Warranty of Infringement: Everything You Need to Know
The Warranty of Infringement is a warranty provided by the seller of goods to the buyer that the goods being sold have not broken any copyright laws.3 min read
2. Who Does the Warranty of Infringement Apply To?
3. When Does the Warranty of Infringement Not Apply to the Seller?
4. How Can Sellers Protect Themselves?
The Warranty of Infringement, or Warranty Against Infringement, is a warranty provided by the seller of goods to the buyer that the goods being sold have not broken any copyright laws, are not patented by someone else, and have no intellectual property claims against them. The seller of the goods is responsible for defending the buyer against any rightful claim of infringement. A "rightful claim" is a claim made by a third party of intellectual property infringement.
What Does a Warranty of Infringement Guarantee?
In addition to a warranty against intellectual property, the warranty against infringement also guarantees that the seller of the goods has "good title" to the goods. This means that the goods being sold:
- Belong to the seller.
- Are free from defects.
- Are not the subject of any litigation.
- Are not mortgaged to another person.
- Would be bought by a reasonable buyer.
The warranty of infringement also covers the licensing of software — but only where the service aspect is negligible. In this case the vendor, or licensor of the software guarantees to the buyer, or the licensee, that the software does not infringe any intellectual property rights of another company.
The warranty of infringement only applies to the sale of goods and not services.
Who Does the Warranty of Infringement Apply To?
The warranty of infringement forms a part of the Uniform Commercial Code (UCC). The UCC is not itself a body of laws but rather a standard set of recommendations for how states should create their own laws.
Article 2 of the Uniform Commercial Code covers the buying and selling of goods and includes the warranty of infringement. Most states have enacted a version of Article 2, with Louisiana being one state that has not.
Article 2 of the UCC states that the warranty of infringement only applies to sellers who are "Merchants." A merchant is defined as someone who:
- Sells or deals in goods of a certain type.
- Has specialized knowledge and skill with regards to the goods that they are selling.
This means that someone selling a laptop on Craigslist is not defined as a merchant because they are selling a single item in a one-off transaction. However, a company that refurbishes used laptops and resells them is merchant because they deal in these goods and have specialized knowledge of the sale of used laptops and the skills required to refurbish them.
When Does the Warranty of Infringement Not Apply to the Seller?
The guarantee of infringement does not apply if the buyer of the goods provides the seller with specifications or blueprints that the vendor uses to make the goods. In this situation, it is assumed that the buyer is better informed with regards to the origins of the specifications being supplied and will not hold the seller responsible for any claims against the goods.
In addition, the warranty of infringement does not extend to how the buyer will use the goods after they are sold. This means that, for example, if a seller manufactures components, they are only required to guarantee that the components themselves do not infringe any intellectual property. If the buyer subsequently uses them to create a product that infringes intellectual property, then the seller will not be held responsible for your buyer's later infringement.
How Can Sellers Protect Themselves?
Sellers who want to ensure that they fall under the protection of the UCC and the warranty of infringement need to ensure that a few provisions are included writing a contract of sale. The first provision is to ensure that it is clearly stated that the seller is a merchant. This can be done with a simple provision like “The seller is a merchant who regularly deals in goods of the kind.”
When the seller supplies the design or specification of the goods, the contract should make it explicit that this has happened with the addition of a provision stating this. An example of such a provision is “The Buyer agrees to supply all designs and specification of the product. The seller will adhere to these designs.”
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