penalties.
For example, if a company is using a software that it didn't create, and a third party claims that the software infringes on their copyright, the company providing the software may offer a copyright indemnity to protect the buyer or user from legal and financial consequences.
Why is copyright indemnity important?
Copyright indemnity is important because it provides a safety net for individuals or businesses that might be exposed to potential legal claims regarding copyright infringement. Without indemnity, a party may face substantial legal fees or damages if they unknowingly infringe upon someone else's copyright. This indemnity clause helps reduce risk and ensures that the indemnitee will not bear the financial burden of defending themselves or paying for any settlements or judgments related to the infringement claim.
For businesses, including a copyright indemnity clause in contracts is essential when distributing, licensing, or using third-party content (such as software, music, or written works). It protects them from the financial and reputational risks associated with copyright disputes. For creators or distributors, offering copyright indemnity can help build trust with customers and clients, assuring them that the content or products being provided are legally compliant.
Understanding copyright indemnity through an example
Imagine a company that licenses a design template from a third party to use in their marketing materials. The license agreement includes a copyright indemnity clause stating that the designer will indemnify the company against any third-party claims that the design infringes on someone else's copyright. A year later, a third party sues the company for copyright infringement based on the template. The designer, under the indemnity clause, agrees to cover the legal costs and any damages the company incurs as a result of the lawsuit.
In another example, a publishing company enters into a contract with an author to publish a book. The contract includes a copyright indemnity provision, whereby the author agrees to indemnify the publisher if the book is found to infringe upon the copyrights of others. If the publisher faces a lawsuit alleging copyright infringement, the author would be responsible for defending the publisher and covering any resulting costs or settlements.
An example of a copyright indemnity clause
Here’s how a clause like this might appear in a licensing or distribution agreement:
“The Licensor agrees to indemnify, defend, and hold harmless the Licensee from and against any and all claims, losses, damages, costs, or expenses (including legal fees) arising from any third-party claims that the licensed content infringes upon the intellectual property rights of any third party, including but not limited to copyright infringement.”
Conclusion
Copyright indemnity is an important legal provision that protects parties from the financial risks associated with copyright infringement claims. By including a copyright indemnity clause in contracts, parties can ensure that they are not left bearing the financial burden of defending themselves against such claims. For creators, distributors, and licensees, understanding and providing copyright indemnity is crucial for managing legal risks, ensuring compliance, and maintaining trust in business relationships.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.