Indemnity

This is a discussion on Indemnity within the Intellectual Property Law Questions forums, part of the Legal Questions & Answers Forum category; Hi there, I own a small software company. A large company, let's call it Northern Airlines, purchased a product from us years ago, dealing with cryptography. A few months ago, ...

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  1. #1
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    Indemnity

    Hi there,

    I own a small software company. A large company, let's call it Northern Airlines, purchased a product from us years ago, dealing with cryptography.

    A few months ago, a patent troll firm indiscriminately sued lots of large companies (including Northern Airlines) for using secure internet connection (SSL, or HTTPS) claiming the use of secure connection violates a patent they had acquired. This is clearly a frivolous lawsuit, but the funny thing is, Northern Airlines has come to the conclusion that the product they purchased from us is somehow responsible for their legal trouble. (This is clearly not true, our product does not even touch secure communication, but that's beside the point.)

    So the law firm representing Northern Airlines sent us a letter asking how we plan on handling the lawsuit (it's their lawsuit, not ours, mind you), and also asking us to indemnify them from harm etc.

    So my question is: why should I sign this indemnity letter they are requesting? What is my benefit for doing it? What if I just refuse to indemnify them?

    My understanding of indemnity is this: if, say, I rent an excavator from ABC, Inc., they ask me to indemnify them in case I cause property damage with this equipment. They want me to assume whole responsibility for the damage. If I refuse to indemnify them, they will refuse to rent me the excavator. But in my case, I am not renting or buying anything from Northern Airlines, I have absolutely no business with them. They are the ones who purchased something from me.

    Thanks in advance.

    -- City Dweller


  2. #2
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    You should in no case sign any indemnification agreement. If Northern Airlines truly believes the software you sold to them is causing this problem, they will likely drag you into the lawsuit with them to which you will probably need to hire an attorney to fight back. Signing that indemnification agreement basically means you think they are correct and you are willing to pay for their lawsuit, damages, etc...
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  3. #3
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    Thanks a lot for your answer. That is what I thought too. Thanks again!

  4. #4
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    Code of Ethics violated?

    I have a followup question, if you don't mind.

    I was wondering if the law firm requesting me to sign an indemnity letter violated some sort of lawyer ethics code? Considering the potentially grave ramifications of my signing such a letter, wasn't the lawyer required, from an ethics point of view, to inform me of the consequences and advise me to consult a lawyer first?

    -- Thanks.

    -- C. Dweller

  5. #5
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    No. It is not their job to inform you of the consequences. They did not violate any rules/procedures.
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