Legal Issues to Consider When Developing your New Mobile App
Mobile app development has low barriers to entry but founders must protect their IP, set terms and conditions, and consider legal structure and employment agreements.
In recent years, mobile application development has become a way for people to enter the technology market with little more than an idea and a computer. Technology provides these individuals with a great degree of freedom and creativity by giving them the ability to start global companies from their bedroom.
There are fewer barriers to starting a technology company each day and it is therefore important for founders to inform themselves of potential pitfalls before launching their App.
Each App is different; however, founders must educate themselves how to protect their product and manage the risks in their business relationships.
There are several general legal issues which are applicable to all Apps and businesses.
Legal Entity
There are several ways to structure your App business which will affect its tax rate, personal liability, control of the business and ability to attract investors.
The options include:
- operating as a sole trader;
- a partnership;
- operating through a trust; or
- incorporating a company.
Each structure has its own benefits and drawbacks and therefore it is important to seek the proper advice to determine which is the correct structure for your business.
Intellectual Property (IP)
Intellectual property (“IP”) includes any original work created during the development of an App. This includes graphics, unique processes and software code. Since an App is an intangible product, IP protection can protect it from being copied or cloned by a competitor.
These are a few important things to keep in mind to protect you IP:
- when discussing your idea with others, you should consider a Confidentiality Agreement;
- when engaging third parties such as graphic designers or software developers, ensure that your Service or Contractor Agreement assign any IP to your business and includes a confidentiality clause. This will apply to things like the software, logos, icons, and graphics; and
- when using app development platforms such as iOS or Android, be aware of each platform’s Terms and Conditions and Licensing requirements.
You will also likely want to Copyright the software and Trademark the name and logo to protect them from being copied and commercialised by others.
Terms and Conditions
When a user downloads and uses an App, you are granting them a limited license based on a set of terms and conditions to which they will need to adhere. When granting this license, it’s important to define important terms around payments and restrictions on the user from reverse engineering. This license is known as an End User Licensing Agreement (EULA). Often, the terms of the EULA are contained within a broader ‘Terms and Conditions’ or ‘Terms of Use’ document, which includes sections on liability, dispute resolution, and prohibited behaviour.
Privacy
Users will often be required to enter private information when using an app. Having access to private information comes with legal responsibilities around its use and protection.
Australian and International privacy laws restrict inappropriate use and disclosure of this information and requires you to publish your privacy policy. Your privacy policy should detail at a very minimum the following:
- when and how information will be collected;
- for which purposes it will be used; and
- to whom it will be disclosed.
Note that stricter rules apply if the App is targeted to children or you collect information about user’s health.
Employment
When employing others to work in your app business it is important to ensure you have proper Employment Agreements in place which will restrict your employees from disclosing confidential information.
Like any business, it is important to ensure you have the necessary professional legal guidance. For assistance with any of these matters or if you need any of these documents drafted, contact us at the link attached here.
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