Trade secret indemnity refers to the legal protection provided under contract between two parties in case loss, breach, or failure to perform occurs.

Trade Secret Indemnity

Trade secret indemnity represents provisions placed in a contract that protects one party against potential loss through insurance or protection provided by the other contracting party.  The two parties involved in an indemnity agreement are typically referred to as the indemnitor and the indemnitee.  The indemnitor acts as the insurer, while the indemnitee is the party protected from loss.

Trade Secret Indemnity Coverage

Trade secret indemnity coverage means that one party agrees to assume the protection or defense for the other in case some sort of loss occurs.  In trade secret law, this means the indemnitor will either assume responsibility for the defense of the other party or provide means to make the indemnitee whole.  Typically, because trade secret clams generally pertain to infringement or breach, indemnity clauses must often address such claims carefully.  Similarly, because the confidentiality of a trade secret may be comprised through no fault of either party, some parties may opt to include “hold harmless” provisions where one party agrees to hold harmless the other should such incidents occur.

Sample Trade Secret Indemnity Clauses

Two examples (one simple, the second more complex) of indemnity clauses follow below:

1. Indemnitor will hold harmless, defend, and indemnify Indemnitee against any and all third-party claims or liabilities addressed within the scope of this Agreement.

2. Indemnitor will, at its expense, indemnify, hold harmless, and defend any claim brought against Indemnitee. Indemnitor will pay all costs and damages, court judgments or awards found against Indemnitee.  Such indemnity is conditioned upon Indemnitee promptly reporting clams to Indemnitor and giving Indemnitor the requisite authority to defend or settle any pending claims.  Indemnitor agrees to negotiate and defend in good faith.

Interested in other forms of Intellectual Property Indemnity?

See our articles on Patent Indemnity, Software Indemnity, Copyright Indemnity, and Domain Name Indemnity.

For more information on this topic, please visit our Trade Secret Protection service page, which is part of our Technology & Data Practice.

Klemchuk LLP is an Intellectual Property Law, Litigation, and Transactions law firm located in Dallas, Texas.  The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution.  The firm publishes the following blogs: Intellectual Property Law, Conversations with Innovators (interviews with thought leaders), Leaders in Law (discussions on timely law topics), and Culture Counts (thoughts on law firm culture and the business of the practice of law).