Home > Research Legal Advice > Copyright Infringement > Copyright, fair use, and the liability of management.
Asked about 3 years ago - San Francisco, CA
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Hello.
I am considering launching a new Internet search service as a part-time small business. As part of its service, the search engine will display copyrighted material used without permission.
My question is not whether or not this service will qualify as "fair use", but rather, supposing an action from a copyright holder, how liability works and how I can protect myself: If the business were formed and operated as a California LLC, could I as the owner/manager still be named and would I still have personal liability? For example, in Perfect 10 v Amazon, even if Perfect 10's primary goal was injunctive relief, could Perfect 10 have named individual managers of Amazon or Google and held them for damages?
Thank you.
Q: ... supposing an action from a copyright holder, how liability works [?]
R: You know "how liability works." The copyright owner files suit, the judge or jury decides whether infringement occurred. If yes - infringer pays owner: if no, the defendant's free and clear. If you have a specific question about "how liability works" then you need to ask it.
Q: ... could I as the owner/manager still be named and would I still have personal liability?
R: Yes. Read the article here: http://j.mp/aeD4qW
Q: As the manager/owner, would I have personal liability in the event of a judgment against the business? How could I protect myself?
R: I’ve already answered your question – You CAN’T. Did you even read the article cited to? http://j.mp/aeD4qW .
You already apparently know this is a illegal business model that's based on willful copyright infringement. Willful infringement exposes the infringer to discretionary increased statutory damages, and according to some courts, to punitive damages as well.
As for your personal liability, having an LLC or corporation is supposed to provide a corporate shield for you, but there are many ways to pierce a corporate shield, which ultimately rest of the concept of basic fairness, where courts try to avoid an inequitable result. So for example, even if you scrupulously maintained a separate and properly operated but infringing LLC or corporation, but your infringing LLC or corporation ends up with no profit to pay a judgment after doing all this infringing yet you make a big salary, I bet your corporate veil gets pierced.
Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.
By actively participating in the business activities, which as you acknowledge will aid, allow or encourage the copying and display of works without authorization, you are individually liable. If your site stores the images or content, you and your company are liable if there is infringement. If your site only allows others to copy, such as a torent site, you and your company are liable for contributory or inducement of any infringement.
This is only the copyright aspect of your risk.
Get competent advise before you do anything.
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