Tom: Representations and Warranties. Spark provided the usual studio warranties to Activision that it had the authority to enter into the agreement (15.1.1), that the execution of the agreement is authorized and enforceable (15.1.2), that no other company or person has any legal interest in the Game (15.1.3), that the idea and works in the Games are the original works of Spark (15.1.4), that the Games do not infringe any third party IP and that Spark will correct, at its own expense, any inadvertent infringements (15.1.5), that any in formation used in the creation of the Games, not supplied by Activision, that is derived from third parties will be with written authorization (15.1.6), that Spark has the experience and expertise necessary to make the Games (15.1.7), and that Spark will at all times adhere to any publishing or tool agreements related to the development of the Games (15.1.8). Activision warranted that it has the power and authority to enter into the agreement (15.2.a), that it has the corporate authority to enter the agreement as a binding and enforceable agreement (15.2.b), that all ideas and IP provided by Activision in conjunction with the development of the Games is owned or properly licensed by Activision (15.2.c).

Chris & Dave: These representations and warranties were meant to protect Activision from exactly the types of claims EA leveled against Spark regarding theft of trade secrets and confidential information. Despite the contractual protection that these representations and warranties gave Activision, Activision made a business decision to help defend Spark against EA’s claims.

Tom: Indemnification. Spark agreed to indemnify Activision against any and all losses from any breach of the agreement or of the above warranties (16.1).

Chris & Dave: Indemnities are often useless to publishers if the developer has few assets. Activision could get more comfort by requiring Spark to maintain liability insurance, but insurance is often prohibitively expensive.

Tom: Activision similarly indemnified Spark from any breach of the agreement or Activision’s warranties (16.2). The procedure to be followed related to the indemnification are laid out in detail (16.3). Activision had the right to extend Spark’s representations and warranties to appropriate third parties and Spark would then be directly liable to such third parties (16.4).

Chris & Dave: This is unusual and it opens up Spark to huge potential liability.

Tom: Activision had the right to withhold payments from Spark if any indemnified claims were made by third parties until Activision recovered its costs of such indemnification or Spark provided reasonable assurances that it could pay the costs (16.5).