Top 5 Legal Issues Facing App Developers

— This is a guest post by Aaron George, fellow app developer and founder of LawKick —

Developing apps can be an exciting and rewarding business to jump into. It’s also one of the easiest businesses to get up and running on a small budget.

The iOS App Store and Google Play are powerful platforms that developers can tap into, providing instant, seamless accessibility to a customer base of millions all over the world. However, even though the app business has fewer barriers to entry, it still comes with all the same legal issues and potential pitfalls as other businesses.

It’s important to be aware of these things in order to structure your business properly and set yourself up for success. So, here is a list of the top 5 legal issues in app development, as well as some tips for how to handle them.

  1. Entity Formation

In any business, it’s always a good idea to limit your personal liability by incorporating or setting up an LLC. There are unlimited potential problems that could arise, and you never know who might sue you or why.

If you have an LLC or corporation established, your personal assets like your home, car, and bank accounts are not at risk on behalf of your business. If you get sued, only your business assets could be seized in a judgment or settlement.

No matter how small your app business is when you start out, it’s usually well worth the expense to form a limited liability entity and make sure you are protected financially. Here’s more info on LLCs and corporations to help you start the process.

  1. Confidentiality

Confidentiality issues come up frequently in the tech world because of the innovative nature of the industry. People are reluctant to openly share their ideas or expose their intellectual property to possible competition.

The most common way of ensuring confidentiality is to use an NDA (non-disclosure agreement) when dealing with any outside parties that are likely to become aware of your confidential information. In app development, this usually comes up with outsourcing.

Before you begin negotiations with other developers, designers, copywriters, etc. that you are considering working with, ask them to sign an NDA and agree that they won’t disclose any sensitive info about the project. Although an NDA can’t actually prevent someone from stealing or sharing your idea, it serves as evidence that you took steps to protect your confidential information, and it will make the other person think twice before they do anything.

  1. Intellectual Property Ownership

Intellectual property, normally just called IP, includes any and all work that is created in the process of developing, marketing, and selling something. As a business owner, it’s important to ensure all IP that your business generates is owned by your company, and not the people generating it.

When it comes to app development, the source code, designs, graphics, app name, app icon, and any written content within the app would all be considered IP. If you are outsourcing one or more of these processes when creating an app, it is imperative that you set forth who owns what with a proper legal agreement.

You should make sure any agreement you enter with an outsourced worker contains an “IP Assignment” provision that clearly specifies that you (or even better, your limited liability entity) owns whatever work is created. When things like that are in writing, it’s a lot harder to fight about ownership down the road when your app tops the charts and the revenue starts pouring in.

  1. Intellectual Property Protection

You should also consider taking further steps to protect your intellectual property against competitors. The 3 main ways of accomplishing this are by registering trademarks, copyrights, and patents.

  • Trademarks can protect things like your app name, company name or logo
  • Copyrights would apply to any written or artistic works, including the source code, content, and designs
  • Patents are to protect processes and inventions that are new and non-obvious

All of these forms of IP protection are important and useful for different reasons, depending on the nature of your apps and your business goals. It’s wise to consult a lawyer before getting too deep into any of these areas of the law, because it can get tricky.

Here is some more helpful information about protecting your intellectual property if you’d like to learn specifics about trademarks, copyrights, and patents.

  1. Terms of Use and Privacy

Two of the least known legal issues confronting app developers deal with terms of use and privacy policies. However, despite the general lack of awareness, these issues are actually some of the most important ones, and if not properly addressed, they can have the most severe consequences on your business.

Terms of Use

Terms of Use is basically a legal agreement that you, the app developer, are entering with every user of your app. The agreement happens automatically when a user uses your app. It basically sets forth what the app is, how it should be used, what constitutes improper use, and what the consequences of improper use will be.

For some very basic apps that have no interactivity between users at all, it may not be necessary to have a Terms of Use agreement. However, if your users are interacting with each other, or with you or members of your company in some way, you should certainly think about having a Terms of Use agreement.

If you clearly lay out the rules for how your app can and cannot be used, you are lowering the possibility that someone can sue you if something bad happens as a result of their use of your app.

Privacy Policy

Privacy is also a major concern, especially for apps that are likely to attract children as users. Any time you are collecting “personally identifiable information” (or PII) from your users, you are at risk of violating privacy laws.

PII includes names, emails, phone numbers, addresses, birthdays, locations, and many other types of info. If your app collects this data in any way, you should have a privacy policy that discloses what data is collected and how it is used.

There are even stricter privacy requirements under the Children’s Online Privacy Protection Act, or COPPA. This law specifically deals with apps or websites that are likely to attract children under the age of 13 as users, and that collect PII from them.

It is a huge burden to meet the COPPA requirements, so if your app or game is likely to have children users, it is a good idea to avoid collecting any PII whatsoever. Some app companies have faced serious financial penalties for failing to meet the COPPA requirements. It’s not worth the risk.

App development is a fun, fast-paced, and exciting business. But just like other businesses, it comes with serious legal issues that you must be aware of and deal with properly in order to minimize your liability and achieve success.

Taking steps to learn about these 5 major legal issues, and others, is a good way to start. You would be wise to consult a lawyer that deals with digital media and internet legal issues as well, just to be sure that you are covering your bases and setting things up to protect yourself.

Sometimes the hardest part is knowing where to look. If you need help finding a lawyer near you, LawKick is a free platform to connect you with qualified attorneys in your area.

What legal issues have you run into since starting your app business?

aarongeorge_1386290923_78

Aaron George is an entrepreneur with a background in app development and law. He’s also an active blogger and the co-founder of LawKick. LawKick is a platform enabling people to connect with lawyers online and get price quotes for free. Connect with Aaron here: http://about.me/aarongeorge

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