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App Legal Requirements: How to Avoid App Development Traps

  • 15-16 min read
  • July 20, 2021
  • 👍 Rating — 4.8 (111 votes)

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

Fortunately, we gathered the pieces of advice that hiring lawyers or legal advisers would provide you with, we collected all of the information that you might need in one place – especially for you and for free.

Legal considerations for app developers

Jurisdiction

The app marketplaces are usually worldwide, meaning that your application is accessible and can be downloaded in different countries. The question is if you develop and establish your application in accordance with the jurisdiction and legal standards of any one country, or do you have to modify the app to fit with expectations of various legal codes. Of course, it is a complicated task to handle all local laws of different locations on your own. Our suggestion is to find and hire an experienced lawyer who will help you avoid problems with any out-of-law development, providing you with the safety and peace of mind of making sure that you are conforming to and taking into account all of the jurisdictions of those countries where your app will be available to be downloaded and used.

Incorporate a Business to Limit Your Liability

Before you decide to develop your app idea and build the solution, think of the type of business you want to run. Would it be a sole trading type, partnerships, or LLC (limited liability company) – the decision is yours. The last option would be quite profitable and flexible as you will not be responsible for all issues related to your project, as the name suggests, it is limited liability, so the rest of your assets, wealth, or net worth will not be endangered by your endeavor.

Non-disclosure agreement (NDA)

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

App Development Contract 

This document is important for both app development companies and customers. The contract has to clearly define the scope of work or services, time limits, fee arrangements (fixed, time&material or mixed), code ownership, whether to use open-source software, etc.

Entity Formation

It is often advised to establish an 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:

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

Registration is required 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.

Cookie management

Cookies are a great marketing tool that provides the statistics of website visits. However, collecting cookies should follow the flow considering legal requirements. The first rule is keeping your visitors informed that your website collects their data based on your privacy policy. Thus, users can decide whether they agree to share data or not. 

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

What industries should consider legal requirements?

We would like to highlight the key legal requirements that should be considered when developing a software solution by the example of three prospective worldwide industries – healthcare, education, and finances. This day these areas are being digitally transformed and continue to adopt the latest technologies for the purpose of providing the same quality services online considering all local laws and limitations. Additionally, do not forget that legal considerations are obvious to take into account for all industries but their filling depends on particular industry conditions. 

Healthcare 

Healthcare applications imply particular regulations as this industry gets a high responsibility for people’s lives and health. First of all, healthcare applications should eliminate the possibilities of human errors in diagnosis, assigning treatment courses, health monitoring, etc. Further, we would like to highlight the main medical regulations that should be considered when developing medical software.


Health Insurance Portability and Accountability Act (HIPAA)
HIPAA regulation is responsible for keeping the health data private and possible to share only with the approved third-party medical systems due to interoperability. Moreover, this law also obliges medical organizations to send notifications in case of health data privacy violations to detect the weak sides and prevent such situations in the future.
Federal Food, Drug, and Cosmetic Act (FD&C Act)
This law regulates the healthcare applications that are responsible for vital treatment issues like medication schedules, notification about the deterioration and need for assistance, etc.
Federal Trade Commission Act (FTC Act)
The FTC Act prohibits deceptive and unfair trade practices affecting interstate commerce. These acts may include those relating to false and misleading health claims, representations regarding the performance of the app, as well as claims that impact consumer data security and privacy
Health Breach Notification Rule
This regulation is liable for alerting consumers in case their private health data was violated.
Lanham Act
The medical solution should be registered and approved as an official trademark by the government. It has to be clear and unique. Additionally, if the application involves third-party trademarks, the app owner has to get official permission of using their trademark in the software.
U.S. Copyright Act
Copyright Act protected the medical app code from being copied or stolen, meaning the app owner has full property rights to its filling like text, pictures, code, design, specific functionality, etc.
U.S. Patent Act
The healthcare application that is considered to be innovative can become patented due to the used technologies. Of course, it is an exception rather than a consistent trend. Certain digital health apps and their associated technologies may be patentable. This will depend, in large part, on the nature of the technology and whether the invention is new and non-obvious

Education

The educational industry has started a digital transformation for the purpose of improving the quality of education and students` educational experience. Different types of educational organizations develop and implement educational platforms that provide the same quality learning process and knowledge evaluation as in-person learning does during and at the end of courses. When developing this types of software solution, developers should firstly consider the next requirements:

  • data privacy – your organization should have its own privacy policy accordingly to your specialists and legal requirements for your industry and entity, the privacy policy should also be updated to the latest privacy laws like HIPAA, COPPA, FERPA;
  • data security – this feature suggests having preventive measure not to allow the personal breach of data violations;
  • access for users with disabilities
  • intellectual property – think of the protection of your IP to save the property rights to all information your system contains like works, tests, lectures, presentations, grading system, etc.

Finance

Finance data requires the highest level of privacy and security. The demand for online banking apps is huge to this day, so it is crucial to consider all legal requirements when developing one to make users feel confident and protected. Among the legal issues that should be considered in fintech solutions are:

  • data access – considering GDPR and ePrivacy regulations;
  • New Payment Services Directive (PSD2) – this legal issue regulates third-party access to customers payment accounts;
  • cybersecurity – prevention of hacker attacks is a must;
  • KYC compliance ( know your customer) – checking the counterparty before the transaction conduct;
  • PCI DSS (Payment Card Industry Data Security Standard) – compliance with international payment systems.

We also would like to present a video where you can learn more about the legal requirements of app development and find out the consistent steps that would help you take into account all of them.

Third-party Intellectual Property Ownership

Copyright

Apple strictly prescribes the use of third-party materials and carefully protects 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 the right to use. If you have been granted access to use assets owned by others you can notify the Google Play Market view team using an 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 legal advice concerning this specific issue.

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

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

User-generated content

Any app that contains or features user-generated content (UGC) must take additional precautions, such as reporting systems, correct categorization, and IARC ratings. DMCA. While you’re obliged by app stores to maintain “moral ground” inside your app, there is the 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 the infringing content, and ban offenders.

Fixing

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

User data protection

User data protection is another important issue you should consult a legal adviser on. If you’re collecting user data, you need to include a privacy policy in your store listing and your app. The privacy policy should inform users what data they’re collecting and why. Here are Google Play legal guidelines.

Several federal laws 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 the Children’s Online Privacy Protection Act (COPPA). This is the primary document that guides the decisions of app store moderators. Additionally, you should check with IARC rules.

GDPR or General Data Protection Regulation became applicable on May 25th in the EU. According to GDPR, parental consent is required for the processing of personal data of kids of a certain age. The age limits differ from country to country and are between 13 and 16 years old.

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

Health Apps

If your app is collecting patient’s health data it may require complying with the Health Insurance Portability and Accountability Act of 1996 (HIPAA and HL7). The general rule is: if your app provides and exchanges users’ health data to doctors/hospitals/organizations and any third parties, it must comply with HIPAA.

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

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

Legal Tips for Video Apps

Video streaming or selling apps may fall under the Video Privacy Protection Act of 1988 in case of disclosure of user rental information or if it’s shared with third-party companies. The VPPA protection does not apply to users of free Android apps (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 the statistics update, the number of privacy-related lawsuits against app developers increased in 2017 because of the extension of the 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 German privacy laws. Pokemon Go was sharing user data like player location, recent web history, messages, and search terms.

In order to avoid problems with the law going forward, developers have to integrate privacy protection during the app development process and always pay attention to data collection and sharing in apps.

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

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

  • Include a Privacy Policy if your app accesses user’s personal data. Check on the General Data Protection Regulation documents to find out the age restrictions in your country.
  • Include Terms and Conditions if your app is paid, freemium, or has in-app purchases. Also, we do not recommend using any of the terms of use generators.
  • Include a Disclaimer to limit your risks in case your app is not working properly or being misused.

This list of required legislative issues may look long and tedious. 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.

Where to find a suitable team of developers?

Building custom software is a challenging process as it requires considering many development standards, industry peculiarities, legal issues, etc. So the main point is to choose an experienced development company that provides a transparent project development cycle and documentation.

The variety of software development teams is surely large, and we would like to mention the core attributes each reliable software development company should offer:

  • proved experience in your industry;
  • suitable skills of developers (tech stack);
  • regular communication;
  • keeping you informed about the development flow;
  • clear and easy-to-understand estimation;
  • development within your budget;
  • research in your industry before the start of the development process;
  • maintenance services. 

Talking about GBKSOFT, the company has a formidable experience of 10 years in developing custom software solutions for clients from different industries, digitally transforming our clients` companies and improving their general efficacy. Our main philosophy is full transparency of all processes during the entirety of the development cycle. If you feel the need for a consultation with our team to build an app for your business from scratch or check if your existing software corresponds to legal requirements – just contact us and we will discuss every issue you are curious about. 

FAQ

The main overarching requirement of applications seems to be a high level of data protection and security, irrespective of which industry the application is being developed in or for. All data recording should be in accordance with data privacy and data security requirements to become a reliable software solution.
In case of any violation from your app`s side, your solution will be deleted from the marketplaces you release it on at best with no consequences. However, in the case of a breach of data privacy, you may have some troubles with law enforcement. So our strong recommendation is to take all legal issues in your industry seriously.

To sum it up 

When developing a custom application, considering all obvious legal requirements as pertains to your business industry eliminates a certain amount of unnecessary and unwanted future legal risks and protects your property rights to, this copyrights umbrella, if devised correctly, will encompass everything that this app contains that is important to you, the IP, DNA or makeup of this solution.

The number of standards and requirements is vast, however, you don’t have to handle all of them on your own. We invite you to a free consultation with our Business Analyst and promise that you won’t be sorry that you chose us.

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Want to verify the existence of all legal requirements in your business software?

Also contact our team to discuss all details.

Alexandra Rostovtseva

Creator

Being a proficient leader with over 10 years of experience in Project and Product Management, Business Development and Sales, I have strong skills in Negotiations, Crisis, Client and Risk management. Being an outstanding communicator I’m also a good mentor and leader in the tech industry. Experience and expertise are the key foundations in my ability to provide deep insights into the industry and as result I’ve also been published or was a contributor to several tech and business articles.
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Comments (8)

Angela
Apr 30, 2020 at 1:50 PM

Well written post on pitfalls of app development. It’s highly recommended to get the NDA signed before proceeding. Should have transparency in the contract as well.

reply
Rich Tom
Mar 13, 2020 at 7:13 AM

Excellent piece of content, Its really useful for mobile app developers. I appreciate your efforts.

reply
Willa Anderson
Mar 03, 2020 at 12:25 PM

Before selecting ios app development services, everyone should learn this article. I always prefer to with your points. NDA, Entity Formation, and DMCA. We always prefer security first because clients always provide confidential data to apply various facilities. Sharing this content is social media to spread awareness more.

reply
Jessica Smith
Feb 28, 2020 at 2:58 PM

Great post! Thanks for sharing with us valuable things. The clarity in your post is simply great, and I could assume you are an expert on this subject. Thanks a million and please keep up the gratifying work.

reply
Francisco Colo
Dec 31, 2019 at 2:44 PM

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.

reply
Birendranath
Feb 22, 2018 at 7:21 PM

Brilliant article and one of the most informative apps related article how we can measure our progress, I’ve ever read. Thanks for sharing this informative articles.

reply
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!

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