Third party infringement: Overview, definition, and example
What is third party infringement?
Third party infringement refers to a situation where someone who is not a party to a contract or agreement violates intellectual property (IP) rights, such as copyrights, trademarks, or patents. This often happens when an outside party uses, copies, or distributes protected content without permission.
For example, if a company creates a unique logo and another business (not connected to the original company) starts using a similar logo without permission, that would be third party infringement of trademark rights.
Why is third party infringement important?
Protecting against third party infringement is essential for businesses that rely on intellectual property, such as technology companies, creative agencies, and manufacturers. Without clear protections, third parties could misuse a company’s inventions, branding, or content, leading to financial losses and reputational damage.
In contracts, clauses addressing third party infringement help define the responsibilities of the parties in case an outside entity infringes on IP rights. These clauses may specify who is responsible for enforcement actions and what remedies are available.
Understanding third party infringement through an example
Imagine a software company develops a proprietary app and licenses it to a business. Later, an unrelated third party copies the app’s code and starts selling a similar product. The software company, as the IP owner, may need to take legal action against the infringer, but the business using the app may also be affected if the infringement leads to market confusion.
In another case, a clothing brand partners with a designer to create exclusive designs. If an outside manufacturer starts producing and selling knockoffs of those designs, both the brand and the designer may suffer financial losses. A third party infringement clause in their agreement could clarify who is responsible for taking legal action.
An example of a third party infringement clause
Here’s how a third party infringement clause might appear in a contract:
“If any third party infringes upon the intellectual property rights associated with this Agreement, the Parties shall cooperate in enforcing such rights. The Intellectual Property Owner shall have the primary right, but not the obligation, to take legal action against the infringing third party.”
Conclusion
Third party infringement can have serious financial and legal consequences for businesses, especially those relying on intellectual property. Including clear contract provisions helps define responsibilities and legal options in case of infringement. Businesses should also take proactive measures, such as trademark registration and monitoring, to protect their IP from unauthorized use.
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.