Today, there is an app for nearly everything - from finding a neighborhood bar to pointing a tv satellite dish to the correct satellite. While the app industry explosion creates tremendous opportunities for developers, it also creates new legal issues. Here are legal pitfalls that can trip the unwary app developer:
Piggy-backing on an Existing Platform
When developers tie their apps to a third-party platform like Twitter, Facebook, or Amazon, they expose the app’s success to the whims of another company. That other company can very easily block your access to their APIs and modify their terms of use. If your app is not clearly allowed by the platform’s terms of use and not firmly inside the spirit of those terms, it’s prudent to have a dialogue with the platform before expending resources and time on building an app and business model that the platform can shut down with a few keystrokes.
Targeting Kids Can Lead to Large Government Fines
The financial consequences of violating the Children’s Online Privacy Protection Act (COPPA) is very real for app developers. To comply with COPPA, any website that engages children under 13 must post a privacy policy and obtain parental consent before collecting personal information from children under 13. The Federal Trade Commission (FTC) takes COPPA very seriously and has levied fines of up to $3,000,000 on websites that were not COPPA compliant. The FTC has also demonstrated its willingness to apply COPPA to app developers. Developer Broken Thumbs Apps paid $50,000 to settle FTC charges it collected email addresses and other personal information from 30,000 children signing up for the developer’s Emily's Girl World and Emily's Dress Up apps.
Incorporating Music into Apps
The commercial use of music typically requires a license and frequently requires multiple licenses from multiple parties. The music industry gives specific names to many licenses according to whether it is the song or sound recording you are using and ac¬cording to how you are using it. If your app requires background music, you will need master use licenses for any specific recordings and synchronization licenses for the underlying songs. Obtaining licenses for popular music can be expensive and administratively frustrating so stock music may be a viable option for those without large music licensing budgets.
Pushing the Privacy Envelope
There are currently no federal laws that explicitly prohibit app developers from collecting and even selling information about the online conduct of their customers (with the exception of personal information about children under 13 which is regulated by COPPA). Nevertheless, consumers, advocacy groups, regulatory agencies, and Congress tend not to like online business models that track and commercially use detailed information about consumers. Such activities create a potential risk of an FTC investigation or a consumer lawsuit when the app developer (i) does not disclose to consumers the fact that such data is being collected and/or sold and (ii) does not offer a mechanism by which consumers can opt out of having their information collected and sold.
Developing Apps for Other Companies
When developers produce apps for customers on a contractor basis, ownership is always a tricky question. App developers that want to protect their future rights to produce similar apps for other clients must clearly define in their contracts which rights the developer reserves in the background technology and source code and which exclusive rights, if any, the developer grants to the client.
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