Insurance · 3 September 2018

Creating an app with a freelance developer? How to retain intellectual property rights

app developer intellectual property
Apps are made up of many different elements, so you need a combination of intellectual property rights to protect the various parts of it

Apps are big business, so how to protect your idea should be an early consideration. Grid Law founder David Walker explains how to create an app with a freelance developer while ensuring intellectual property rights are retained.

Question

In your article “Essential legal considerations when developing a new app”, you said:

“However, if you have engaged freelancers, or an agency to develop the app for you, they will own all of the rights until they are specifically assigned to you. Therefore, you must have a proper written agreement with them that assigns all of the rights to you. If you don’t, you won’t own the rights to the app, even if they say you do.”

I would like to know how I go about making sure that this does not happen. I am about to create an app with a freelancer and want to know how I can get paperwork to ensure that all the rights remain mine after the job is done?

I look forward to your response.

Answer

Thanks for your question.

The app developer you are working with is likely to have standard terms and conditions of business which you will need to sign up to if you want to work with them.

Have a read through these and look for a section on “intellectual property rights”.

You need to look for a clause that says something to the effect that “all intellectual property rights in the app will automatically be assigned to you”.

It’s possible that the assignment will be conditional on you paying all fees that are due to the app developer. This is quite normal and so long as they fulfil their obligations to you then I have no issue with this.

However, a provision such as this could be a cause for concern if the developer fails to fulfil their obligations to you and you then decide to withhold payment. This could lead to a legal dispute between you and the developer in which you have to prove they breached their contract and you should have the intellectual property assigned to you despite not paying the full amount due to them.

If the terms and conditions don’t have an intellectual property section, or they say that all rights will be retained by the developer, the contract will need to be amended. Either a new clause will have to be inserted or the existing clause amended.

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Alternatively, instead of amending the terms and conditions (or if the developer doesn’t have standard terms and conditions), the intellectual property rights in the app could be assigned to you in a separate contract.

To be legally binding, this assignment needs to be a proper written agreement signed by the developer.

An assignment of intellectual property rights is one of the rare occasions when an oral agreement isn’t sufficient and won’t be legally binding. (I would also say that an exchange of emails is also insufficient in this case.)

Depending on the terms of your agreement with the developer, the assignment may be for a nominal consideration of £1.00 or the payment could reflect the true value of the intellectual property. This is something you will have to negotiate and should be factored into the price you are paying them to develop the app.

An important point to keep in mind is that if the developer uses a standard app building platform, it may not be possible for you to own all of the intellectual property rights in the technology or code underlying the app.

A good analogy to make here is with a website. Say, for example, the developer built you a website using WordPress. They wouldn’t be able to assign any rights in WordPress to you. You would need to enter into a licence agreement with WordPress to continue using the platform.

In this situation, the only rights the developer is able to assign to you is anything they have specifically created, for example, any text they have written or logos they have designed. (You may already own these if they are your exiting brand and you provide the content.)

If the developer won’t (or can’t) assign the intellectual property rights to you, you will have a licence to use them. A licence is permission to use the rights in the app.

You will have to negotiate the terms of the licence but ideally it will be an exclusive, perpetual, royalty free licence.

Exclusive means that even though you don’t own the rights, only you have the right to use them. Perpetual means that it lasts for ever and royalty free means that you don’t have to pay anything further for the rights.

When you have secured ownership of all the rights in the app, you should then think about protecting them. Some elements of it, such as the text, will automatically be protected by copyright laws. Other elements, such as logos, may be registerable as trade marks.

If you have any further questions about this, please feel free to email me again at editors@businessadvice.co.uk.

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ABOUT THE EXPERT

David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry – advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.

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