Monday, November 15, 2010

Authorities Regarding Vicarious Liability in eCommerce

On November 4, 2010, I gave a presentation entitled "Vicarious Liability in eCommerce: The Legal Exposure of Internet Businesses for the Wrongdoing of Others" for the San Diego County Bar Association.

 A few attorneys who could not attend asked if I could share the authorities on which I based my presentation.  I gave them the authorities and I thought I would share them here also. 


California Unfair Competition Act, Business and Professions Code 17200, et seq.

Federal Trade Commission Act, 15 U.S.C. 41, et seq.

U.S. Copyright Act , 17 U.S.C. 101, et seq.


A & M Records, inc. v. Napster, Inc. (2001, 9th Cir.) 239 F.3rd 1004.

Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. (2005) 545 U.S. 913, 125 S.Ct. 2764, 162 L.Ed.2nd 781.

Emery v. Visa International Service Assoc. (2002) 95 Cal.App.4th 952, 116 Cal.Rptr.2nd 25.

Schulz v. Neovi Data Corporation, et al. (2007, 4th Dist.) 152 Cal.App.4th 74, 60 Cal.Rptr.3d 810.

Perfect 10, Inc. v. Visa International Service Assoc. (2007, 9th Cir.) 494 F.3rd 788.

Perfect 10, Inc. v., Inc., et al. (2007, 9th Cir.) 487 F.3rd 701.

Federal Trade Commission v. Neovi, Inc., et al. (2008, S.D.Cal) 598 Fed.Supp.2d 1104.

Federal Trade Commission v. Neovi, Inc., et al. (2010, 9th Cir.) 604 F.3rd 1150.

Thursday, November 11, 2010

Why Hire an Attorney to Incorporate

Given the rise of the use of online companies to form corporations, many people ask why they should use an attorney to form a business entity such as a corporation.  The reason is because online companies do not do three important things that business owners must address when they incorporate.

What online companies do:

They do what you tell them to do.
They file articles of incorporation.
They obtain Federal Employment Identification Number (FEIN).
They appoint the initial director(s) of the corporation.
Send the customer a notebook with a bunch of forms.
They might draft organizational minutes and bylaws and file SOI with state.

What online companies don't do:

Do not finish organizing the corporation.

Do not issue stock.
Do not file necessary notices to make stock issuances lawful.

Most importantly they don’t address the Three Crucial Questions business owners miss.

The Three Crucial Questions are:

What type of entity, where, and why?
What is the entity’s capitalization?
What happens if:  a partners dies, becomes disabled or says “I’m out of here”

These issues are vital.  Why do you want a LLC in Delaware?  What are you paying for your stock; what are you putting into your corporation?  What happens if you die or just quit working in the business?

The online companies won't help with these issues and others.  An attorney can help business owners to work them out.  Business owners who don't work through these issues are asking for serious trouble.