Business / Mobile app development Guide

Legal Pitfalls of App Development

Jul 27, 2017
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Legal pitfalls of app development

Before starting the development of a mobile application you have hundreds of questions. And we bet that most of them are connected with the business idea of your app and a software development process. You are so excited about the fact, that your app will be soon developed, that you totally forget about legal issues, that need to be considered.

Fortunately, we gathered this information in one place for you.

Legal Issues to be Concerned by Future App Owner

NDA. We always encourage our customers to sign a non-disclosure agreement prior to discussing their app idea. This document will secure your confidential information that has economic value.

App Development Contract. This document is important for both app development company and customer. Contract has to clearly define the scope of work or services, time limits, fees arrangements (fixed, time&material or mixed), code ownership, whether to use open-source software, etc.

Entity Formation. It is often advised to establish LLC prior to starting app development. That way app owners could limit their liability if any problems arise. While entity formation is a common step among entrepreneurs, there may not be necessary if you’re developing an app for personal use.

Intellectual Property Ownership. There are two aspects that one should consider during the app development: protection of own copyright and not infringing third-party copyright.

You can protect your intellectual property by:

  • Trademark that identifies the source of origin of goods or services. Trademark is used to protect your app’s name and logo.
  • Copyright protects app’s source code, artwork, design, text. The app automatically gets copyright protection once the work is done. In addition, you can file a copyright application to the US/EU/GB Copyright Office in order to establish a public record.

Registration is required in order to be able to bring a lawsuit in the federal court, but usually one needs to apply in each country he/she wants protection in. Therefore, global registration may not be necessary in case you’re not Apple. Take your time to create a profitable app first.

  • Patent is used to protect specific app mechanism or service that is new or not obvious. It must be acknowledged that patenting is rare practice among app developers.

Third-party Intellectual Property Ownership

Third-party Intellectual Property Ownership

Copyright. Apple and Google strictly prescribe the use of third-party materials and carefully protect intellectual property rights. Laws (and app laws) differ in different countries but fundamental rules are common across all app stores.

Apps should only include images, music and texts you have right to use. If you have been granted access to use assets owned by others you can notify Google Play Market view team using advance notice form or just sending a cover letter while applying to Apple’s Store.

Encouraging copyright infringement. There may be a possibility that your app allows users to stream or download copyright protected materials. In such situations, you should get a legal advice concerning your specific issue.

Restricted content policy. Review your app and store listing page for any restricted content, such as adult content, violence, or drugs. You can check out all rules on Google Restricted Content Policy page.

Note: This regulatory requirements may also refer to ads inside your app, so be careful choosing your future ads provider.

User-generated Content

User-generated content. Any app that contains or features user-generated content (UGC) must take additional precaution, such as reporting system, correct categorization, and IARC ratings.

DMCA. While you’re obliged by app stores to maintain “moral ground” inside your app, there is Digital Millennium Copyright Act (known as the Online Copyright Infringement Liability Limitation Act) that exempts from direct and indirect liability of Internet service providers and other intermediaries.

Meaning you’re not liable for copyrighted or inappropriate content spreading across your media resource if you’re registered as a designated agent, take action to remove infringing content and ban offenders.

Fixing. There is always a possibility that your app won’t pass the review from the first time. Usually, those problems can be easily fixed. For such cases, we’re providing afterdelivery maintenance in order to help you during registration process, and make adjustments according to the user’s and stores’ feedback.

Collecting User Data

Collecting User Data

If you’re collecting user data, you need to include a privacy policy in your store listing and in your app. The privacy policy should inform users what data you’re collecting and why. Here’s Google Play privacy policy guidelines and Apple legal guidelines.

There are several federal laws that protect users from information disclosure you should be familiar with:

  • Video Privacy Protection Act of 1988.
  • Health Insurance Portability and Accountability Act of 1996.
  • Children’s Online Privacy Protection Act of 1998.

Kids Personal Data

If your app uses kids personal data you should carefully review all requirements of Children’s Online Privacy Protection Act (COPPA). This is the primary document that guides the decisions of app stores moderators. Additionally, you should check with IARC rules.

International Age Rating Coalition. IARC is aimed to streamline the acquisition of content ratings from authorities of different countries, such as ESRB in North America and PEGI in Europe, Australia, and Brazil. Therefore, by referring to IARC rules you will comply with requirements of most significant kids protection authorities.

Health Apps

If your app is collecting patient’s health data it may require complying with Health Insurance Portability and Accountability Act of 1996 (HIPAA). The general rule is: if your app provides users’ health data to doctors/hospitals/organizations, it must comply with HIPPA.

Here are several scenarios when your app must NOT comply with HIPPA:

  • User downloads the app and fills in with health data for personal use. You do not create, receive, maintain or transmit protected health information.
  • User downloads personal health data from hospital/doctor resource and uploads it to your app in order to manage/add to other health materials WITHOUT involvement of health provider. You do not share this information and developed the app WITHOUT involvement of health provider or any other interested party.

Video Apps

Video streaming or selling apps may fall under Video Privacy Protection Act of 1988 in case of disclosure of user rental information or share it with third-party companies.

The VPPA protection does not reach the users of a free Android app (downloaded without providing ID information). Moreover, in 2013 Netflix lobbied the change to VPPA that permits sharing rental information on social networking sites after obtaining customer permission.

 

According to statistics update, the number of privacy related lawsuits against app developers increased in 2017 because of extension of app’s functions and data collection. For example, Niantic (Pokemon Go developer) was sued by the Federation of German Consumer Organizations as the game violated the privacy laws of Germany. Pokemon Go was sharing user’s data like player’s location, recent web history, messages and search terms.

In order to avoid problems with law in 2017 and 2018, developers have to integrate the privacy protection during app development process and always consider the data collection and sharing in apps.

Use of Open-source Software

Use of Open-source Software

Most open-source software is under GNU GPL license (copyleft license). If your product includes source code licensed under GPL or LGPL (Lesser GPL), then your code may become subject to the GNU terms: if you distribute your product, you then have to distribute the underlying source code.

However, there are several non-copyleft open-source licenses that allow you to release software under proprietary licenses.

App Legals

Summing up all possible pitfalls, here are the most important legal issues, you need to consider developing a mobile application:

  • Include a Privacy Policy if your app access user’s personal data.
  • Include Terms and Conditions if your app is paid, feemium, or has in-app purchases. Also, we do not recommend to use any of terms of use generators.
  • Include a Disclaimer to limit your risks in case your app not working properly or being misused.

This list of required legislative issues may look depressing. But you should not worry about it when working with our team because 90% of those precautions and requirements are covered by our side.

All you need is to relax, entrust us with the development of your mobile application and consider it developed.

Alexandra

Alexandra is a Business Manager with solid experience in client communications, team management, product management. She’s driving force and soul of every project completed by GBKSOFT!

Other Articles of Alexandra

Comments (2)

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Adon
May 14, 2017 at 4:25 PM

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.

reply
Tony
May 16, 2017 at 3:11 PM
Adon,

100% true!

reply

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