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Making Things With AI

Images, video, voice and music — how they work, where they break, who owns them.

Lesson 81 of 848 min

What an indemnity actually buys

What is being offered

Several providers now offer to defend and cover customers against third-party copyright claims arising from output. This is a genuine commercial commitment and it is worth having. It is also narrower than the headline.

An indemnity is a contract term: if a third party brings a claim of a specified kind, the vendor will take on the defence and pay defined amounts. Everything turns on the specification.

The conditions to read

Every indemnity worth the name has conditions. The usual set:

Tier. Frequently available only on paid business or enterprise plans, not free or consumer tiers.

Unmodified output. Some require that you used the output as generated. If you edited it, composited it, or ran it through another model, cover may lapse — which is exactly the workflow the rest of this course recommends, so read this one carefully.

Safety features left on. If you disabled filters or circumvented protections, cover usually goes.

No knowledge. If you knew or should have known the output was infringing, you are outside it. Prompting for a named artist and then claiming surprise sits here.

Prompt conduct. You must notify within a stated period, and failing to notify promptly can void the whole thing.

Vendor control of the defence. They choose the lawyers and the strategy, and may settle in a way you would not have chosen.

Caps. Often limited to what you have paid, or to a stated figure, and consequential losses — your lost business, your client's — are typically excluded.

What is usually not covered

Personality and publicity rights. Most indemnities are drafted around copyright. A claim from a person about their face or voice is often outside them, and that is one of the most likely claims to arise.

Trademark, sometimes.

Defamation.

Regulatory penalties, including for failing to disclose where disclosure is required by law.

Your client's losses, which is what will actually be claimed against you.

That last one deserves emphasis. If a campaign is pulled, the client's loss is commercial — the media spend, the reprint, the delay. A vendor indemnity aimed at a rights holder's copyright claim frequently does nothing about it, and the exposure sits with you under your own contract.

What an indemnity buys, and what is claimed against youUsually inside itA third party's copyright claim about theoutputThe cost of a defence the vendor controlsDamages up to a stated capOn a paid tier, with safety features left onIf you notified within the stated periodUsually outside itA claim about someone's face or voiceTrademark, sometimesDefamationRegulatory penalties for failing to discloseYour client's losses — media spend, reprint,delayRead the exclusions first, because that is where the drafting effort went. The rights most likely tobe asserted against you personally are frequently outside it, and the loss your client will actuallyclaim is almost always outside it.
What an indemnity buys, and what is claimedagainst youUsually inside itA third party's copyright claim about theoutputThe cost of a defence the vendor controlsDamages up to a stated capOn a paid tier, with safety features left onIf you notified within the stated periodUsually outside itA claim about someone's face or voiceTrademark, sometimesDefamationRegulatory penalties for failing to discloseYour client's losses — media spend, reprint,delayRead the exclusions first, because that is where thedrafting effort went. The rights most likely to beasserted against you personally are frequentlyoutside it, and the loss your client will actuallyclaim is almost always outside it.

How to use one properly

Read it before relying on it. It is a page. Read the exclusions first; that is where the content is.

Keep the evidence of compliance. Which tier, which settings, what you generated and when. If cover depends on conditions, you have to be able to show you met them.

Do not let it replace checking. Reverse image search on anything that will be published. Melody search on a hook. Recognisability check on any face. These take minutes and they prevent the claim rather than paying for it.

Match your client contract to it. If you warrant to a client something broader than your vendor covers, the gap is yours. Say what you can honestly say, and no more.

What to tell a client

An honest formulation, and clients respect it:

The generated elements come from a service that indemnifies commercial use on our plan, within its stated conditions. We have checked the output against reverse image search and it does not match any known work. We cannot guarantee that no claim will ever be made, because nobody can. Here is what we have done and here is the record.

Compare that with "it is all fine, they indemnify us". The first is defensible. The second is a promise you cannot keep, and it is the one that ends badly.

It is also worth knowing why these offers exist. They appeared as a competitive response when enterprise buyers began refusing to adopt generative tools without one, and they are priced into business tiers. That is a perfectly ordinary commercial arrangement and it tells you something useful: the indemnity is a sales instrument as much as a legal one, which is why the headline is generous and the exclusions are where the drafting effort went. Read them in that spirit rather than as a reassurance.

The honest summary: an indemnity is a useful risk transfer for a specific class of claim on specific facts, offered by a party with far deeper pockets than you. It is not a licence to skip the checks, it usually excludes the rights most likely to be asserted against you personally, and it never protects your client from their own losses. Treat it as one control among several rather than as the answer.

The one thing to keep

A vendor indemnity is a conditional contractual promise with exclusions and caps, so it shifts some risk on some facts and never removes the obligation to check your own work.

Before you move on

Which claim is a vendor's output indemnity least likely to cover?

Pick the one you would defend. Nobody sees your answer.

No ads. No data sale. No public scores on people. Ever.

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