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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 2174 times)
Isaac
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Re: Does an LLC protect against Patent Infringemen
« Reply #5 on: Oct 4th, 2007, 4:18pm »
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on Oct 4th, 2007, 11:27am, JSonnabend wrote:
I don't agree with Isaac or the other poster.  Generally, if you follow business entity formalities, the LLC will be difficult to pierce.  This holds true for torts as well as other causes of action.  (If it didn't hold true for torts, the corporate shield would be pretty worthless, no?)
 
- Jeff

 
We've disagreed on this before as I recall.    
 
Let me first admit that the law  concerning business entities isn't something I deal with in my practice, and that most of what I remember on the subject is book knowledge from law school.
 
That said, under my interpretation, the corporate shield would still useful because it would allows shielding a member or partner from liability other than his own personal torts (such as from fellow members or employees) and from liability from debts of the LLC (i.e. contracturally incurred liability).  However non of the vicarious tort stuff is going to be applicable in a one member LLC with no employees.
 
Here's a link to discussion of an example case discussing the matter of liability for one's own torts in an LLC setting.  
 
http://lawprofessors.typepad.com/unincorporated_business/2006/10/court_a pplies_c.html
 
In particular I point to this paragraph of the discussion:
 
"The court found that this provision barred any contractual liability. As for whether the Beans could be personally liable on the tort claims, however, the court observed that “[i]n the context of general corporate law,” agents and officers of a corporation are liable for torts that they personally commit, even when acting on behalf of the corporation and even if the corporation is also liable. The court went on to conclude “this well-accepted principle of law regarding individual tort liability and business entities should apply in relationship to the ‘unless otherwise provided by law’ exception of MCL 450.4501(3)"
 
I stand by my statement that in at least some jurisdictions, the liability shield isn't much help against your own torts.
 
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Isaac
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Re: Does an LLC protect against Patent Infringemen
« Reply #6 on: Oct 4th, 2007, 6:50pm »
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I'm obviously not an attorney because of all the help everyone is providing for me here (thanks by the way)...
 
But, I will say that 4 of the 6 of the books I'm reading on LLC's do say if you get a second person or more into the LLC you will have greater protection from your own personal assets.
 
They also say nothing is 100%, except your attorneys bill Cheesy
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JSonnabend
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Re: Does an LLC protect against Patent Infringemen
« Reply #7 on: Oct 9th, 2007, 7:46am »
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Isaac, you're misreading the cited language.  Of course you're always liable for your own personal torts.  If I hit you with my car, even if it's leased through the LLC, I'm still liable.  That doesn't mean if the LLC infringes somehow I'm personally liable, even as a sole member LLC.  The LLC's infringement is not my "personal tort," it's the LLC's tort.
 
- Jeff
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SonnabendLaw
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Isaac
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Re: Does an LLC protect against Patent Infringemen
« Reply #8 on: Oct 9th, 2007, 10:00am »
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on Oct 9th, 2007, 7:46am, JSonnabend wrote:
Isaac, you're misreading the cited language.  Of course you're always liable for your own personal torts.  If I hit you with my car, even if it's leased through the LLC, I'm still liable.  That doesn't mean if the LLC infringes somehow I'm personally liable, even as a sole member LLC.  The LLC's infringement is not my "personal tort," it's the LLC's tort.
 
- Jeff

 
The case I referenced wasn't about a LLC owner getting into a car accident, but about misrepresentations made by the LLC owners in the course of business (that is on behalf of the LLC)
 
If you own one person LLC, the difference between your torts and the LLCs torts can be quite ephemeral.  If you are driving a delivery truck in the course of business, and hit someone, is that an LLC tort or your own tort?
 
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Isaac
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Re: Does an LLC protect against Patent Infringemen
« Reply #9 on: Oct 9th, 2007, 10:41am »
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I was asking mostly about a 1 person LLC protecting aginst patent infringment cases.
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