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Legal Compliance Are Required For The Development Of The Mobile App

Founder's Agreement is nothing but a foundation forStartups. It is the first and foremost document for the startup.

Founder Agreement: To have a detailed Founder Agreement is what lays the foundation stone of your Startup. The equity distribution, vesting provisions, co-founders' obligations, roles and responsibilities are the most important aspects of a Founder's Agreement. Starting a business with partners isn't too dissimilar from marriage. And when the reality sets in, a Founder's Agreement is your most trusted friend. I would encourage that it should be one of the first documents for a co-founded start-up, however, it is never too late to create one.

Business Registration: Making a decision of starting a Partnership versus LLP versus a Private Limited depends on the nature of your business as well as your funding requirements. While a Private Limited company may be best suited for funding requirements, I would suggest LLP for most mobile app based e-Commerce businesses to start with. LLP can be formed under Limited Liability Partnership Act, 2008 and it provides the benefits of limited liability to its partners and allows its partners the flexibility of organizing their internal structure as a partnership based on an agreement. At the same time a LLP has the basic features of a corporation including a separate legal identity. Filings with Ministry of Corporate Affairs, Opening Bank Account, Service Tax registration(if turnover is expected to be over 10L), PAN (5L and above turnover) are all part of the process and may take valuable time, especially when it's a creative product/service which is to be launched.

Service Rules, Employee Handbook, Vendor Agreements (NDA & NCAs): Service rules are the basic conduct rules any Organisation creates for its employees and itself to follow. Any misconduct, its punishment and even punitive compensation as part of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal), 2013 should be mentioned in Service rules. An employee handbook should have employee benefits, leave policy, anti-harassment policy, computer use policy, etc. A copy is this should be given to the employee and an acknowledgement needs be taken for the same. Vendor agreements should have non-disclosure, non-compete and non-circumvention clauses apart from "work for hire" clause, explained under IP.

IP, Copyright, Trademark, Designs and Trade Secrets: IP is created the moment the first line of code is written. But your IP can be secured at conceptual stage under Indian Patents Act as a Provisional Patent, however complete specifications need to be filed within 12 months as per section 9 of the said Act. IP is country specific and if your mobile app is going to be used outside of India, its advised to get it Patented for other countries from where the business is expected. There are broadly five types of Intellectual Property Rights (IPRs) that a startup needs to protect to leverage its intellectual property, namely: (i) Patents, (ii) Copyrights, (iii) Trademarks, (iv) Designs, and (v) Trade Secrets. Where all or part of the development of the App has been outsourced, the vendor agreement should ensure that the Start Up company has acquired all IPRs to the software through a properly drafted "work for hire" clause.

IPRs need not only be protected but it also needs to be ensured that you are not infringing on someone else's IPR. App Platform, App charges and data security: Distribution of your App over Android, IOS or Windows is an important consideration and depends upon your target market audience. From a legal perspective, all charges including in-app charges should be made clearly available and should not be hidden especially if the App is free to download and there are in-app purchases.

As per the IT Act, 2000 under section 43 (h), it's an offence to charge the services availed by one person to the account of another person . The other legal consideration is the Change in Maintenance Due to Corona Virus By Shonee Kapoor / September 26, 11/3/22, 11:54 AM Legal Requirements of Mobile Applications & Ecommerce Business in India 6/10 Prev Post Child Custody Orders never Final; Can be Modified in the Interest of Child Next Post Comparision of Divorce Laws in India permissions you seek from your users, for eg. reading their SMS or MMS like Facebook!! The data collected by a mobile app is far more precise for target advertising as compared to website data, thus collection, storage and protection of that data is a sensitive area and needs to be addressed with caution.

Always encourage the customers to sign a non-disclosure agreement prior to disclosing their app idea. This is the document that is meant to secure confidential information.

There must be a contract between the App development company and the customer who wants to develop the mobile app, the said contract is known as App Development Contract. This contract defines the scope of work or service, contract period, consideration, ownership etc.

Business Registration is the most important requirement for the development of mobile applications i.e. which type of business is to be carried out viz. Private Limited Company, Limited Liability Partnership etc.

There are 5 types of Intellectual Property Rights (IPRs)that every startup needs i.e. Trademark, Copyright, Designs, Patents, and Trade Secrets. IP is country-specific and if a mobile app is going to be used outside India, it is advised to get it patented for other countries from where the business is expected. IPRs are not only protected but also they are not infringing on someone else's IPR.

Distribution of App over Android, IOS or windows is an important consideration and depends upon target market audience. The charges such as in-app charges should be made clearly available and should not be hidden especially when the App is free to download and there are in-app purchases.

There is Disclaimer, terms of use and the privacy policy agreements for the mobile apps. Each and every mobile app need a Terms of use and privacy policy available to user as part of the Intermediary Rules as part of IT rules, 2011. The name and contact details of grievance officers is a must and so the ignorance of which may cost huge punitive implications.

The Crucial Legal Issues to Protect Your App
  1. Jurisdiction
    If you launch the app in an international market, you must ensure that a future product complies with local laws. Before marketing and distributing an app abroad, get a lawyer to run your case and help with all the legal work. Such cooperation enables to avoid of possible confusion regarding the laws of the countries where a product will be released.
  2. Incorporate a Business to Limit Your Liability
    Your responsibilities depend on how you will operate your business. You can act as a sole trader, become a partner in a partnership, or form a limited liability company.

    An LLC is considered a right structure to limit your liability and protect personal assets if any problems arise.

  3. Confidentiality Agreement to Protect Your Business Idea
    In order not to expose your business idea to possible stealing or competition, sign a confidentiality agreement before sharing it with the mobile development company and discussing the workflow.

    A non-disclosure agreement (NDA) is considered the most familiar way to protect your product and maintain confidentiality. An NDA agreement for app development is no guarantee that your business idea security is wholly ensured, but it will significantly help in taking legal action against anyone who violates the terms of it.

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  4. Intellectual Property Rights to Prevent Your Product from Copycats
    How to secure an idea for an app? You need to ensure that all intellectual property rights of your app contents, design, and code are the property of your company, and not belong to the people who create the product. There are three ways assigning intellectual property rights and protecting your app idea�trademarks, copyrights, and patents.

    Copyright may protect the app's source code, design, content. The source code may also qualify for trade secrets.

    You can trademark the app name, slogan, brand name, and logo. If you market your product internationally, you can adopt global brand protection strategies that help to protect your app from any infringers in the target countries.

    You can also get patent protection.
  5. Contract Issues
    Signing a contract is essential for a product owner and a development company. An application development agreement defines the responsibilities of both parties, rights to the technology, the deliverables, costs, workflow, timeline. Include a confidentiality clause, specify code ownership, and terms of use of open source software.
  6. A Privacy Policy
    As the Statista data shows, 37% of Americans take proactive measures regarding the data protection.In case of collecting users' personal information, your responsibility is to include a privacy policy, be transparent with users about what data you may access and why it's needed. You must assure people that you protect their personal information and keep it secure.

    Pay particular attention to the requirements of Children's Online Privacy Protection Act if children under 13 can use the app. Before dealing with personal data from children, post a privacy policy and obtain parental consent.

    Ensure that your mobile app complies with the European Union's General Data Protection Regulation, other international and local data protection laws, requirements, legal guidelines, and regulations.

    Carefully examine the App Store legal guidelines and article called 'Protecting the User's Privacy". Look through the Google's Privacy Policy Guidance.
  7. The Right App Legals
    When you prepare your app for release on the App Store or Google Play Market, you must agree to their terms and conditions. But you aren't insured against any legal risks as the app stores protect their businesses, not yours. Therefore, set your rules that users must agree and follow to download and use your mobile app. It's also vital to create the right disclaimer.
Moreover, if there are in-app ads, you need to ensure that the content complies with advertising, marketing, and promotion laws of the countries where you distribute the product.

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