≡ Menu

Announcement: The Common Draft desk book of contract clauses and templates, with extensive research notes and commentary, is posted (in draft). If you’d like to be notified of significant developments in the project, please subscribe to updates at right, because I’ll be posting announcements on this blog. See also my first e‑book, Signing a Business Contract? A Quick Final Checklist for Greater Peace of Mind.

Patent-infringement warranties should be negotiated very cautiously

A patent-infringement warranty in a contract can be a decidedly non-trivial matter, because:

  • You can infringe a patent * without knowing it, indeed without even knowing that the patent exists;
  • You can infringe a patent that didn't exist when you did your product-design work — that can happen if the patent application was still pending when you did your design work, and the patent issued afterwards;
  • You can't manage compliance with a patent infringement warranty merely by making sure your people do their own work.

* Generally, infringement of a patent consists of (1) making, using, offering, or selling • a product or service • that comes within the scope • of any one of the claims of the patent; or (2) by inducing others to do so; or (3) by 'contributing' to such action by others.

If you're asked to give a patent infringement warranty for your product or service, you'll definitely want to consult patent counsel. You and your counsel might decide you need to commission a patent search and have the counsel provide you with a clearance opinion. That will usually involve non-trivial calendar time and expenses, which of course might have to be factored into your pricing and scheduling for the contract.

In contrast, copyright- and trade-secret warranties are comparatively easy for a provider to manage. Generally speaking, demonstrably doing one's own work, without improperly "borrowing" from others — that is, proving independent creation — should defeat claims of copyright infringement or trade-secret misappropriation. (FOOTNOTE: Proof of independent creation is great to have, but it's not necessarily required to prevail against copyright-infringement or trade-secret-misappropriation claims.)

Comments on this entry are closed.

On Contracts is Stephen Fry proof thanks to caching by WP Super Cache