This excerpt taken from the GPS 10-Q filed Jun 9, 2009.
23.4 Gaps Proprietary Rights Indemnity
(1) At Gaps expense and as described herein, Gap agrees to defend and indemnify (as set forth in (2) below) Supplier, its Affiliates, and its Subcontractors (and their respective directors, officers, agents, and employees) from and against any third party claims, actions, or
Gap Confidential and Proprietary Information
proceedings and liability, damages, costs, or expenses, arising under such third party claims, actions, or proceedings, that the (i) Gap Software (subject to Section 23.1C above), (ii) Gap Documentation (subject to Section 23.1C above), (iii) Gap Intellectual Property (including jointly owned patents under this Agreement to the extent any such third party claims, actions, or proceedings and liability, damages, costs, or expenses arising from the separate exploitation by Gap), or (iv) Gap Equipment (subject to Section 23.1C above) (individually each, and collectively all, of the items listed in (i) through (iv) above are referred to in this Section as the, or a, Gap Infringement Trigger): (i) infringes upon or otherwise violates any copyright, trademark, service mark, patent or misappropriates the trade secrets of any third party; or (ii) that Suppliers use (as permitted by this Agreement) of the Gap Infringement Trigger otherwise violates or misappropriates any copyright, trade secret, trademark, service mark, or patent of any third party (collectively referred to for purposes of this Section 23 (Authority to License, Quiet Enjoyment, Proprietary Rights and Indemnity) as Gap Infringement Claim(s)).
(2) Gap shall pay all amounts that a court finally awards to such third party or that Gap, or as provided herein Supplier, agrees to in settlement with such third party of any such Gap Infringement Claim(s), as well as any and all reasonable attorneys fees and costs of investigation arising from such Gap Infringement Claim(s) incurred by Supplier or any other party indemnified under this Section 23.4 (Gaps Proprietary Rights Indemnity) associated with such Gap Infringement Claim and incurred prior to Gaps assumption of the defense against any Gap Infringement Claim. After Gap assumes the defense against any Gap Infringement Claim in accordance with this Section, Gap shall not be responsible for the payment of expenses or charges incurred by Supplier in connection with such Gap Infringement Claim, except
(a) to the extent Gap pre-approves any such charge or expense after Gap assumes control of the defense of such Gap Infringement Claim, provided such approval by Gap is not to be unreasonably withheld; or
(b) charges or expenses incurred by Supplier in connection with the cooperation by any Supplier employee with Gaps defense to the extent such cooperation materially disrupts or interferes with the performance of such employees job, in which case Gap shall reimburse Supplier for the employees actual expenses and time at a rate to be agreed to by the Parties in advance.
B. Continued Right to Use
Supplier also agrees that, if its use of the Gap Infringement Trigger, or any part thereof becomes, or in Gaps opinion is likely to become, the subject of an Gap Infringement Claim(s), Supplier will permit Gap, at Gaps option and expense for all associated costs, either to timely procure the right for Supplier to continue to use the Gap Infringement Trigger, or part thereof, or to timely replace or modify the Gap Infringement Trigger with another item of comparable quality and performance capabilities to become non-infringing, provided such replacement or modification allows Gap to continue meeting its obligations under this Agreement. If such replacement causes an increase in Suppliers expenditure of time or resources to deliver the Services, the Charges will be equitably adjusted. If Gap is unable, after exercising diligent efforts, to procure the above referenced rights, or modify or replace the Infringement Trigger, Gap may discontinue use of the Infringement Trigger but shall not be excused from any of its obligations under this Agreement.
C. Remedial Acts
In the event (i) Suppliers ongoing use of the Gap Infringement Trigger, or any part thereof, is the subject of any action by a third party arising from a Gap Infringement Claim that would
Gap Confidential and Proprietary Information
preclude or impair Suppliers use of the Gap Infringement Trigger as provided for under this Agreement, or any part thereof, (e.g., an injunction prohibiting or limiting use), or (ii) if Suppliers continued use of the Gap Infringement Trigger as provided for under this Agreement, or any part thereof, may subject it to damages or statutory penalties, Supplier shall give prompt written notice to Gap of such fact(s). Upon notice of such facts, Gap shall use commercially reasonable efforts to: (i) procure the right for Supplier to continue to use the Gap Infringement Trigger, or part thereof, or (ii) replace or modify the Gap Infringement Trigger, with another system or components of comparable quality and performance capabilities to become non-infringing. If Gap fails to complete the remedial acts set forth above within sixty (60) days of the date of the written notice from Supplier, and Suppliers ongoing use of the Gap Infringement Trigger remains impaired, Supplier shall have the right to take such remedial acts that are commercially reasonable to mitigate any impairment of its use of the Gap Infringement Trigger (hereafter referred to as Suppliers Remedial Acts). Gap shall pay Supplier for all documented commercially reasonable amounts paid by Supplier to implement Suppliers Remedial Acts. Failure by Gap to pay such amounts within forty-five (45) days of invoice by Supplier shall, in addition to, and cumulative to all other remedies available to Supplier under this Agreement, entitle Supplier to exercise the payment escalation rights under Section 27.1 (Invoices and Payments General).
D. Gap Infringement Exclusions
Gap shall have no obligation under this Section 23 (Authority to License, Quiet Enjoyment, Proprietary Rights and Indemnity) with respect to any Gap Infringement Claim to the extent such Gap Infringement Claim is Finally Determined to be caused by: (i) modifications to the Gap Infringement Trigger, or any part thereof, made by Supplier, its Affiliates, or their respective agents (except as directed, authorized, or approved by Gap); (ii) combination or use of the Gap Infringement Trigger, or any part thereof, with products, data, equipment or software not provided by Gap; (iii) Gaps compliance with Specifications or written direction provided by Supplier, including Suppliers business processes; or (iv) use by Supplier of the Gap Infringement Trigger, or any part thereof, after Gap has provided modifications to Supplier (at no cost to Supplier) that would have avoided the allegedly infringing activity ((i), (ii), (iii), and (iv) above are collectively referred to herein as the Gap Infringement Exclusions).