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
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"
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 https://www.shoneekapoor.com/legal-requirements-for-mobile-app-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
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.
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
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.
- 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
An LLC is considered a right structure to limit your liability and protect
personal assets if any problems arise.
- 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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- 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
You can also get patent protection.
- 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
As the Statista data shows, 37% of Americans take proactive measures
regarding the data protection.In case of collecting users' personal
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
Pay particular attention to the requirements of Children's Online Privacy
Protection Act if children under 13 can use the app. Before dealing with
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
- 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
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.