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Warranties and indeminities are almost universal in contracts, and
particularly in intellectual property licenses which involve, by
definition, intangible assets.  They put boundaries around both the
supplier's and the customer's repective promises and liabilities.  The
customer needs protection against breach of the promise that what is being
licensed is legal and authorised.  The licensor needs reassurance that the
licensed material will be used in accordance with license terms.

In the case of the licenses on www.licensingmodels.com, the indemnities
are as follows:

1.  The Publisher warrants that the material is not in breach of anyone's
else's rights, and indeminifies the Licensee against any loss.

2.  The Licensee indemifies the Publisher against abuse of the material.
This indeminity is strictly limited to abuse that is caused or knowingly
assisted or condoned by the Licensee, and excludes abuse by a User of
which the Library is unaware.  The indemnity text is prefaced by the
phrase 'subject to applicable law'.

In the Commentary to each of the licenses on www.licensingmodels.com,
specific attention is drawn to the consitutional inability public
institutions in some US states to accept limitation of the supplier's
liability or to give indeminities - North Carolina is a cogent example.  
The Commentary recommends the indemnity clauses be deleted in these

However, the position is different from state to state.  And these
licenses have been created to be used internationally.  The constitutional
issue that Chuck Hamaker describes is unique to states in the USA.

In these licenses, I have attempted to strike a balance between the
interests of each party to the license, and to restrict the indemnities to
issues that go to the heart of the license itself.  This was the approach
adopted by both publishers and librarians in the UK in creating the
PA/JISC license, which served as one of the models for these licenses.  
They are model licenses that can, of course, be adjusted during
negotiation to cover the position taken by Diane Frank.

When examining these licenses, it is important to read both the license
text itself AND the associated commentary, where many of these issues are
raised and the options explained.

John Cox
John Cox Associates
The Pippins, 6 Lees Close, Whittlebury
TOWCESTER, Northants NN12 8XF
Tel: +44 1327 857908
Fax: +44 1327 858564
E-mail: John.E.Cox@btinternet.com

-----Original Message-----
From: Diane Frake <DFRAKE@vermontlaw.edu>
To: liblicense-l@lists.yale.edu <liblicense-l@lists.yale.edu>
Date: 10 May 2000 16:28

John, thanks for putting this on the listserv.  It's good stuff.  I have
only glanced at the consortial agreement and have a concern about one of
the provisions - the indemnity clause.  At an excellent workshop on
understanding license agreements, the presenter, a lawyer from MIT, said
under no circumstances should you agree to an indemnity clause (especially
if it's for any claims that might arise).  It could result in unlimited
damages for your institution.  I don't sign any agreements with an
indemnity clause.  When I am modifying an agreement, I always remove the
clause.  It would be great if this were not in the model agreement, or
indemnity was limited to bad acts and was reciprocal.  It would give
libraries more leverage in negotiating agreements.

Diane F. Frake, Associate Director
Julien and Virginia Cornell Library
Vermont Law School
P.O. Box 60
So. Royalton, VT 05068
(802)763-8303, ext. 2444
Fax: (802) 763-7159