An IP Warranty and IP Indemnification Walk into a Karaoke Bar...

An IP Warranty and IP Indemnification walk into a karaoke bar...

They both want to sing "Bohemian Rhapsody".

(Bar owner groans, "Not that song again...".)

He turns to them, and says something different to each of them.🍺

To the IP Warranty , he says, "I have that song and I guarantee that you have the right to sing the song. We’ve got all the proper licenses, so you won’t get sued for singing it." 🍻

But to the IP Indemnification, he says, “I have that song. And if you get sued or Freddie Mercury’s ghost comes after you, I’ll handle it. I’ll cover all your legal fees, handle the lawsuit, and pay any damages.”

What's the difference and which is preferable?

For the IP Warranty, the bar owner is giving a promise that you can sing the song without legal issues. But not saying to you what happens if you are sued - you'll have to figure that out yourself.

For the IP Indemnification, the bar owner isn’t making any guarantees about the song’s rights but will step in to protect you if trouble arises.

In technology contracts, the concept is similar.

In general terms:

📑 An IP Warranty reassures the customer that they can use the IP without issues but the customer bears the initial costs and responsibility of any claims and legal work, including trying to extract compensation from the vendor. Some vendors will provide limited remedies.

📑 An IP Indemnification shifts the burden to the vendor, covering the customer from the start of any claim, though the remedies might be more limited.

So, what’s your go-to karaoke song, and what do you prioritize when dealing with IP warranty vs. IP indemnification?

For a deeper dive into other common SaaS topics, download "10 Contract Basics to Know as a SaaS Attorney".

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