This excerpt taken from the GPS 10-Q filed Jun 9, 2009.
23.3 Suppliers Proprietary Rights Indemnity
(1) At Suppliers expense and as described herein, Supplier agrees to defend and indemnify (as set forth in (2) below) Gap, its Affiliates, and its subcontractors (and their respective directors, officers, agents, and employees) from and against any third party claims, actions, or proceedings and liability, damages, costs, or expenses, arising under such third party claims, actions, or proceedings, that the (i) Services, (ii) Supplier Software (subject to Section 23.1C above, (iii) Supplier Documentation (subject to Section 23.1C above), (iv) Supplier 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 Supplier), (v) Supplier Modified Intellectual Property, (vi) Supplier Modified Documentation, (vii) Supplier Modified Software, (viii) Supplier Equipment (subject to Section 23.1C above), (ix) Gap Owned Intellectual Capital, or (x) the modifications made by Supplier to the Applications (to the extent such modifications caused such infringement) (individually each, and collectively all, of the items listed in (i) through (x) above are referred to in this Section as the, or a, Supplier 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 Gaps use (as permitted by this Agreement) of Supplier 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 Supplier Infringement Claim(s)).
(2) Supplier shall pay all amounts that a court finally awards to such third party, or that Supplier, as provided in Section 23.5 (Conditions to Indemnity Obligations), agrees to in settlement with such third party of any such Supplier Infringement Claim(s), as well as any and all reasonable attorneys fees and costs of investigation arising from such Supplier Infringement Claim(s) incurred by Gap or any other party indemnified under this Section 23.3 (Suppliers Proprietary Rights Indemnity) associated with such Supplier Infringement Claim and incurred prior to Suppliers assumption of the defense against any Supplier Infringement Claim. After Supplier assumes the defense against any Supplier Infringement Claim in accordance with this Section, Supplier shall not be responsible for the payment of expenses or charges incurred by Gap in connection with such Supplier Infringement Claim, except
(a) to the extent Supplier pre-approves any such charge or expense after Supplier assumes control of the defense of such Supplier Infringement Claim, provided such approval by Supplier is not to be unreasonably withheld; or
(b) charges or expenses incurred by Gap in connection with the cooperation by any Gap employee with Suppliers defense to the extent such cooperation materially disrupts or interferes with the performance of such employees job, in which case Supplier shall reimburse Gap for the employees actual expenses and time at a rate to be agreed to by the Parties in advance.
B. Continued Right to Use
Gap also agrees that, if its use of Supplier Infringement Trigger, or any part thereof becomes, or in Suppliers opinion is likely to become, the subject of a Supplier Infringement Claim(s), Gap will permit Supplier, at Suppliers option and expense for all associated costs, either to timely procure the right for Gap to continue to use Supplier Infringement Trigger, or part thereof, or to timely replace or modify Supplier Infringement Trigger with another item of comparable quality and performance capabilities to become non-infringing, provided such replacement or modification allows Supplier to provide the Services in accordance with this Agreement, including the Service Levels. If such replacement causes an increase in Gaps expenditure of time or resources in connection with the Services, the Charges will be equitably adjusted. If Supplier is unable, after exercising diligent efforts, to
Gap Confidential and Proprietary Information
procure the above referenced rights, or modify or replace the Infringement Trigger, Supplier 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) Gaps ongoing use of Supplier Infringement Trigger, or any part thereof, is the subject of any action by a third party arising from a Supplier Infringement Claim that would preclude or impair Gaps use of Supplier Infringement Trigger as provided for under this Agreement, or any part thereof, (e.g., an injunction prohibiting or limiting use), or (ii) if Gaps continued use of Supplier Infringement Trigger as provided for under this Agreement, or any part thereof, may subject it to damages or statutory penalties, Gap shall give prompt written notice to Supplier of such fact(s). Upon notice of such facts, Supplier shall use commercially reasonable efforts to: (i) procure the right for Gap to continue to use Supplier Infringement Trigger, or part thereof, or (ii) replace or modify Supplier Infringement Trigger, with another system or components of comparable quality and performance capabilities to become non-infringing. If Supplier fails to complete the remedial acts set forth above within sixty (60) days of the date of the written notice from Gap and Gaps ongoing use of Supplier Infringement Trigger remains impaired, Gap shall have the right to take such remedial acts that are commercially reasonable to mitigate any impairment of its use of Supplier Infringement Trigger (hereafter referred to as Gaps Remedial Acts). Supplier shall credit Gap for all documented commercially reasonable amounts paid by Gap to implement Gaps Remedial Acts. All such amounts shall be credited to Gap on the monthly invoice immediately following Gaps demand for such credit. Failure by Supplier to credit such amounts as set forth above shall, in addition to, and cumulative to all other remedies available to Gap under this Agreement, entitle Gap to immediately withhold payments due to Supplier under this Agreement up to the amount to be credited under this Section. In the case where there will be no further invoices, Supplier will pay the amount of the credits to Gap within forty-five (45) days after (1) the end of the last month of the Term or (2) the effective date of termination or expiration of this Agreement for any reason.
D. Supplier Infringement Exclusions
Supplier shall have no obligation under this Section 23 (Authority to License, Quiet Enjoyment, Proprietary Rights and Indemnity) with respect to any Supplier Infringement Claim to the extent such Supplier Infringement Claim is Finally Determined to be caused by: (i) modifications to Supplier Infringement Trigger, or any part thereof, made by Gap, its Affiliates, or their respective agents (except as directed, authorized, or approved by Supplier); (ii) combination or use of Supplier Infringement Trigger, or any part thereof, with products, data, equipment or software not provided by Supplier; (iii) Suppliers compliance with Specifications or written direction provided by Gap, including Gaps business processes that Supplier utilizes in connection with the performance of the Services; (iv) use by Gap of Supplier Infringement Trigger, or any part thereof, after Supplier has provided modifications to Gap (at no cost to Gap) that would have avoided the allegedly infringing activity, or (v) the Gap Owned Intellectual Capital, Gap Software, Gap Documentation, or Gap Intellectual Property in which the basis of Supplier Infringement Claim(s) existed prior to the Reference Date ((i), (ii), (iii), (iv) and (v) above are collectively referred to herein as the Supplier Infringement Exclusions).