Your apps are amazing — but you also need to cover your business bases to avoid legal issues. Here are 4 key app developer legal issues to take care of now:
By 2024, consumer spending in mobile apps is predicted to exceed $170 billion. With smartphones outselling personal computers 5 to 1 in 2019, this already staggering figure is only bound to grow. If you’re a mobile app creator, this is a huge opportunity to tap into.
The good news is that the Apple App Store and Google Play Store don’t discriminate between mobile apps developed by tech behemoths and apps from amateur developers. The bad news? Large organizations have the benefit of enormous financial and human manpower to navigate the process.
So as an amateur or small app developer, there are several legal issues you must pay attention to if you don’t want to be caught flat-footed and flat-broke later on. Here’s a look at four of the most important.
Your Basic Business Structure
Different business structures vary by country, though with many similarities. In the United States, you have five business structures to choose from for your mobile app business: limited liability company (LLC), corporation, S corporation, partnership, and sole proprietorship. This Salesforce article does a great job of explaining what each is about.
If you are anticipating only a trickle of sales, it would seem reasonable to go for the simplest, lowest-cost structure — sole proprietorship.
Nevertheless, there’s no way to predict your business’ growth trajectory. You’re better off limiting your liability from the get-go through an LLC. With an LLC, your car, home, bank accounts, and other personal assets are protected from any legal risks that befall your business. Setting up an LLC will cost you, but it is well worth it over the long term.
Business Confidentiality
Setting up and running a mobile app involves generating and capturing sensitive data. This could include strategic plans, functional and non-functional app requirements, user passwords, and user credit card numbers. You must establish the appropriate technical and logical controls to ensure sensitive data remains confidential. But you require legal safeguards as well.
Whenever an outside party must be privy to your app business’ confidential data, get them to sign a non-disclosure agreement (NDA). These outside parties could be developers, graphic designers, copywriters, and more. An NDA doesn’t hinder anyone from sharing your information. It’s a deterrent and a reminder that there’ll be consequences if they proceed to do so.
Intellectual Property Ownership
Your mobile app’s intellectual property (IP) refers to the body of knowledge created in the process of developing and publishing it. You must ensure any IP generated in creating the app is unambiguously owned by your business and not the persons or companies generating it. For mobile apps, IP will comprise source code, app design, graphics, app icon, app name, and app text.
Business insurance can help recover the loss of physical property but provides only limited protection when it comes to IP. IP ownership is key when you outsource one or more of your creation processes. Any outsourcing agreement you enter into must have an ‘IP assignment’ clause that specifies you own any work created. Go further and secure the requisite trademarks, copyrights, and patents. IP matters are complex, so it’s prudent you engage an attorney.
Your Privacy Policies and Terms of Use
Privacy policies and terms of use are elements many app developers see as a formality. They’ll download a general document from the Internet and make a few amendments. In fact, these two documents pose the greatest danger to your app’s future. If not correctly addressed, they can have disastrous consequences for your business. The two documents directly affect users of your app, and a misstep can invoke not only their wrath but that of regulators.
Your terms of use detail how your app should be used, they define improper use, and outline the consequences of improper use. Your TOU should be invoked automatically when the app is run. Terms of use protect you from lawsuits in instances where the app isn’t used as required.
Privacy policies detail what personally identifiable information (PII) you collect and how you use it. PII includes credit card numbers, social security numbers, birthdays, physical addresses, phone numbers, and email addresses.
Cover all bases
Your innovative mobile apps can be lucrative for you. But like anything business, they come with a myriad of legal issues that could short-circuit success. Tackling these four mobile app developer legal issues will cover your key bases.
For more tech-related small business tips, check out our Small Business archive.
