Category: Blog, Business

5 Key Legal Issues to Consider in your Mobile App Development in 2021

Discover the top 5 legal issues in app development that you should consider as an App Owner or Product Owner.

5 Key Legal Issues to Consider in your Mobile App Development in 2021

As someone with an idea you’re looking for to realize as a mobile product, you’re probably wondering how to make your application technologically superior and attractive to users, or how to ensure its success. However, why is it worth considering the legal aspects of applications, even at this stage?

Most of all, each stage of app development, involves legal issues which – for your own safety – should be looked into at this very moment. In this article, we will provide a comprehensive presentation of the 5 most crucial legal issues which are involved in the app development process.

1. NDA (Non-Disclosure Agreement) – protect the idea of your mobile product

NDA, i.e. Non-Disclosure Agreement, is a contractual document under which the parties legally pledge to keep certain information confidential. We always encourage our clients to sign such agreements BEFORE starting business negotiations. Why?

–> Download for Free your Printable NDA (PDF)

It is one of the few ways to protect your product concept. NDAs can be signed with multiple parties. A well-structured confidentiality agreement is an effective tool for protecting your rights in case the party you have signed a contract with breaches its conditions.

What should you pay attention to when signing such an agreement?

  • A firm definition of confidential information.
    It is a good idea that the parties, before signing a contract, very precisely specify what they consider as confidential information. Most of all, it should include all information concerning your company:

    • financial data,
    • know-how,
    • show-how,
    • operating,
    • marketing,
    • or trade data.

    Additionally, the definition should include information concerning the product:

    • ideas,
    • solutions,
    • operating methods,
    • functionalities,
    • and elements of the app’s architecture.

    It is also worth adding a clause according to which confidential information is all information which we have handed over to the other party in connection with business talks.

  • Obligations of the other party
    The other party’s obligations need to be precisely defined. They should include, among others, maintaining the confidentiality of all obtained confidential information, as well as an obligation according to which the other party will disclose information to its staff only if it is necessary and that it will obligate the staff to also maintain the secrecy of this information.
  • Choice of laws
    When signing an NDA with a software house, make sure to determine the jurisdiction governing the contract so that it is favorable to you.
  • Contractual penalties
    Without contractual penalties for breaking the confidentiality obligation, the NDA loses a lot of its value. What penalties can be included? For instance, a specific amount of money for each violation of the confidentiality obligation and, furthermore, a specific sum as compensation for damage to your professional image or lost revenue.
  • Term
    As a rule, the duration of NDAs is 2, 3, or 5 years. This choice depends on the value of the information you want to protect. Some information can lose its value after two years, and others after five years.
  • Obligation to return information
    As a safeguard, it’s worth considering a situation where, after business negotiations, we do not wish to continue cooperation with a given party. For these circumstances, in the agreement, we include an obligation to return or destroy confidential information once the business talks are over.

Let’s sum up:

NDA for App Development - what you should consider

2. Independent Contractor Agreement

What should you pay attention to when starting cooperation with a software house? We have partly discussed this in this article about choosing a partner for your app development.

Furthermore, it is worth thinking about the agreement as a compass guiding us through the process of cooperation in its entire duration, and particularly when there are doubts or conflicts. That is why it is a good idea to specify in the agreement how this collaboration will work. It is a trade standard to e.g. work in the Agile methodology, which should not be omitted in the agreement. To wrap up:

  • Describe the methodology of cooperation
    If you talk about how the cooperation will work at the negotiation stage, you will avoid mismatching mutual expectations. In the agreement, include the tools you will use, rules of communication, and procedure for arranging meetings.
  • Force majeure
    In consideration of the unfolding pandemic situation – but also for unexpected economic or political events, too – remember to include the force majeure clause in the agreement. In case you are affected by any adverse effects of any events outside your control, this clause will allow you to mitigate the adverse effects under the agreement. Force majeure clause usually is mutually binding – as many of typical provisions of such agreements.
  • Exit plan
    It is beneficial for both parties to draw up an exit plan in case the cooperation ends before the planned duration. It is also worth including information about the hand-over of the existing code, payment due dates, and contractual penalties – if any – for unauthorized termination of cooperation, if the parties so decide.
  • Consider other crucial clauses
    Read about them here.

Pro tip: Consider legal aspects of your mobile app from the very beginning

Our experience dictates that legal aspects are often omitted in the app development process. Meanwhile, the right path is to take them into account from the very beginning – at Product Discovery stage, while designing the User Journey Map. Why? Because it may turn out that:

  • it is necessary to design additional functionalities, e.g. check-boxes or space for making the license agreement available;
  • it is necessary to redesign some screens, e.g. when determining which user data we collect.

Thanks to legal monitoring over an application from the very start of its creation, the lawyer, when discovering new directions of app development, is able to determine which solutions are legal and how to design them in line with the provisions of both national or European law.

It will increase the safety of the entrepreneur responsible for the contents of the application. Also, it will help to avoid the additional costs of redesigning the application after it is finished.

3. Privacy Policy & Data Protection

What legal requirements should you meet in connection with personal data protection?

Ensuring the security of processing users’ personal data is one of your fundamental legal obligations. The specific requirements depend on the country of distribution of your app. For instance, if you would like your application to be available to European users, you need to fulfill the legal requirements for applications imposed by GDPR, and if you would additionally like your app to be downloaded by users below the age of 13 in the USA, you need to meet the legal requirements of the Children’s Online Privacy Protection Act.

The requirements also depend on what your application does. Some sectors have higher requirements for data protection, e.g. medical sectors (HIPAA). Since there are so many legal acts regulating the issues of personal data processing in applications, the safest way is to leave it to the lawyer involved in the app development process.

Data must also be appropriately protected from a technical perspective. You, as the Product Owner, are responsible for issues such as data leaks. This is why it is worth choosing a company which makes sure to protect data from the technical side.

It is a good idea to properly fulfill the obligations of personal data processing to make it an advantage of your application for conscious users who care for their data.

How to properly fulfill the obligations of personal data processing?

  • Collect a limited amount of data. Ask users only for data which is absolutely necessary for the application to run properly.
  • Do not use users’ data for purposes other than for which you collected it. For instance, if you collect the data of a user in order to register his or her account, do not use this data for marketing purposes if you do not have separate consent for that.
  • Make sure to keep access to data limited. Make sure that data can only be accessed by those persons who are authorized to do so, and that such access is necessary for the proper functioning of the application.
  • Respect the rights of data subjects. Give the users a feeling that their data is safe and their rights are respected.
  • Care for communication. Many of the legal aspects regulating the protection of personal data require the owner of the application to maintain documentation connected with personal data protection. It is worth starting such documentation already at the stage of designing the application. This also applies to providing users with concise and clear information about how the application uses their data, in the form of a Privacy Policy.

Privacy and data protection in mobile applications - 5 steps

Extra-territorial application of GDPR

It is worth mentioning that, pursuant to GDPR, even if the seat of your company is not in Europe itself e.g. in the USA or in Asia, but you are addressing your products or services to users in Europe by making the app available for download, then your application also must be compliant with GDPR. This entails a number of additional legal issues that you need to consider, e.g. you are obligated to include the protection of users’ personal data even at the stage of designing the application.

Read also:

4. Terms & Conditions

When it comes to the Terms & Conditions of your application, a lot depends on which country you are going to make your application available to users. For example, there are many legal acts in European countries that impose requirements on the contents of Terms & Conditions to include specific text and legal issues. This includes the recently adopted regulation on online intermediation services (which applies throughout the European Union). Most of all, you should remember to specify:

  • Definition of the controller
    It is a good idea to include basic information about your company in the Terms & Conditions.
  • Conditions of service provision
    In the Terms & Conditions, describe what your application does, the conditions of registration (e.g. age limitations) and deleting the account, as well as when the agreement is concluded and when terminated between you and the user. Also, it is worth mentioning the rules of safe use of the application or technical requirements, alongside the suspension and blocking of user accounts.
  • End-User Licence Agreement
    The application is a computer program which you make available to users under a license. In Terms & Conditions, specify the conditions of this license agreement.
  • Processing of complaints and contact with the controller
    In Terms & Conditions, include the rules of complaints processing and information on how to contact you. It is good practice to establish a clear procedure for complaints, including multiple ways of contact with you.
  • Limitation of liability
    The Terms & Conditions is also a good place to define the scope of your liability towards users. This document should be written using simple language that is easy to understand for a regular user. There is no point in adding clauses in small print s. It will not increase user trust, and can be in conflict with some legal acts regulating the legal issues on informing app users about the terms and conditions of service provision.

Let’s sum up:

Terms & Conditions for mobile apps - what should you specify?

5. App Stores Requirements

Your mobile app must also comply with all requirements about app publishing arising from the guidelines from Google and the guidelines from Apple. These put the emphasis on personal data protection, including health data and information obtained from minors, as well as on the intellectual property issues concerning your mobile product.

To find out more about this topic, follow our blog, as we are preparing a separate article about this. In the meantime, read our:

Summary

The development of a mobile application is a complex and multi-faceted process. It is important to consider all its aspects, including legal factors, at the very start. This will allow you to avoid a situation in which your finished and ready application does not meet legal requirements applicable in a given area or sector, and it is then necessary to redesign the app before launching.

Luckily, you can easily protect yourself against this by engaging a specialist to take care of the legal security of your application and to solve all legal doubts. Let’s sum up the 5 key legal issues in mobile app development:

5 key legal issues in mobile app development that you should consider as an App Owner