App Launch – Legal challenges and pitfalls we should avoid
App Launch – Legal challenges and pitfalls we should avoid
Developing a new app is a complex project and comes with various challenges. One of these is the legal protection of both the developer and the users. To comply with the multitude of legal requirements and thus protect themselves from severe legal consequences, app developers should seek legal support early on in the course of the project.
If the legal component, along with various other challenges, is not addressed with the necessary seriousness, app developers risk heavy fines, lawsuits for damages, or even the blocking of the app due to possible violations of the law.
In the following blog post, we provide an overview of the legal hurdles that app developers should address early on.
The Importance of Legal Aspects in the Digital World
In the digital world, compliance with legal requirements plays an immense role as the framework for digital interactions and business models. The development of opportunities and possibilities in this field progresses just as rapidly as the continually arising new challenges and legal hurdles. Cybercrime and artificial intelligence also play an increasingly important role, and their rapid developments constantly create new risks that must be addressed legally.
Legal Hurdles in App Development
Even during the development process of an app, developers must pay special attention to compliance with various legal regulations with different objectives. You can find a general overview of the most important areas of online law in our blog post here.
Data Protection in Apps – A Major Source of Risk
During app development, various personal data are collected and processed, making data protection and the GDPR particularly important. At the same time, failure to comply with these regulations poses a significant risk. In particular, app developers should be aware of the following data protection obligations (not exhaustive).
The Most Important Data Protection Obligations for a Legally Compliant App Launch
App developers should be meticulous in ensuring that they collect and process users’ personal data only after obtaining explicit consent (Art. 6 para. 1 lit. a GDPR). This applies in particular to non-essential cookies, user data tracking, and various tools. Collected personal data must be protected against unauthorized access, and a certain level of data security must be ensured. It is also essential that users have the ability to access the personal data they have provided within the app and delete it if necessary. A legally compliant app must also adhere to statutory information obligations (see Art. 13 GDPR, Art. 14 GDPR), for example through a legally sound privacy policy. This should always be easily accessible within the app. Content-wise, it should specifically provide information on who the responsible party is, which personal data is collected and processed, the purpose of processing, and the duration of any storage. Additionally, it should disclose whether and which third parties may have access to the collected data. Equally important is the clear and unambiguous presentation of data subjects’ rights under the GDPR (in particular, Arts. 12–23 GDPR). App developers should also ensure that the app collects and processes only the personal data necessary for a specific purpose (see Art. 5 GDPR: principle of data minimization and purpose limitation).
Data security, order processing agreements & directory of processing activities
The app developer is also responsible for ensuring and maintaining an appropriate level of data security within their system (see Art. 32 GDPR). This may be achieved through technical and organizational measures, such as data encryption, access controls, or pseudonymization. Where third parties process the collected personal data, the app developer should enter into data processing agreements with them, which should also include provisions regarding various security measures (see Art. 28 GDPR). If the app involves transferring data to third countries, specific protective measures must be implemented (Arts. 44–50 GDPR). Additionally, the app developer is obliged to maintain a record of processing activities, documenting all personal data processing accordingly (see Art. 30 GDPR).
Terms of Use & Disclaimers
For legal protection, apps require various legal texts. Among these are, in particular, clear and transparent Terms of Service. Terms of Service are essentially a contract concluded between the app operator and the app user. They set out agreements regarding the manner in which the app may be used.
The purpose of the Terms of Service is to provide users with clear rules of conduct, in order to prevent potential legal issues arising from inappropriate use at an early stage. In addition, they offer the provider a certain level of protection, as they allow the inclusion of provisions favorable to the provider regarding liability and enable the provider to refer to the accepted Terms of Service in the event of a dispute.
Terms of Service are required whenever users are granted access to online services, for example via a website or an app, provided that user registration is possible. In terms of content, Terms of Service regulate various aspects of user behavior. They specify in detail which activities are permitted within the app and which behaviors are prohibited. The aim is to prevent abuse, harassment of other users, and other illegal conduct. In connection with this, Terms of Service usually also explicitly state under what conditions the app operator may suspend a user’s account and deny further access. Furthermore, the app operator can, to a certain extent, limit their liability and include provisions regarding data protection. The app developer may also include regulations concerning the intellectual property of the app’s content, as well as provisions on the applicable law and jurisdiction.
Consumer Protection in the App
Consumer protection also plays a significant role in app development. It must always be ensured that the app does not mislead users, for example, regarding fees that are not clearly indicated or the completion of a paid subscription that is not clearly communicated. Regarding any costs, a transparent and easily understandable arrangement must be established and communicated to the user.
End-User License Agreements (EULA)
App developers should also consider End-User License Agreements (EULA).
An End-User License Agreement (EULA) is a contract concluded between a software provider and a user. It grants the user the right to use the software under the conditions specified in the agreement. The content is generally limited to the licensing rights of the software.
The purpose of a EULA is to protect the software developer’s intellectual property, prevent misuse, and prohibit unauthorized redistribution or modification of the software. The agreement grants the user a license to use the software and specifies the exact parameters of that license. For example, it can define whether the software may be used for private purposes only or also for commercial use. Furthermore, it clarifies that while the user receives a license to use the software, the intellectual property remains with the software developer.
The software provider can also, in a manner favorable to them, limit their liability by stating that they are not responsible for any damages resulting from the use of the software.
It is always important to provide a transparent explanation of how potential software errors will be handled and whether, and how, any updates or patches will be provided. It is also common and advisable to include provisions specifying the types of violations of the license terms that may lead to termination of the agreement.
Licenses and Copyright in the App Launch
During the development and release of an app, various types of licenses may become relevant. The licenses required depend on several factors specific to the app. In particular, a distinction should be made between so-called open-source licenses and commercial licenses.
Open-source licenses grant users various rights regarding the use of the software. However, this “free” use is subject to certain conditions. As long as the user complies with these conditions, they can generally use the software free of charge within this framework. In contrast, commercial licenses grant the right to use software, for example, within the developed app. However, usage may also be subject to restrictions in this case.
Bedeutung des Urheberrechts für Inhalte und Programmcode
In app development, copyright and intellectual property inevitably play a significant role. Protected intellectual property includes, for example, images, texts, or designs used, as well as software code. When using content from third-party providers, app developers must always ensure that they obtain the appropriate usage licenses to avoid copyright infringement. Even when using open-source software in apps, there is a risk, as previously explained, that its use is only legally compliant under certain license conditions. To protect their intellectual property, every app developer should take early measures. Depending on the case, one such measure could be registering a trademark.
Source Code and Copyright
Source code is also protected as intellectual property under copyright law. This allows the app developer to prevent unauthorized use of the code. It should be noted, however, that the underlying idea of the code is not necessarily protected at the same time. The copyright holder, for example, has the exclusive right to reproduce the code (see §16 UrhG). They also decide whether and in what form the code will be published (see §17 UrhG). Furthermore, the copyright holder retains the right to modify the code, unless they choose to authorize others to do so.
License agreements regularly complement the protection of source code. App developers should, in any case, refrain from unauthorized copying or distribution of another creator’s code, as this would constitute a copyright infringement, which could have consequences, such as an injunction temporarily halting further development of the app. In addition, the copyright holder of the code could be entitled to claim damages.
The copyright holder also has so-called moral rights. This particularly includes the right to be recognized as the author and the protection of the work’s integrity, for example, if it has been altered in a way that damages the author’s reputation. In addition to national copyright law, international agreements exist, meaning that copyright protection may also extend to a large number of other countries.
App Store Guidelines
In addition to general legal requirements, app developers must also consider the specific guidelines of app stores. These include the particular conditions that must be met for publication in app stores (for example, the Apple App Store or Google Play Store). They typically require that content complies with youth protection standards and that apps are age-appropriately rated. Besides legally mandated regulations regarding data protection, these guidelines often include their own privacy policies and require that app users are informed about data collection and can consent to it.
The guidelines often specify payment systems for in-app purchases and outline commission arrangements. They also set technical requirements, such as ensuring that the app remains compatible and secure through regular updates. Furthermore, app store guidelines require that apps do not infringe on trademark, patent, or copyright rights and that end-user license agreements (EULA) are provided.
Liability and Legal Risks in App Publication
Based on the various legal aspects already mentioned, liability issues can also become relevant when publishing apps. To avoid these, the developer must ensure that there are no security vulnerabilities in the app. Furthermore, they should ensure that user-provided data cannot be misused at any time. They must also always respect the rights of third parties, particularly copyright and trademark rights, to prevent personal liability. Additionally, the app must avoid providing or publishing misleading information, as this could potentially give rise to liability.
To prevent issues early and minimize risks, the source code should be carefully reviewed before publication. In addition, data protection requirements under the GDPR must always be observed to avoid costly warnings and fines. Relevant and necessary legal texts, such as clear Terms of Service and license agreements, should be drafted in a legally secure manner and integrated into the app. It is also essential to have professional liability insurance to mitigate potential risks and damages, thereby reducing the associated financial burden.
Conclusion
From the idea, through development, to the launch of an app, there are numerous hurdles to overcome. For a successful outcome, the complex legal requirements are particularly important. Ignoring various legal pitfalls can quickly become an obstacle to publication or even lead to mandatory compensation payments. Since challenges are not only legal but also of other types, we can, based on experience, advise app developers to seek support from qualified lawyers for legal matters in order to outsource this complex area. This significantly contributes to achieving the most efficient and successful path to a successful app launch.
We are happy to support motivated app developers with their projects using our legal expertise and experience – contact us to arrange a free initial consultation!