Charlie Javice, the then-29-year-old founder of the startup Frank later acquired by JP Morgan, has already been convicted of three counts of fraud and one count of conspiracy to commit fraud back in 2025. The fraud stemmed from inflated user numbers for the website service for student loan applications that were touted by her during the acquisition by JP Morgan.
Under the acquisition agreement’s advancement clause, JP Morgan reportedly agreed to advance money to pay for Javice’s legal fees stemming from the acquisition, apparently including her criminal defense in the case brought by the U.S. government.
Javice and her co-defendant Olivier Amar have already cost JP Morgan $144.2 million in legal fees, which are likely to grow on appeal. That’s nearly the same amount JP Morgan lost in the fraud of $175 million. According to Bloomberg Law, “Javice and Amar were ordered to reimburse JPMorgan for their defense costs as part of their sentences, but the bank is unlikely to recover much that way.”
So what this means is JP Morgan will likely end up losing far more money from the prosecution of Javice and Amar. On top of the acquisition cost, JP Morgan is footing the enormous legal fees of Javice and Amar.
Let’s put aside the possibility that Javice and Amar could prevail on some issue on appeal. In such case, an indemnity provision in the acquisition agreement would likely be invoked by them. The Delaware Supreme Court’s rejection of an interlocutory appeal of the lower court’s ruling that the advancement clause was enforceable also mentions that “Javice demanded advancement and indemnification in connection with the investigation,” but apparently only the advancement of legal fees was at issue then. Indemnity would mean JP Morgan would have to pay the costs for Jarvis without recouping it.
What does this have to do with Nanoble’s indemnity claim v. Disney?
So what does Javice’s case have to do with the ongoing copyright lawsuit between Disney against Nanoble, the AI company behind Hailuo AI?
Maybe nothing.
But it’s striking to see that the Delaware court has enforced the advancement provision in the acquisition agreement between Javice’s startup and JP Morgan. And that is so even though Javice has been found guilty of defrauding JP Morgan in a criminal case. And that is so even though JP Morgan may end up losing more money than the amount of loss by which it was defrauded during the startup acquisition. (Of course, advancement clauses are included for this very purpose of defending the officers against legal claims related to the acquisition, some would argue. The same can be said of indemnification clauses.)
All of this is to say that courts routinely enforce contractual provisions. True, terms of use for online services are not negotiated like an acquisition agreement. But courts still routinely uphold their validity if users have “clicked” their assent to the terms.
There is a scenario in which, like JP Morgan, Disney could end up losing money if it prevails on its copyright claim against Nanoble if the indemnification clause applies and is enforced. Any damages award that Disney wins could be taxable income since it constitutes a damages award for non-physical injury. And, even if no money traded hands between Disney and Nanoble, the indemnification of that amount, assuming it’s enforceable, could be a forgiveness or discharge of a debt owed, in which case it’s still taxable income.
As I said before, Nanoble’s counterclaims are not to be taken lightly. That’s why Disney has raised numerous defenses to invalidate the indemnification clause.
And, if that’s not enough, the law firm Quinn Emanuel represents both Javice and Nanoble.