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We rethought the typical indemnification clause

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Full section text

Handling third party claims

X.X.  Provider’s Obligations to Handle Cloud Services IP Claims.  If Customer receives a Service Infringement Claim from an Outside Entity (including after the end of a Service Period), and that Claim is not solely the result of Customer’s Improper Customization; Customer’s use of a Trial or Pre-Release Feature; or the Provider’s implementation of Customer’s specifications, instructions, or requirements; and Customer complies with the requirements in the Section “Claim Coordination” below, then, at its own expense, Provider shall do the following as Customer’s only legal remedies for that Claim:

  1. defend Customer from and against the Claim;
  2. pay, on behalf of Customer, all amounts awarded against Customer (including reasonable attorneys’ fees) as a result of the Claim, or any amounts agreed by Provider to be paid in settlement of the Claim; and
  3. if the Claim results in a settlement or court order prohibiting Customer from using any part of the Cloud Services, then either: (i) obtain the necessary rights for Customer to continue using the Cloud Services, if commercially reasonable; (ii) implement an Infringement Mitigation, if feasible; or (iii) if neither of those options is available, proceed with Early Termination in accordance with the “Early Termination” Section, and issue a Prorated Refund to Customer.
  4. {"name":"Reimburse the Customer","addText":"reimburse the Customer for all the Customer's expenses in helping to defend the claim."}

{"name":"Claims involving Trials and Pre-Release","addText":"If the claim involves the Customer’s use of a Trial or Pre-Release Feature, the Provider's  obligations shall be limited to ..."}

Optional variations
Modify text below to replace it.
Oops! Something went wrong while submitting the form.
{"optionalVariations":{"option1":{"name":"Claims involving Trials and Pre-Release","addText":"If the claim involves the Customer’s use of a Trial or Pre-Release Feature, the Provider's obligations shall be limited to ...","afterText":"</li></ol>","displayedText":"Carve out Claims involving Trials and Pre-Release Features"},"option2":{"name":"Reimburse the Customer","addText":"<li>reimburse the Customer for all the Customer's expenses in helping to defend the claim.</li>","afterText":"and issue a Prorated Refund to Customer.</li>","displayedText":"Reimburse the Customer for helping to defend a Claim"}}}

X.X.  Customer’s Obligations.  Customer will have the following obligations to handle claims arising from misuse.
‍If Provider receives a Claim from an Outside Entity (including after the end of a Service Period) and that Claim arises from Customer’s Infringing or Unlawful Content{"name":"Narrower claims - Infringement only", "deleteText":", Customer's violation of the \u201cProhibited Data\u201d Section, or Customer's use of the Cloud Services for a High Risk Activity or unlawful purpose"}, and Provider complies with the requirements in the “Claim Coordination” Section, then, at its own expense, Customer shall do the following:

  1. defend Provider from and against the Claim; and
  2. pay, on behalf of Provider, all amounts awarded against Provider (including reasonable attorneys’ fees) as a result of the Claim, or any amounts agreed by Customer to be paid in settlement of the Claim.
Optional variations
Modify text below to replace it.
Oops! Something went wrong while submitting the form.
{ "optionalVariations": { "option1": { "name":"Narrower claims - Infringement only", "afterText":"Unlawful Content", "deleteText":", Customer\u2019s violation of the \u201cProhibited Data\u201d Section, or Customer\u2019s use of the Cloud Services for a High Risk Activity or unlawful purpose,", "displayedText":"Narrow the scope to cover infringement claims only" }}}

X.X.  Claim Coordination.  To receive the benefit of the other party’s obligations in this Section “Handling Claims from Others”, a party must:

  1. promptly notify the other party of the Claim, though delayed notice only reduces the other party’s obligations to the extent the delay meaningfully impairs their ability to respond or resolve the Claim;
  2. if the other party is responsible for defending the Claim, allow that party to control the Claim’s investigation, defense, and settlement, but only if the notifying party retains the right to hire its own non-controlling counsel at its own expense, and to approve in advance any settlement that would require it to admit fault or a violation of law;
  3. if the other party is responsible for defending the Claim, provide reasonable assistance, upon request, in connection with the Claim’s investigation, defense, and settlement.
  4. {"name":"coordination rights for the party not controlling the defense","addText":"The party not controlling the defense will have the rights to do a, b and c"}
Optional variations
Modify text below to replace it.
Oops! Something went wrong while submitting the form.
{ "optionalVariations": { "option1" : {"name":"coordination rights", "addText": "<li>The party not controlling the defense will have the rights to do a, b and c", "afterText": "if the other party is responsible for defending the Claim, provide reasonable assistance, upon request, in connection with the Claim’s investigation, defense, and settlement.</li>", "displayedText":"Add coordination rights for the party not controlling the defense. " }}}

What we did differently

Indemnities are often over-broad, under-defined, and hard to use when it matters. Our version is focused and practical, easier to agree on, and easier to act on when a real claim hits. In this rewrite, we scoped the clause to cover only the claims clearly caused by one side’s actions.  Then we paired it with a practical framework for how defense, payment, and resolution should work

  • Easier to explain
  • Easier to agree on
  • Easier to use when it counts
Definitions
  • Uncapped Liabilities<endsummary>
    1. Provider’s liabilities under the “Provider’s Obligations to Handle Service Infringement Claims” Section[ and the “Customer’s Obligations to Handle Claims Arising from Misuse” Section”];
    2. either party’s liabilities from any claim that it infringed or misappropriated the other party’s Intellectual Property Rights;
    3. either party's liabilities from any claim that it breached the “Maintaining Confidentiality” Section, excluding obligations pertaining to Customer Content; and
    4. liabilities that cannot be limited by law
  • Data Breach Liabilities<endsummary>a party’s cumulative total liability for any claims resulting from its breach of the “Maintaining Confidentiality” Section (solely those obligations pertaining to Customer Content), the “Implementing Security and Privacy Measures” Section, or the DPA
  • Service Infringement Claim<endsummary>a Claim that the Cloud Services, as used by Customer in accordance with this Agreement, infringe or misappropriate others’ Intellectual Property Rights.
  • Customer’s Improper Customization<endsummary>Customer’s modification, change, or combination of the Cloud Services with other software, systems, or data that: (1) results in infringement or misappropriation of others’ Intellectual Property Rights, and (2) would not have resulted in that infringement or misappropriation if Customer had used the Cloud Services as described in the User Documentation.
  • Infringement Mitigation<endsummary> modifying or replacing the allegedly infringing portion of the Cloud Services to make it non-infringing, without substantially impairing the Cloud Services’ primary features.
  • Trial<endsummary>means a limited time period during which Customer may use the Cloud Services on a free or trial basis, as specified in the applicable Order.
  • Pre-Release Features<endsummary>optional features, functionalities, or services that Provider invites Customer to use before they are generally available to all customers.
  • Early Termination<endsummary>nding a Service Period before its expiration date.
  • Claim<endsummary>any demand, notice, investigation, action, suit, or proceeding.
  • Prorated Refund<endsummary>a refund of prepaid fees covering the period from the effective date of termination to the end of the Service Period.
  • Service Period<endsummary>the period beginning on the Service Start Date and continuing for the service duration, as specified in each Order.

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  • Customer Content<endsummary>[Customer Account Information and] any data or content that Users: (1) submit to their Cloud Services accounts, including from External Tools, or (2) generate from use of the Cloud Services, but excluding Customer Usage Data or any Generative AI Outputs.
  • Intellectual Property Rights<endsummary>nder patent, copyright, trade secret, trademark, and moral rights laws, and other similar rights.
  • One Year of Fees<endsummary>the total amount paid or payable by Customer to Provider under all Order(s) during the 12 months immediately preceding the first incident giving rise to liability, or, if the first incident giving rise to liability occurs after Service Closure, the total amount paid or payable by Customer to Provider under all Order(s) during the most recent 12-month period in which Customer paid fees to Provider.

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  • Customer Content<endsummary>[Customer Account Information and] any data or content that Users: (1) submit to their Cloud Services accounts, including from External Tools, or (2) generate from use of the Cloud Services, but excluding Customer Usage Data or any Generative AI Outputs.
  • Intellectual Property Rights<endsummary>under patent, copyright, trade secret, trademark, and moral rights laws, and other similar rights.

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  • Claim<endsummary>any demand, notice, investigation, action, suit, or proceeding.
  • Customer’s Infringing or Unlawful Content<endsummary>Customer Content that violates or infringes others’ Intellectual Property Rights, privacy rights, publicity rights, or other legal rights, including rights to prior consent.
  • High Risk Activity<endsummary>an activity (such as operation of nuclear facilities, air traffic control, life support systems, or emergency services) where the use or failure of the Cloud Services or a particular feature of the Cloud Services would reasonably be expected to lead to death, personal injury, or environmental or property damage.
  • Claim<endsummary>any demand, notice, investigation, action, suit, or proceeding.
  • Service Period<endsummary>the period beginning on the Service Start Date and continuing for the service duration, as specified in each Order.

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  • Customer Content<endsummary>[Customer Account Information and] any data or content that Users: (1) submit to their Cloud Services accounts, including from External Tools, or (2) generate from use of the Cloud Services, but excluding Customer Usage Data or any Generative AI Outputs.
  • One Year of Fees<endsummary>the total amount paid or payable by Customer to Provider under all Order(s) during the 12 months immediately preceding the first incident giving rise to liability, or, if the first incident giving rise to liability occurs after Service Closure, the total amount paid or payable by Customer to Provider under all Order(s) during the most recent 12-month period in which Customer paid fees to Provider.
  • Service Closure<endsummary>the end of a Service Period (whether by expiration or Early Termination), without a subsequent Order for the same Cloud Services taking effect immediately after.

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