An indemnity is a promise to pay for losses if something goes wrong. IP indemnity scope defines exactly what kinds of IP problems the other party will pay for. The scope might be narrow (they only cover direct patent infringement claims) or broad (they cover patents, trademarks, trade secrets, and any legal claim related to IP). This matters because a narrow scope leaves you exposed: if you're sued for trademark infringement but the indemnity only covers patents, you pay your own legal costs. The scope also affects whether they pay just your legal fees or also damages awarded against you. Courts in the US and UK interpret indemnity clauses strictly, so the exact wording determines who pays.
Negotiate for the broadest indemnity scope possible—include patents, trademarks, copyrights, trade secrets, and "any third-party claim" related to IP. Specify that they pay both your legal defense costs AND any damages or settlements. Add a clause requiring them to control the legal defense (so they can't settle without your consent). If they resist, at least get them to cover the IP categories most relevant to your business. ---
Frequently Asked Questions
What does this clause mean in simple terms?
An indemnity is a promise to pay for losses if something goes wrong.
Why should I care about this clause?
IP indemnity scope defines exactly what kinds of IP problems the other party will pay for.
What are my options?
The scope might be narrow (they only cover direct patent infringement claims) or broad (they cover patents, trademarks, trade secrets, and any legal claim related to IP).
How does this affect small businesses?
This matters because a narrow scope leaves you exposed: if you're sued for trademark infringement but the indemnity only covers patents, you pay your own legal costs.