liability – Attorney Evan Brown

April 1, 2024 Cybersquatting, Litigation, Trademarks

Can the owner of a company be personally liable for what the company does?

personally liable

One of the major benefits of forming a corporation or limited liability company is the shield from personal liability the business entity provides to its owners. But that shield does not protect against all of the company’s officers’ conduct.

In a recent trademark infringement case in federal court in California, a court evaluated whether a company’s officer could face liability for trademark infringement and cybersquatting. Plaintiff sued the company and the owner individually, asserting that that the owner should be personally liable because he controlled and was involved in all significant corporate decisions regarding the alleged infringement.

Citing to Facebook, Inc. v. Power Ventures, Inc., 844 F.3d 1058 (9th Cir. 2016), the court observed that a corporate officer can be personally liable when he or she is the “guiding spirit” behind the wrongful conduct, or the “central figure” in the challenged corporate activity.

In this case, the court declined to dismiss the individual defendant from the lawsuit. With respect to the alleged trademark infringement and cybersquatting, the court focused on the fact that the individual defendant:

was the founder and central figure of the company,
personally participated in all major business strategy, branding and marketing decisions and actions,
ran the company from his home,
was the only officer of the company and was simultaneously the CEO, CFO and Secretary,
promoted the company’s brand from his personal social media account, and
directly negotiated with the plaintiff’s founder to see whether the parties could “find a more peaceful resolution.”

Simply stated, the individual defendant was not merely a board member that “final say,” but was substantially involved in every aspect of the conduct of the business giving rise to the alleged intellectual property infringement.

Playground AI LLC v. Mighty Computing, Inc. et al., 2024 WL 1123214 (N.D. Cal., March 14, 2024)

See also:

May 18, 2021 Contracts

Murdered Uber passenger’s mom can keep her case in court and out of arbitration

An Uber driver murdered plaintiff’s son. So plaintiff – the Uber user’s mom – sued Uber for wrongful death. The lower court threw out the case, saying that the Uber terms and conditions required the matter to go to arbitration. Plaintiff sought review with the Georgia Court of Appeals. On review, the court reversed and sent the case back to the lower court.

The appellate court found that it was improper to dismiss the case because it was not clear that plaintiff’s son – the one killed by the Uber driver – actually agreed to the Uber terms and conditions that contained the provision requiring arbitration.

First, there was a dispute as to whether he even saw the link to the terms and conditions when he signed up for Uber in 2016. That’s because he was using an Android phone, and plaintiff alleged the on-screen keyboard within the app may have covered up the link to the terms and conditions.

Second, the court noted that even though Uber submitted evidence it emailed updated terms and conditions to plaintiff’s son, and that he continued using Uber thereafter (thereby binding him to the terms), it was unclear that the email was ever sent to plaintiff’s son. If the customer never saw those terms, they would not apply, and therefore arbitration would not be proper.

Thornton v. Uber Technologies, Inc., 2021 WL 1960199 (Ct. App. Ga. May 17, 2021)

June 10, 2008 Section 230

A look back at Doe v. MySpace

Court of Appeals upholds Section 230 immunity for MySpace. Social networking provider not subject to suit for negligence for failing to implement technological measures to weed out underage users.

Doe v. MySpace, Inc., — F.3d —-, 2008 WL 2068064 (5th Cir. May 16, 2008).

I’ve been pretty busy the past few weeks with work and speaking engagements, and I also slipped in a little vacation awhile back. So I’m doing some catching up, looking over a number of interesting decisions from the past few weeks. While I was on the beach in Florida with my family, the Fifth Circuit issued this intriguing opinion in a case that has gotten quite a bit of publicity since it was filed back in 2006. Here’s the story.

When Julie Doe was 13, she lied about her age and set up a profile on MySpace. A year later, she met — first online, then offline — a 19 year-old named Solis. That Solis allegedly assaulted Doe.

MySpace Section 230 graphic

Julie and her mother filed suit against MySpace alleging, among other things, negligence. The plaintiffs claimed that MySpace should have done more to prevent Doe and Solis from meeting.

The case bounced around Texas and New York state court, then to New York federal court, then back to Texas where it ended up in the U.S. District Court for the Western District of Texas. Last year, the district court dismissed the case, holding that the Communications Decency Act at 47 U.S.C. 230 immunized MySpace from liability.

The Does sought review with the Fifth Circuit. On appeal, the court affirmed.

Section 230 provides, in relevant part, that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” The Does had argued that Section 230 should not bar the negligence claim, as the allegations dealt not with MySpace’s publication of information, but with the site’s failure to implement appropriate security.

Agreeing with the lower court, the appellate court rejected what it called disingenuous artful pleading by the plaintiffs. It found that the allegations were “merely another way of claiming that MySpace was liable for publishing the communications and they [spoke] to MySpace’s role as a publisher of online third-party-generated content.”