Under what conditions is Kidokinetics Franchisor obligated to defend a Franchisee against a third-party claim of MOBILNK Software infringement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- D. KIDOLINK Software and Franchisee's Right to Indemnification.
If a third party claims that the MOBILNK Software infringes any U.S. patent, copyright, or trade secret, Franchisor may elect, in its sole discretion, to defend Franchisee against such claim at Franchisor's expense and pay all damages that a court finally awards, provided that Franchisee promptly notifies Franchisor in writing of the claim, and allows Franchisor to control, and Franchisee cooperates with Franchisor in, the defense or any related settlement negotiations.
If such a claim is made or appears possible, Franchisor may, at its option, secure for Franchisee the right to continue to use the KIDOLINK Software or modify or replace the KIDOLINK Software so that it is non-infringing.
If neither of the foregoing options is available in Franchisor's judgment, Franchisor may terminate the license granted by this Agreement and require Franchisee to return the KIDOLINK Software without compensation.
Franchisor has no obligation with respect to any claim based on a version of the KIDOLINK Software that is modified without Franchisor's authorization or is combined, operated or used with any product, data, or apparatus not specified or approved by Franchisor.
THIS SECTION 6.D.
STATES THE ENTIRE OBLIGATION OF FRANCHISOR AND FRANCHISOR'S AFFILIATES TO FRANCHISEE WITH RESPECT TO ANY CLAIM OF INFRINGEMENT.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, Kidokinetics may elect to defend a franchisee against a third-party claim of infringement regarding the MOBILNK Software. This is not an obligation, but an option Kidokinetics can choose to exercise at its sole discretion.
The specific conditions under which Kidokinetics may defend the franchisee are: (1) the claim alleges infringement of a U.S. patent, copyright, or trade secret; (2) the franchisee promptly notifies Kidokinetics in writing about the claim; and (3) the franchisee allows Kidokinetics to control the defense and cooperates fully with Kidokinetics in the defense or any settlement negotiations. If these conditions are met, Kidokinetics may choose to defend the franchisee at its own expense and pay any damages awarded by a court.
However, Kidokinetics has no obligation regarding any claim based on a version of the KIDOLINK Software that the franchisee modified without authorization or if the software is combined, operated, or used with any product, data, or apparatus not specified or approved by Kidokinetics. The FDD states that this section outlines the entire obligation of Kidokinetics and its affiliates to the franchisee concerning any infringement claim related to the MOBILNK Software.