Kathryn Rogers considers the main legal concerns for the ever-growing army of app developers
At its recent WWDC2012 event, Apple's CEO, Tim Cook, announced that more than 650,000 apps are now available to App Store customers and, since its launch, over 30 billion apps have been downloaded. In addition to this, more than 10 billion apps have been downloaded for Android mobile devices and the number of apps coming onto the market is growing at a staggering rate.
It is estimated that, within the next four years, more people will connect to the Internet via a mobile device, such as a smartphone or tablet, than via a traditional computer. With this in mind, more and more companies are scrambling to develop their own apps to take advantage of this rise in popularity and to avoid being left behind as competitors vie for users' attention. However, there are a number of considerations relating to app development which should be borne in mind. This article examines some of the key issues.
Who owns the app?
The general rule is that copyright in the app software will be owned by its author from the moment he or she writes the code. The main exception to this is where the code is written by an employee in the course of his or her employment, in which case the employer will be the first owner of the copyright. Ownership of the app software is likely to be a key concern when the development of an app is outsourced to a third party.
Where work is commissioned from a developer, the developer will generally own the copyright even though the commissioner of the work has paid for the work to be done. It is therefore crucial that the copyright position is dealt with up front when the developer is initially engaged in order to avoid potential problems later.
Be aware of the OS licence terms
Once an app has been accepted for use on a mobile device it will be subject to certain terms and conditions, such as Apple's 'iOS Developer Program License Agreement' or Google's 'Google Play Developer Program Policies'. These documents set out the provisions governing the operation and marketing of the app and may include obligations relating to content, privacy and ongoing support. Careful consideration should be given to these terms and conditions to ensure that the app is fully compliant, as a failure to comply could result in complaints from users which damage the reputation of the app or the app could be removed by the platform operator.
What about open source software (OSS)?
App developers have been adopting OSS at a rapid pace and it is quickly becoming the backbone of custom app development. However, it is important that the developer is aware of the licence terms which apply to the particular OSS being utilised.
The Open Source Initiative currently lists over 50 licences on its web site which fulfil the conditions of the Open Source Definition. It is outside the scope of this article to examine them all but it is worth noting that the most widely used open source licence is the GNU General Public License (GPL), the terms of which can have major implications for app developers.
The terms of the GPL give the licensee permission to modify the licensed work, as well as to copy and redistribute the work or any derivative version. The licensee is permitted to charge a fee for redistribution or can redistribute free of charge. However, the GPL additionally states that, where the licensed work or any derivative version of it is distributed, the distributor may not impose 'further restrictions on the rights granted by the GPL' which means that any app software created by modifying the original OSS must also be licensed under the GPL.
This is a significant problem for iOS apps, as Apple's App Store terms are incompatible with this model. iOS uses Digital Rights Management (DRM) to restrict how a user can use downloaded software and the iOS terms prohibit modifications and redistribution. These restrictions effectively make it impossible for apps which use GPL software to be made available on iOS devices without breaching the terms of the GPL.
Given the potential implications associated with using OSS, it is important that app developers have effective policies in place to monitor and govern the use of OSS. Detailed records should be maintained of the components used in the production of an app and the licence terms which apply to those components.
Other IP considerations
Where an app uses copyright protected content such as images, videos and sound recordings, licenses should be put in place to allow the use of such content.
In addition to establishing the ownership and license terms for any copyright material used in the app, trade mark registration should be considered as an additional step to protect intellectual property rights in an app. Trade marks will help an app developer to distinguish his or her service from those provided by others. A registered trade mark will also make it easier for the app developer to take legal action against anyone who uses that trade mark without permission – that is important given the pace at which the app market is developing.
Even if an app developer decides not to apply for a trade mark, a trade mark search should still be carried out to avoid inadvertent infringement of pre-existing trade marks as a number of apps have been removed from the App Store on the basis of alleged trade mark infringement.
Tying an app to another platform
One company that encountered this problem was Zynga, whose game FarmVille was for a time the most popular game on Facebook. As more and more users began to access Facebook via smartphones rather than traditional PCs and laptops, there was a marked decline in the popularity of FarmVille. Zynga's attempt to develop an iOS version of FarmVille was not a success, and has now been withdrawn and replaced with a web-based app with reduced functionality. It seems unlikely that FarmVille will ever achieve the same success on mobile devices as it did on 'traditional' web browsers.
Another risk in tying an app to a third-party platform is that the app's functionality may simply be co-opted by the platform owner for its own services. The StockTwits service used the Twitter API to enable investors and traders to search for details of listed companies using the '$' symbol and the company's stock market ticker (eg $GOOG, $AAPL) – a feature that was then introduced by Twitter into its own platform (or 'hijacked', as StockTwits preferred to say) in July 2012.
Earlier this year concerns were raised about iPhone app developers having access to smartphone users' personal information, including e-mails, calendars and contacts. The issue gained media attention when it came to light that Twitter and several other apps had copied entire address books from some smartphones, in contravention of Apple's guidelines, and had saved the details on its servers without making it clear to users that this would happen.
From a UK perspective, the Information Commissioner's Office has made it clear that apps are subject to the same regulations as web sites and other businesses from a data protection perspective. Where an app involves the processing of personal information, the app developer must ensure that it complies with relevant data protection legislation, which for UK companies includes being clear with users about how their personal data will be used and for what purpose.
Minimise the risks of liability for user-added content
Where apps allow for user contribution, consideration should be given to how liability is minimised for user-added content which is defamatory, infringing or otherwise unlawful. One important decision is whether and how user-added content is moderated. The main options are: (i) do not moderate content; (ii) check content before it appears; or (iii) review content after it appears. Regardless of which option is chosen, it is important for the app developer to have a robust takedown policy and a clear internal process for dealing with any complaints received.
The most common choice is for content to be unmoderated. Whilst this makes it difficult to control the quality of material posted, the advantage is that it is easier to avoid liability for unlawful user-added content as, by not undertaking to moderate the app, the developer is not assuming responsibility for the material that appears. The only condition being that the app developer maintains a process for removing offending content expeditiously upon being made aware of it.
Whilst this article looks at the legal issues from an English law perspective, app developers will need to consider and comply with laws in other countries where the app is being marketed and distributed. The cross-border nature of the internet means that an app which is lawfully developed in one country could infringe a third party's IP rights in other countries in which it is marketed, downloaded and used. Also, as consumer protection and data protection laws in England differ from those in the other countries, app developers should be mindful that other countries may have tighter restrictions which will need to be complied with if their app is being marketing or distributed outside of the UK.
Apps are no longer a fringe product or novelty: for most businesses that use them, they will become one of the most important means by which they provide services or information to their customers. They will therefore demand an increasing level of professionalism, both in their presentation and functionality, and in ensuring that appropriate steps are taken right from the start of the development process to avoid any legal pitfalls.
Kathryn Rogers is an Associate at Cripps Harries Hall LLP: email@example.com