Indemnity and liability for intellectual property. 3

[Myndex]

Indemnity and liability for intellectual property.

I'm an independent designer, and recently a new client has asked me to sign their lawyer's overly long contract (instead of my simple one). Included is a clause indemnifying them, and placing liability for any infringement of intellectual property that could conceivably be found in my design directly on me.


My question is, how much is indemnity insurance (should I chose to sign it seems I should have it) and how much insurance should one get?

Or should I insist that they modify the clause, to something like "will not KNOWINGLY infringe..."

The product is simple, and the productions runs will be so small (10K) that I doubt there's much opportunity for any infringement (in fact, the ID was done elsewhere, I'm only doing the part design).

Thanks for any advice


Andy

 

[MikeHalloran]

The situation smells like they _know_ they'll end up in court....



Mike Halloran
NOT speaking for
DeAngelo Marine Exhaust Inc.
Ft. Lauderdale, FL, USA

 

[Myndex]

I don't think so - It's just that this is a start-up project, and they have this aggressive lawyer who's kind of - well, he's a lawyer, and he does what lawyers do.

I don't see anything that is really a liability for me, since my only function is taking the design the ID person did, and turning it into plastic parts. Nevertheless, I don't want to ACCEPT liability, especially at the discount rate I bid.


It's *such* a small job (I doubt I'll bill more than 100 hours to them), I'm wondering if I should walk.


Cheers


Andy

 

[IRstuff]

I think that you should mark up the clause to your liking and send it back, then decide on walking after their response.

TTFN

 

[Myndex]

Thanks IRstuff - yes, I think that's what I will do.

A

 

[IRstuff]

There aren't too many companies that offer full indemnity and even fewer companies that have the chutzpah to demand it. Such a requirement is absurd.

The Lemuelson Foundation went around suing people for using barcodes that allegedly infringed on their patent. That was only 7 yrs ago, and more than 30 yrs after the invention of the barcode.



TTFN

 

[Myndex]

Thanks for that insight - it seemed pretty weird - I mean, I think these people are spending more on this lawyer for this ridiculous contract than they're going to spend on my work!!!

A

 

[IRstuff]

That's their perogative...

After a few more suppliers tell them to go pound sand, they'll get the message.

Alternatively, if they refuse to change it wording, you could simply up your bid to cover the insurance premiums.

TTFN

 

[Myndex]

Well, that's the thing - this is such a simple job, I was just bidding on it as an individual - I *could* run it through my corporation, and get my lawyer involved, but I'd just about have to double my fee - and for the insurance, you need to get a policy and pay for 20 years to cover some lawsuit years down the line - this job just isn't worth that!


Sigh... Ya try to give a little guy a good deal, and he tries to take ya to the cleaners!


Heh.

 

[plasgears]

This reminds me of an insurance experience I had some years ago. As a Certified Flight Instructor, I had an Air Scout group in which I was doing flight school on Wed and flying on Sat. It was based in an Assy of God church in IL.

I asked the pastor to provide insurance to cover any damages and liability to me and the students arising from the operation. He came up with a hold harmless insurance policy covering the church hierarchy. I quit the program after seeing that.

Assy of God is now alternately known as Cornerstone Ministries. Check your paper's classified for ads by Cornerstone for car contributions. Sell it on the open market instead.

 

[Ron]

Myndex...agree with IRStuff...mark it up and send it back. I do this routinely. Sometimes it works, sometimes not. I then have to make the decision to accept or not. If it is a broad form of indemnity, I'll walk from the project before accepting poor terms. Don't think about the marriage...plan for the divorce.

Indemnification is not always insurable, particularly in the broad form you have described. Indemnification is a lawyer's term for shifting liability from one party to another, in this case from them to you.

Indemnification should always be tied to professional negligence. As an example, you would agree to indemnify them for your negligent actions, but not for just any professional action on the project.

 

[Myndex]

Thanks Ron,

You and IR have given me some ammo/basis for dealing with this.


Best,

Andy

 

[Ron]

Andy...go to pdhonline.org and download the course material for "Every Word Counts-Contracting Mechanisms and Their Review, Module 1" (you'll have to register for the site, but you shouldn't have to buy the course to review the material). It will give you a bit more ammo for contract review.

Good luck.
Ron

 

[DRC1]

Indemnity and insurance are interelated on a contract. The indemnity creates an obligation to protect the contractee and the insurance provides the method and limits. Note that insurance is always to a limit and indemnification is usually with out limit. I have often seen indemnity against intectual property. However, if you are uncomfortable with it, I would strike it out. I would discuss with your insurance agent. He should be able to give you good advice on what is standard for your work. Better yet, If you have a short form , fillit out sign it and send it over. Tell them that for 100 hours work you dont want to spend a lot of time negoiating a contract.

Good Luck

 

[rnd2]

Why don't you say to them: "If you want it this way it'll cost you this. If you want it that way it'll cost you that."