A Legal Blog by Aaron | Sanders, PLLC

Let’s Sue Everyone! More on the Personal Liability of Business Owners for Infringement

Lawyers Sue Too Much, Except When They Don’t

Last week, I discussed the scary court decision, Universal Furniture Int’l, Inc. v. Frankel, in which the owners of a company were found liable for their company’s copyright infringement, even though they were not defendants in the original lawsuit against the company. The copyright owner sued the company and won, and then, when the company filed for bankruptcy, the copyright owner filed a separate suit against the owners. As I explained, if the company is small enough, the owners will be too close the acts of infringement to avoid personal liability. To the court, the only question was whether the copyright owner had to re-prove the copyright infringement. The court held that it didn’t have to because the exact same acts of infringement were involved.

So how does one explain Burberry Ltd. v. Horowitz? In that case, Burberry, the well-known clothing manufacturer, brought an action for trademark infringement against a company called Designers Imports, on grounds that Designers Imports was selling counterfeits of Burberry’s clothing. The court agreed, found Designers Imports liable for $1.5 million, and issued an injunction. Somewhat later, Burberry sued one Asher Horowitz for exactly the same acts of trademark…

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Owner Liable for his Company’s Copyright Infringement

Incorporation? Shmincorporation!

Since Aaron & Sanders is in the business of (among other things) helping start-ups get started up, one of the most frequent questions Tara and I get is whether it was worthwhile to incorporate or form some similar corporate entity, such as an LLC. The short answer is it depends on (1) whether you will need to be entering in any scary contracts (i.e., if you breach it, will you be personally devastated?), and (2) how many owners would there be (a single owner is about ten times easier and cheaper to form than two owners, then it get more complex and expensive from there).

It’s well known that corporate entities “protect” the owners somehow, but there is often some confusion about what the owners are protected from. Corporate entities protect against contract liability only, and even then, only if you are clear it’s your company and not you who is forming the contract.* And, only if you have been treating your corporate entity as something separate and apart from you (otherwise, the contract creditor can “pierce the corporate veil” and reach your personal assets).

* I.e., In the part where it says who the parties are, make…

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Good Contract > No Contract > Bad Contract (Part 2)

Drawing Lessons from ICG Link v. Steen

In my Friday post, we looked at the facts and holding of the October 31, 2011 appellate decision in ICG Link v. Steen. Recall that both parties thought they had entered a contract for ICG Link to build Steen’s company, Nashville Sports Leagues (“NSL”), a website. They sued and counter-sued each other for breach of contract: ICG Link to get paid, NSL to get damages for what it regarded as a less-than-useful website.  Only, there was no contract because the court couldn’t determine what it was NSL thought it was buying. As I mentioned in my last post, the contract was the equivalent of a contract for a car with four wheels, an engine and a drive-train, for $12,000. Just as you don’t know what car you’re getting for $12,000 (it could be a Yugo, it could be a Maserati), ICG Link and NSL never had a “meeting of the minds” about the website.

The result was that both parties felt pretty burned. ICG Link recovered only half of the amount it invoiced, and NSL (and Steen) had to pay for a website that it never used. That is because, in the absence of…

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