Court Construes Indemnity Clause In License In Favour Of A Computer Games Publisher

The High Court in the recent case of The Codemasters Software Co. Ltd v Automobile Club De L'Ouest [2009] EWHC 2361 construed an indemnity clause against third party claims in a license agreement in favour of the licensee, a computer games company.

The organiser of the 24 hour Le Mans endurance race licensed rights to use certain materials relating to the race to a computer games publisher which included, "cars, car's liveries, team names...including any logos and trademarks...". The computer games publisher incorporated the material in its computer game. Car manufacturers claimed that the race organiser did not have the rights to grant a license in respect of use, in particular, of the design of their cars. The computer games publisher relied on the third party indemnity clause in its license agreement with the race organiser. The Court held that that the indemnity operated to protect the computer games publisher from claims of infringement by third parties, including the car manufacturers. In The Codemasters Software Co. Ltd v Automobile Club De L'Ouest [2009] EWHC 2361, Codemasters Software Company Limited (Codemasters) wanted to incorporate a reproduction of the Le Mans series of motor races into a computer game including, in particular, the cars. The organisers of the Le Mans 24 hour endurance race, Automobile Club de L'Ouest (ACO), granted Codemasters a non-exclusive license to use and reproduce "Endorsements" relating to the Le Mans series of races in its computer game. This included car manufacturers' names, trade marks and car designs. Significantly, ACO warranted that the use by Codemasters of the "Endorsements" would not infringe any IP rights anywhere in the world. The license agreement included an indemnity against claims by third parties for:

"any breach or alleged breach of any agreement or warranty made by the indemnifying party pursuant to [the license]".

Codemasters included likenesses of certain cars in its computer game. When Codemasters subsequently began to publicise the launch of the computer game, several car manufacturers claimed that ACO did not have the right to grant Codemasters a license to use the designs of their cars in the game. Codemasters was...