Legal Considerations When Creating a Mobile Application

January 5th, 2016

How to correctly launch your application

SAMUEL LAJOIE, lawyer | Quebec City

Mobile applications or mobile apps are currently revolutionizing our daily lives. The tremendous success of some mobile apps is impacting the business models of multinationals and SMEs alike, in addition to facilitating many start-ups. Indeed, to any creative young entrepreneur, the idea of starting up a business by developing a mobile application is very appealing, since it’s simple, inexpensive, and can be highly lucrative. However, although launching a mobile application is relatively easy, there are legal issues to be addressed if the venture is to get off the ground and be a success.

Intellectual property

First of all, an entrepreneur who wants to create a mobile app needs to properly control the associated intellectual property. Everything created and invented in the course of the development, marketing, and even the sale of the mobile app, such as the source code, the name, the design, the interface, the graphics, the logos, etc., are considered intellectual property. A prudent entrepreneur should make sure that all of the intellectual property associated with his mobile app belongs to him.

Accordingly, he is strongly advised to have all his subcontractors and employees sign contracts. The contracts should contain specific clauses stating that the intellectual property the subcontractors and employees have developed is assigned to the entrepreneur and remains his exclusive property, and that all moral rights are waived by these contributors. If the intellectual property belongs to a number of different parties that participated in its creation, the app will definitely be less valuable.

In the competitive realm of the Web and mobile applications, creative and innovative ideas are a precious commodity. A wise entrepreneur will not share his ideas, intellectual property or other confidential information with investors or subcontractors without making sure he is protected. Although it is impossible to set up a foolproof system to prevent a third party from appropriating or revealing your idea, the signature of a confidentiality agreement is recommended, for this shows that the entrepreneur wants to protect his idea. In addition, such an agreement is essential to protect against the disclosure of an invention which the entrepreneur might eventually wish to have patented.

In Canada, there are two methods of protecting intellectual property: the registration of trade-marks (to protect the name and logo) and the filing of one or more patent applications (to protect inventions/concepts). Generally speaking, a mobile app without a portfolio of trade-marks and patents will be less valuable in the event of a sale or major investment. However, without such protection the app is still covered by copyright, which applies automatically.

Terms of use and confidentiality policy

Before a mobile app is put online or launched, two vital legal documents must be drafted: the terms of use and the confidentiality policy.

The terms of use are the contract between the business and each user of the app. Essentially, this contract stipulates the guidelines for the use of the app, while setting the boundaries of what is allowed and what is not allowed on the app. The terms of use of a mobile app must be perfectly tailored to the nature of the app and the various options for interaction among the users. It is also important that the terms of use be drafted in accordance with the laws and regulations of the jurisdictions where the app will be operated. The terms of use will become a crucial factor in the event of a lawsuit or a claim by a user of the app.

Meanwhile, a confidentiality policy is indispensable when an app compiles data and personal information about its users (e.g., name, email address, phone number, birthdate, etc.). This policy will explain to the app’s users why the confidential information is collected and how it will be used. Furthermore, the confidentiality policy for a mobile app must be perfectly adapted to the functionalities of the app and must be modified as it evolves over time. To avoid litigation on this score, it is essential that your confidentiality policy be in line with the requirements of the various laws and regulations governing the protection of personal information.

A well-drafted confidentiality policy will be your ally in the event of problems. Note that for any mobile app where the users have a “user account,” Apple insists that you send it a confidentiality policy for review if you want your app to be available on the famous App Store. These days, businesses must pay careful attention to the management and use of the personal information they collect. The number of class actions aimed at penalizing corporate misconduct in this area is growing steadily.

No matter how big or small your project is, it is highly recommended that you consult a lawyer during the development of your mobile application and prior to marketing it. BCF’s Internet strategic team can provide you with advice and guidance to properly address all of the legal issues related to the development and operation of your mobile application.

Samuel Lajoie is a member of BCF’s Internet strategic team, which offers our clients strategic advice regarding their online presence. This is a continually evolving environment which calls for the expertise of a multidisciplinary team like that of BCF.