Systemic Liability

A patent or intellectual property liability situation that most frequently arises in the context of non-infringement warranties or indemnities, where numerous customers have received such rights in a standard contract or license agreement. If the warrantor loses any infringement litigation, even with respect to a small part of its sales to a single customer, all of its sales may be subject to a damages claim for infringement. Thus losing even a small case can result in massive liability.