April 2 2013

Going mobile? Not without protection!

Numerous applications are developed for smart phones to meet the needs of their users in various situations, which is without a doubt one of the great benefits of these devices. Considering the advantages to be gained, particularly when marketing their products and services, many companies are increasingly interested in developing a customized application to reach out to their clients. When undertaking such a project, however, a company must pay particular attention to the development and release rules imposed by the most important smart phone system operators, such as Apple, Blackberry and Android, as well as the legal implications created by the use of an application, notably in drafting license agreements that grant users the right to use an application. For the purposes of this article, only Apple’s rules will be analysed.

What is an EULA?

The End-User License Agreement (EULA) governs users’ rights and obligations regarding their use of the company’s service via Apple’s mobile application. This agreement, which is an adhesion contract between the company and the user, may be modified from time to time with a simple notice to this effect to users, who must then accept the changes. Of course, should users refuse to adhere to the license agreement, they will automatically be denied access to the application.

What are Apple’s Requirements?

Apple provides to companies that wish to develop their own application the tools to integrate their creation to Apple’s mobile devices. However, to do so, Apple requires that many terms and conditions be included in the license agreement, notably in order to limit its liability in case of a potential lawsuit from the user. The parties to the license agreement must acknowledge that the agreement is not concluded with Apple, which is a third party to the agreement.

Undertaking from the Company

Apple demands that the company be solely responsible for the license and its content. The company must also acknowledge that it is solely responsible for the maintenance and support of the application and that Apple has no responsibility in this matter. Furthermore, in the case of copyright violation, the company must indemnify and hold harmless the user, Apple undertaking no role in this respect.

Undertaking from the Company

Users must also make various undertakings. They must undertake to abide by the terms and conditions of the AppStore and declare that they are not in a country under embargo. Users must also acknowledge that the license is non-transferable and that the application can only be used on an iPhone or iPad that they own.

Apple Satisfaction Guarantee

Apple demands that the license agreement include a satisfaction provision: should the application not meet the guarantees offered by the company, the user may inform Apple of the situation. Concerned about the satisfaction of its users of its devices, Apple will reimburse the amount paid by the user for the application; said user will then have no other recourse against Apple. Apple may demand to be indemnified by the company for the amount paid.

Legal Implications for Your Company

Your company must not underestimate the legal risks present in the user conditions of its application. The popular photo sharing service Instagram learned its lesson the hard way. After modifying its user conditions in December 2012, which implied that pictures taken by users could be sold, without compensation, a class action suit was brought against the company. Under pressure from its users, Instagram reversed its decision.

It is important that your company states the necessary cautions regarding the use of the application released. For example, in the case of an application that includes the use of transportation, some warnings should be given with respect to the dangers of using the application while on the road or the possibility that the information provided on road maps by the application may be out of date.

Certain restrictions regarding the use of the application may also be specified by your company, notably for content that could be provided to the user in the application. Certain rights could be reserved, such as the right to revoke the service under some conditions. Your company must also inform users on how it gathers, uses and stores personal information, if applicable.

In any case, your company must include in the license agreements provisions to limit its liability to users of the application.

Also, according to the type of application developed, your company shall have to subscribe to additional obligations. For example, in an application to which a geolocation service is integrated using GoogleMaps, precise license rules established by Google have to be respected.


Conclusion

In order to avoid a refusal from the system operator to release their mobile application and to limit their liability to users, companies wishing to proceed with the development of a mobile application should, when drafting their license agreement:

1) Follow the guidelines established in order to include all undertakings required by the operator; and

2) Add all warnings and notices necessary regarding the use of application, while specifying the applicable restrictions.

For the company and the user, a license agreement represents many legal obligations. It must be drafted with care.

If your company has developed or is thinking of developing an application, do not hesitate to contact us so that we may advise you in this matter.




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