Legal Question in Intellectual Property in New York

Re: Internet children's publishing site

In addition to thinking about what kind of business entity to use, may I suggest that you investigate the availability and cost of insurance to protect your business. Publisher's liability insurance is a customary line of specialized business insurance.

Re: Internet children's publishing site

You can and should limit your exposure by including clearly drafted and comprehensive terms of use (including a broad indemnity, a cap on monetary damages, a consequential damages waiver and other such provisions)on your website. However, as a sole proprietor, you will still be personally responsible for answering/fighting all legal claims against the company. Even if you ultimately prevail in defending such claims, you will still have expended your own assets in doing so. For example, you can and should require your users to indemnify you from third party infringement claims (a claim by a third party that work posted by on your site by one of your users infringes the third party's copyright). However, such a provision will not prevent third parties from suing you if one of your users posts allegedly infringing work on your site. You would then have to answer the claim and either try to bring the user into the lawsuit to defend the claim or defend the claim yourself and then try to seek the costs of the defense (and damages if you lose) from the user. Either way, you'll need a lawyer and you'll be spending your own money. For this reason, you may want to seriously consider a corporate form for your company. As you may know, a corporation is considered a person unto itself (separate and apart from you) under the law. Thus, if someone sues the corporation, your personal assets would, ordinarily, be considered separate an would not be at risk. In addition, you would not normally be expected to use your own assets to defend claims against the corporation. The corporation would spend its own money on the defense. If the corporation fails to answer the claim, a default judgment would be entered against it (not you personally), but if it has no money, the plaintiff is generally out of luck. In this scenario (whether the corporation answers rthe claim or fails to do so), you will not have to expend your own assets on the defense, and you will not be personally liable even if the corporation fails to answer and has a default judgment entered against it. So the upshot is that as a practical matter, the corporate form provides you with greater protection than you can achieve by contract as sole proprietor. You should note that it is possible under certain circustances for a plaintiff to "pierce the corporate veil" and go after the assets of the individual(s) running the company (you). But ordinarily, you would be shielded from personal liability for acts of the corporation.

Re: Internet children's publishing site

A sole proprietor cannot protect himself against liability. To protect yourself, you would have to form a limited liability company (LLC).