How do I move my open-source software under my LLC for liability protection?
Dolan Williams
LawyerOh ok thanks for clarifying! So in this case, where possible, you could put a disclaimer that you are acting on behalf of your LLC rather than an individual. Basically, a short statement clarifying that your LLC holds all the liability and that you are personally protected as a result. Nevertheless, yes, transferring ownership to your LLC would b helpful, changing the license where possible. Make your LLC the one that is the face of everything you do. Also, having a business bank account in the name of your LLC (where you control deposits) is smart to limit your liability, too.
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In the past, I developed some open-source code that have become very popular. I’ve now created an LLC to do business relating to that work e.g. developing custom private solutions for clients. I also have end users who would like to sponsor me (think “Patreon”) for my open-source work. I’m seeking legal advice for how I should go about doing the latter so that my LLC correctly provides a liability shield for the open-source contributions my end-users are sponsoring.
Hello! My name is Dolan and thank you so much for contacting me! I just had a few quick questions for you: So if I can clarify, you have like a basic framework for the software; however, you have the ability to customize it for specific customers, correct? What is the nature (generally) of what the software does?
Hi, Dolan. The software is used to train neural networks to model electric guitar amplifiers, and to use those neural networks in audio effects plugins.
Ok got it! So to me it sounds like you would need a few things: 1. You need a basic contract that outlines the services provided including any general deadlines and deliverables; 2. You should have it in writing of course; 3. You need a strong liability clause as well. One that limits your liability in that the damages they seek would only be limited to the actual damages that they incur as a result of any breaches by you and vice versa. You can also state that the limits to your liability wouldn't include things like hackers or thieves that manipulate the software; 4. I would also include a non-disclosure agreement; 5. I'd also include a non-solicitation section; 6. I'd also include a clause that says they promise not to reverse engineer or otherwise duplicate their specific code except for their own business needs and that they will keep the software code private except for in limited business purposes. 7. You can also include that there is an open source platform for this, but on the open source they are not liable for any harms that may befall one of your clients. The site lets us draft these kinds of contracts and you get a 10% discount. So for this, I normally charge $[price], but it'd be $[price] for you. Just let me know and I can draft a template for you. Thanks!
Thanks, Dolan. I do have a contract template for my proprietary B2B work. What I'm asking about right now though is the open-source side. Basically, fans of my work want to support me for the open-source work and encourage me to keep working on it. I'm not sure the exact steps I need to take to make sure it's clear I'm acting on behalf of my LLC rather than as an individual. However, the repositories in question are owned by me as an individual. This is what I -think- I'd need to do, but I want to know if you agree, or what I should do differently. 1. Transfer and transfer ownership of the repo on GitHub to the GitHub Organization I made for my LLC. 2. Commit a change to the LICENSE for each repo giving copyright to my LLC [Question for you: Is this correct? Can I do this? Should I? I want the LLC's protections for future contributions to the repos from myself & contributors.] 3. Set up the Patreon to deposit to my business bank account and get paid there as usual. Does that sound right to you?
Oh ok thanks for clarifying! So in this case, where possible, you could put a disclaimer that you are acting on behalf of your LLC rather than an individual. Basically, a short statement clarifying that your LLC holds all the liability and that you are personally protected as a result. Nevertheless, yes, transferring ownership to your LLC would b helpful, changing the license where possible. Make your LLC the one that is the face of everything you do. Also, having a business bank account in the name of your LLC (where you control deposits) is smart to limit your liability, too.
I think that answers my questions. Thanks again.
You got it, sir!