I Only Indemnify for Willful behavior August 19, 2013
Contracts Are Complex
As a consultant, I routinely negotiate contracts for my services. One of the clauses that I often find in the first pass of a contract is one where I indemnify my client for any patent infringements in my code.
I have never and never will sign a patent infringement indemnification.
I'm perfectly happy to indemnify for copyright violations, because copyright violations require me actually copying the code.
But patents can be asserted even if I never saw the art that the patent was based on. Patents can be asserted even if I came up with the invention all on my own.
So, I usually change the language to only indemnify the client for willful violations of IP rights. Sure, if I know about a patent and I introduce a similar thing into the code I deliver for a client, I should own that.
The issue of patent indemnification is a risk allocation issue. But as a developer, I have less time to review the vast sea of software patents than I do to write software. In fact, if I needed to do a patent art search for every line of code I wrote, it would cost about 20x for me to get a project done.
Nor is the client usually in a position to assess the risks of the hundreds of cleaver things I build into the application.
So, the clause is just a risk shift from the client to me... but sadly it isn't.
False Sense of Security
Patent infringement claims cost millions of dollars to litigate and the only reason to litigate them is to win tens or hundreds of millions of dollars. But even with my assets and an insurance policy, I am not worth $10M+ to someone asserting that my code violated their patent.
So, if one of my clients is sued for patent infringement and they look to me to indemnify, I'm not going to have the resources to fight a patent lawsuit nor am I going to have the resources to pay a judgment. So, the client is still stuck with most of the cost of the patent infringement.
On the other hand, a patent infringement litigation would effectively terminate my business. I would be spending the vast majority of my time and my resources defending on. How do I know, I used to be married to someone who did IP litigation for a living. I know how time consuming a lawsuit can be.
Just Say Willful
So, I just say, "Willful."
I can control what code I write and I can make sure I don't copy and paste non-open source code and that I stick to the licenses of open source code I insert into projects.
I can control not doing anything related to any software patents I know about.
But I cannot indemnify a client for patent violations if I don't know about the patent and it's worse than useless for each of us if I do.