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   Does an LLC protect against Patent Infringement?
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   Author  Topic: Does an LLC protect against Patent Infringement?  (Read 2194 times)
JSonnabend
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Re: Does an LLC protect against Patent Infringemen
« Reply #10 on: Oct 10th, 2007, 7:36am »
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No, Isaac, it's not nearly as "ephemeral" as you're making it out to be.  Even in multi-owner corporations the individual acts of a director can lead to personal liability.  Fraudulent statements uttered by such a person clearly can fall within the "acts of the individual".
 
By contrast, when an LLC is in the business of selling a product that later is found to infringe, that's not the act of the individual, it's the act of the LLC.  
 
By your argument, the individual signing the contract on behalf of the LLC would be on the hook personally as well, as he would be for anything the LLC did, since an LLC is not a natural person capable of actually "doing" anything.
 
- Jeff
« Last Edit: Oct 10th, 2007, 7:37am by JSonnabend » IP Logged

SonnabendLaw
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Isaac
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Re: Does an LLC protect against Patent Infringemen
« Reply #11 on: Oct 10th, 2007, 8:43am »
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on Oct 10th, 2007, 7:36am, JSonnabend wrote:
No, Isaac, it's not nearly as "ephemeral" as you're making it out to be.  Even in multi-owner corporations the individual acts of a director can lead to personal liability.  Fraudulent statements uttered by such a person clearly can fall within the "acts of the individual".

 
I agree with you here.   I just think the hypo presented here at least hints at a possibility of infringing acts attributable to the owner.
 
In the case of an LLC simply selling a product found to be infringing, I would agree that the facts would suggest against personal liability, but in a one person LLC where the owner designed, manufactured the product himself, or even closely directed the design my a contractor,  the infringing acts could be attributable to the owner, particularly if the infringement is found to be willful.    
 
In a willful infringement scenario what would be the argument that the infringement wasn't a personal tort?
 
Quote:
By contrast, when an LLC is in the business of selling a product that later is found to infringe, that's not the act of the individual, it's the act of the LLC.

 
I agree.
 
Quote:
By your argument, the individual signing the contract on behalf of the LLC would be on the hook personally as well, as he would be for anything the LLC did

 
That doesn't follow.  I did point out that liability in contract was treated differently than tort liability.  
 
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Isaac
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Re: Does an LLC protect against Patent Infringemen
« Reply #12 on: Oct 10th, 2007, 12:25pm »
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on Oct 3rd, 2007, 9:49pm, lemonbar wrote:
Does an LLC protect against Patent Infringement or can they break through it and get to the induvidual possessions of a 1 person LLC?

 
 
I have to admit I did not read the later posts, but the corporate veil is pierced in extreme circumstances, i.e. "deep rock," undercap, fraud/misrep in forming the company done by the member(s), making them personally liable.
 
However, infringement, while also a tort is a tort on behalf of the formed company, making the company liable, not the person.  Just my view, not advice.
 
Regards,
 
 
 
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Isaac
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Re: Does an LLC protect against Patent Infringemen
« Reply #13 on: Oct 10th, 2007, 3:29pm »
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on Oct 10th, 2007, 12:25pm, TataBoxInhibitor wrote:
However, infringement, while also a tort is a tort on behalf of the formed company, making the company liable, not the person.  Just my view, not advice.
 
Regards,

 
I did some google searching to see what others had written on the subject.   While I wouldn't rely on what I found as legal advice, or even to support an argument with Jeff Smiley, it isn't too hard to find discussion of patent infringement cases holding individuals liable without piercing the veil.    There's also some discussion in Chisum to that effect that mostly cites older appellate court decisionss.
 
The most recent CAFC case I saw discussed was a 2004 case that seems to suggest that the piercing the veil standard is to be applied, which would suggest that it isn't all that easy to hold the owner liable in a garden variety infringement case.
 
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Isaac
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Re: Does an LLC protect against Patent Infringemen
« Reply #14 on: Oct 11th, 2007, 12:50am »
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It seems that it is safer to form an LLC just in case it helps protect me in general for my product causing harm to a consumer and also it might protect me from infringement actions. Maybe, maybe not.
 
What would examples of willing infringement and unwilling infringement?
 
In my situation I believe I have found prior art - same  simple thing used the same way for the same purpose and documented and sold years prior.
 
Also, I do not see any patent application or any other document for that matter in the US and its has been longer then 30 months after filing the WIPO PCT.
 
Also, their product states patent pending US. (might be fraud if they never applied for it on time)
 
Also, they do not have a patent granted yet in any state.
 
Also, the Internation Searching Authority gave the opinion that as it was written it is not Novel or Inventive. They did however find it to be Industrial. (The PCT has 3 conditions needed for all claims in the patent.)
 
Lastly, if they ever did get a patent and asked me to stop I would verify the patent and show the prior art to an attorney and let him judge it. After that I would stop selling all together without a problem.
 
Does this hint at anything at all that could be considered 'willing' infringment?
 
I'm in the process of finding a PCT attorney and already used a patent attorney not well versed in PCT. Said I needed to get a PCT attorney to determine what status is of their patent app since it would take him a lot more hours to figure that stuff out.
 
Thanks
« Last Edit: Oct 11th, 2007, 12:55am by lemonbar » IP Logged
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