Ask HN: I've finished developing an iPhone application. How do I protect myself?

[cheesylard]

Currently I live in Reno, Nevada.

I got an iOS developer's license under my name in February 2013. Since it is under my name, it will be displayed when I submit it to the App Store. I do not want to release it under my own name in fear of getting sued by a patent troll.

The application itself is a music player, which streams audio from another source that I do not control. As such, I am afraid that it might be possible that I may violate some term, or I might break some DLC rule or something to that effect. Or just plain old bad luck with some random patent troll.

I have done some research and it appears that my best course of action is to start an LLC and get a new Apple Developer license under the LLC's name. I really don't know how I would go about acquiring the LLC, though. I also do not know if there is anything else I should do to protect myself that I may have overlooked. It would be great if someone could clarify this for me!

Thanks.

[ndcrandall]

The usual advice applies, if you are really worried consult a lawyer. Many will do 30min - 1hr consultations for free and will enlighten you to the risks about your app specifically.

An LLC will protect you from most liabilities and is probably the easiest way to protect yourself in this case. Worst case scenario they sue the company and get all $0 worth of assets from it (assuming no sales).

Applying for an LLC is fairly simple and straight forward. Most states allow you to create one online for less than $100. It honestly takes less than an hour to set them up. Beware the tax implications of doing so, it's a pass-through entity meaning profits and losses are passed directly to your personal income. This is usually not a big deal and most tax software makes this very simple to document at tax time, just keep a record of all profits and expenses.

This is just from experience so take it with a grain of salt. Hopefully this gets you started with some further research.

[cprncus → ndcrandall]

> Worst case scenario they sue the company and get all $0 worth of assets from it (assuming no sales).

But worst case has to assume significant sales, or what's the point of the whole discussion? And are you suggesting the OP doesn't defend in court? Because if not, then legal fees will kill OP. If he doesn't defend, then I guess it is cross your fingers and hope the jury in East Texas holds an Opposite Day that day.

[jasonkester]

Do you have millions of dollars to pay a settlement? Hundreds of thousands? Tens of thousands perhaps?

No, right?

Then why do you think you're going to be targeted by anybody for a lawsuit of any description? It's generally a bad idea to sue poor people.

Put your app out and see what happens. This seems like the silliest possible reason to avoid doing so.

[cprncus]

Are you thinking of the LLC to hide your identity? I don't think that will work--the LLC is a legal structure that has your name linked to it in the state that is registered in.

It sure sounds like you think the LLC provides more protection against this particular problem than it actually does. Sadly, I don't think it does nearly enough to make your concerns go away. IANAL and AFAIU, the LLC will protect your personal money if you get sued if you are not found by the judge to be personally negligent, and if you are not found by the judge to be merely an alter ego of the LLC (and thus s/he would pierce the corporate veil, i.e., order your personal assets liable), and if you pay your lawyers up to $1 mil in legal fees to defend, etc.

It's really not as protective as any of us would hope.

[cheesylard → cprncus]

I was under the impression that a judge could only pierce the corporate veil if I violate some sort of rule with regards to the LLC; i.e. withdraw / deposit company funds in my name or something like that.

[totalforge]

Different types of entities, such as incorporation, subchapter-S corp, and so on, might offer different degrees and types of legal protection. Talk to a lawyer and consider your options.

[iamshs]

Will LLC protect you though? The troll can still link the LLC back to you. LLC can reduce your liability though in case if you get sued.