Use this Checklist to analyze Sponsor-offered indemnification clauses; determine what problems, if any, the clauses contain; and determine the editorial changes necessary to conform the clauses to the requirements of the Regents’ Rules and Regulations related to Intellectual Property. Because no two deals are identical, the best language for one transaction may not be the same as that for another transaction. If in doubt, please contact the Office of General Counsel with any questions.
There are four types of indemnifications we routinely encounter in health-related sponsored research agreements. They are listed below, in order, from the least comprehensive (least coverage) to the most comprehensive (most coverage):
2. Sponsor Negligence (Clause 3)
3. Product Liability (Clause 12)
A full indemnity contains language that is either broad enough to cover, or expressly covers, all the other possible lesser types of indemnification; similarly, the product liability and negligence indemnities expressly cover the lesser use of results indemnity. The three aspects of this Checklist are:
1. What kind of indemnification do you need? (What is the scope of coverage?)
2. Does Sponsor want the University to indemnify Sponsor?
3. What other problems, unrelated to scope, are posed by a Sponsor-offered clause?
Tips:
- Strive for the broadest indemnity appropriate under the circumstances.
- When the protocol is ours, Sponsor has little control over what we will do and should only be asked to indemnify us with respect to Sponsor's use of the results of the study.
The sample clauses for this Checklist are here: Indemnification Sample Clauses.
1. Does the protocol belong to the Sponsor?
yes.
Use Clause 1.
2. Does Sponsor want the University to indemnify Sponsor?
yes.
Use our standard University indemnification. See Clause 2.1.
The critical elements of this clause are highlighted in the Review of Indemnification Clauses.
no.
Good. Leave clause as it is.
3. Does Sponsor’s indemnification cover the proper parties?
yes.
Good. Leave clause as it is. See example of a list of all the proper parties as in Clause 1.1
no.
The proper parties must be included. See Clause 1.
4. Does Sponsor’s clause have broad claim coverage?
Look for words like "claims," "demands," "costs," or "judgments."
no.
Include language that will cover a broad array of damaging events. See Clause 3.
5. Are the number and/or scope of conditions reasonable?
In each case, conditions are reasonable if they are things we would normally do anyway. For example, it is reasonable to expect us to follow the protocol, written instructions, and laws and regulations that govern clinical research. Similarly, it is reasonable to expect that we will promptly notify the Sponsor if we learn about a claim.
yes.
Good. Leave clause as it is. See Clause 5.2 for an example of a reasonable number of/and scope of conditions.
no.
Strike any condition that poses an unreasonable risk of loss of our coverage (conditions that we would not be likely to fulfill in the ordinary course of business). Reasonable conditions are illustrated in Clause 5.2 (containing 3 conditions) and Clause 10 (containing 9 conditions).
6. Are the carve-outs reasonable?
In each case, carve-outs are reasonable if they logically relate to things for which we should be responsible. For example, if we are negligent, Sponsor’s obligation to indemnify us should not apply. Similarly, if we don’t follow Sponsor’s protocol, or if we willfully harm a patient, then Sponsor should not have to indemnify us.
yes.
Good. Leave clause as it is.
no.
Strike any carve-out that seems unrelated to our negligence or willful malfeasance. See subparagraphs a. and b. of Clause 1.1 (our standard).
7. Is there a notice provision?
Sometimes, Sponsor makes its obligation to indemnify us contingent upon our giving prompt written notice. Occasionally, such notice will be required to be given within too short a period; e.g., 10 days.
yes.
Replace any numerical deadlines with "promptly" or 30 days. Other acceptable language includes "promptly," or "within such time as will not materially prejudice the rights of the Sponsor." Always replace “immediately” with “promptly.”
no.
Good. Leave clause as it is.
8. Does the clause require us to cooperate fully with the defense of the claim or turn over the defense to the Sponsor?
yes.
Insert the language, “subject to the statutory duties of the Texas Attorney General” as illustrated in Clause 10, subparagraphs g. (control of defense) and h. (full cooperation).
no.
Good. Leave clause as it is.
9. Does Sponsor’s clause address any issues, other than the ones discussed here?
Even a long indemnification provision should address only certain issues: identifying the parties, setting out the scope of coverage, stating conditions and carve-outs, and discussing notice and defense of claims issues, etc. An example of an unusual item, in the clinical trial context, would be a clause that obligates us to indemnify the Sponsor against harm it may suffer, if intellectual property we give the Sponsor (as we might be required to do pursuant to the intellectual property clause) turns out to infringe a patent.
yes.
Delete any unusual items. Explain to the Sponsor that we do not address such issues in the context of Sponsor indemnifying us.
no.
Good. Leave clause as it is.
