This warranty asserts that the vendor's services, software, or deliverables do not infringe upon any third-party intellectual property rights, including patents, copyrights, trademarks, or trade secrets. In other words, the vendor promises that it has the legal right to provide what it's selling and that no other party can claim ownership or exclusive rights to the product or service. This is essential because if the vendor's offering infringes on someone else's IP, the customer could be sued by the actual IP holder, forced to stop using the product, or required to pay damages. The non-infringement warranty shifts this risk from the customer to the vendor, making the vendor responsible for defending against IP infringement claims.
This warranty is particularly important in technology contracts where IP disputes are common and can be extremely costly. Without it, a customer could invest significant resources in implementing a solution only to discover it violates a competitor's patent, leaving the customer liable for damages and forced to find an alternative solution.
Insist on a robust indemnification clause that requires the vendor to defend you against any third-party IP infringement claims at the vendor's expense, including legal fees and damages. Request that the vendor warrant it has conducted freedom-to-operate analysis and owns or has properly licensed all IP in its offering. Include a provision allowing the vendor to modify the service to make it non-infringing if an infringement claim arises, or to obtain a license on your behalf. Verify the vendor has IP infringement insurance and consider requiring proof of it. For high-value contracts, conduct your own IP due diligence or require the vendor to disclose any known IP risks.
Frequently Asked Questions
What does this clause mean in simple terms?
This warranty asserts that the vendor's services, software, or deliverables do not infringe upon any third-party intellectual property rights, including patents, copyrights, trademarks, or trade secrets.
Why should I care about this clause?
In other words, the vendor promises that it has the legal right to provide what it's selling and that no other party can claim ownership or exclusive rights to the product or service.
What are my options?
This is essential because if the vendor's offering infringes on someone else's IP, the customer could be sued by the actual IP holder, forced to stop using the product, or required to pay damages.
How does this affect small businesses?
The non-infringement warranty shifts this risk from the customer to the vendor, making the vendor responsible for defending against IP infringement claims.