To remove the existing damage simply sharpen it until they are gone. To prevent it in the future increase the edge angle to give it more strength and/or adjust the method of the cutting to try to decrease the strain on the edge, more direct control and less twisting for example during metal cutting.
I would also add to Cliff's statements that if it happens again that perhaps you have a knife with faulty heat treatment or a bad batch of steel. If it happens repeatedly with 'normal' use that is not something that is right. Send it back under warranty. Kershaw has a great customer service dept.
This will take hours, even with the gey stones in the spyderco in the back bevel slots. I've being doing nothing but sharpening since my original post, and still barely put a dent in the chips. I wonder how this happened. IIRC it was fine when I closed it. Also, the tini near the tip appears to have bubbled on the top.
Attach two strips of 200 grit sandpaper with double sided tape to the flats on your Sharpmaker and sharpen as usual. After the chip is gone follow-up with the bare brown and white rods to finish the edge. I use this method to reprofile blades and it will save you hours.
Buy a new knife???!!! I really like my avalanche, it's been part of everything in my life: photography, car repair, mail/boxes, anything and everything that needs cutting, and getting some drunk guy who first tried to run me off the road, then tried to drag me out of my car to do God knows what to me to back off.
Before getting the various responses about diamond and sandpaper, I went and did it my way, which may or may not have been dumb: just dulled my knife out making like I was trying to cut the sharpmarker rods lengthwise. Now I just have to buy some more bon ami and scouring pads to clean out the rods, and then back bevel and then sharpen.