I am in the process of starting up an online web business. I will either set it up as an LLC or C/S corporation. I would like to know what other steps can I take to minimize liability from trademark or copyright infringement or any other type of law suit as a result of setting up my online business? Is there any insurance for this? Any advice will be appreciated.
Our firm works with Los Angeles start-ups regularly.
In addition to setting up the corprate entity, many office liability policies do carry coverage against trademark and copyright litigation but you need a reliable insurance agent to obtain it and evaluate the extent of the coverage.
Having a lawyer review you plans going in makes sure you are not buildinga business in a mine field. Finally having a good lawyer that one can call with regular or occasional ten minute questions will ultimately save money. One can retain an attorney at a reduced rate if they know they will receive a volume of work, or just call when you need it. Every dollar spent "double-checking" with the lawyer will save ten dollars down the road in avoided litigation.
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The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
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By creating either an LLC or a corporation you address the limited liability issue. So long as your company is adequately capitalized and operates like a company with at least some formalities, you will be limited to the assets of the company in terms of liability with the exception of payroll taxes and a few other things related to employees, for which the principal of a business may be held personally liable. (There is not insulation from liability but liability only arises if one does not pay the payroll taxes, etc.
If you are concerned about owners of trademarks or copyright bringing a claim, you may have insulation, but I urge you to avoid that. It is a slippery slope. I am assuming you would not intentionally infringe. If you take the proper steps you can likely avoid infringement.
You can insure against liability certainly and definitely should do so. Although I have not seen it, you probably could acquire insurance coverage to protect against unknowing infringement.
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You have not indicated whether you be selling services or goods. This will affect your selection of business entity. Is this an e-commerce cite or some other type of webite?
Phillip M. Smith Jr.
Tax and Business Attorney
Phone: 855 IRSTAXBIZ
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