What can be the consequences of indemnification clauses in online terms of use?

Question

A lot of online services prompt users to accept conditions of use that have clauses for indemnification that look very much like there is a chance that the user who pays for the service can possibly pay fees if a third party causes damage just because it was in some "relation" or "in connection" to the user's use of the service. On the other hand most of these conditions of use also include clauses that write that the indemnification clause will survive any termination.

So my question is, what is the scope of the indemnification clause?

• Is it required that the service provider first prove that the user's use of the service is 'in connection' for the third party suit against the service provider or can they just say because this user uses the service he is in connection to any suit that is against the service?

• Also what happens if the service provider just suits himself by some third party connected to the provider and decides to use this as a way to sue its users?

• Also what happens several years after the user stopped using the service? If this clause survives termination are the above problems permanent? If yes, isn't using such online services (services which have both indemnification and a clause that indemnification survives termination) a risk that last one's lifetime and rises with every new service with similar terms that you ever use?

Example of indemnification clauses are:

You agree to indemnify and hold {service provider}, its officers, directors, employees, agents, subsidiaries and affiliates, harmless from any demands, loss, liability, claims or expenses (including attorneys’ fees), made against {service provider} by any third party due to or arising out of or in connection with your use of the Site.

or other variant:

You shall defend {service provider} against any claim, demand, suit or proceeding made or brought against {service provider} by a third-party alleging that Your Content, or Your use of the Service in violation of this Agreement, infringes or misappropriates the intellectual property rights of a third-party or violates applicable law, and shall indemnify {service provider} for any damages finally awarded against, and for reasonable attorney’s fees incurred by, {service provider} in connection with any such claim, demand, suit or proceeding; provided, that {service provider} (a) promptly gives You written notice of the claim, demand, suit or proceeding; (b) gives You sole control of the defense and settlement of the claim, demand, suit or proceeding (provided that You may not settle any claim, demand, suit or proceeding unless the settlement unconditionally releases {service provider} of all liability); and (c) provides to You all reasonable assistance, at Your expense.

For my questions I assume that the terms have also a clause that the jurisdiction is a state within the USA. For simplicity lets assume that it is state of California like the following text:

K. Governing Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California, without reference to conflicts of laws principles. The parties agree that the federal and state courts in San Francisco County, California will have exclusive jurisdiction and venue under this Agreement, and the parties hereby agree to submit to such jurisdiction exclusively.

Also we may assume that the user has to click on an agree button when he registers for the online service.

Another assumptions is that the terms have this clause also:

L. Severability. If any provision, or portion thereof, of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, such determination will not impair or affect the validity, legality, or enforceability of the remaining provisions of this Agreement, and each provision, or portion thereof, is hereby declared to be separate, severable, and distinct.

Answer 1

The scope of the clause is the scope that the clause defines

If you agree to a clause that says "You indemnify us if {circumstance}" then if {circumstance} happens they can rely on the indemnity.

For example, when you buy home insurance, your insurer indemnified you for {conditions} which include (among other things) your house catching fire. If your house catches fire (subject to any exclusions like if you set it on fire deliberately), then they will indemnify you for the consequent damage. You would need to demonstrate to their satisfaction that the circumstances of the indemnity occurred and the amount of the damage. If there was a dispute over that, you may have to sue them.

The same is true of these sorts of indemnity clauses.

For the first example, they would need to demonstrate that there were "demands, loss, liability, claims or expenses" by a "third party" and that it was "due to or arising out of or in connection with your use of the Site."

For the second example, they would need to demonstrate a "claim, demand, suit or proceeding" by "by a third-party" and that your content or use violated IP or "applicable law" but only if they a) gave you a copy of it b) allows you to defend it and c) they help you do that (at your cost).

At face value, there is no reason to believe that such clauses would be unenforcable - they don't seem to be unconscionable or even unfair.