US jurisdiction report: The importance of patent indemnification

Let us examine what is meant by the term “indemnification”. The term is used to describe security or protection against a loss or other financial burden. In reality, it is a form of insurance compensation for damage or loss. In some cases, it may also refer to an exemption from liability for damages.

With indemnity, the insurer indemnifies the policyholder by making a promise to make whole an individual or business for any covered loss. Thus, it comprises a contractual obligation of one party (the indemnifier) to compensate the loss incurred to another party.

The term “hold harmless” is often used in place of the term indemnification—their meaning from a legal standpoint is the same.

Under laws that originated in the English statute of frauds, undertakings such as indemnification are required to be clearly and precisely expressed in writing.

If such a writing does not exist, the agreement to indemnify will not be enforceable in the courts.

Under US law, interpretations of indemnification clauses vary state by state. Some states are more liberal in their requirements to include enforceable indemnification clauses, while other states have very strict requirements.