Q: If my company designed a car wheel and sold a license to a manufacturer. Who is liable for accidents from its use?
I am considering forming a startup based on the design of a new lightweight automobile wheel. The business model is to patent the wheel design and sell licenses to wheel manufacturers and collect royalties from it. If there ends up being a design flaw in the wheel and it results in a wheel failure on the road. Who is liable for injury/damages from a potential lawsuit? My company or the wheel manufacturer that made it and sold it?
A: The injured party would sue both the seller and the manufacturer/designer. The designer would ultimately be liable to the seller and the manufacturer (if different from the designer), for damages they pay out to the injured party. Basically, if all defendants in the case are insured, the designer’s (your) insurer would pay the loss.
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