Apps can be big business, particularly if you have a unique idea and execute it well. But what risks are there for sole traders producing their own apps, and how can you protect yourself?
Grid Law founder David Walker explains what app entrepreneurs need to be aware of when releasing their product into app stores.
I have read your article, “Essential legal considerations when developing a new app” which was quite useful – thanks for the information.
I have developed a simple mobile application which works out distance and bearings (like a simple calculator) and is ready to launch in the app store (it can only be done on Android).
What control measures should I take to protect myself before launching the app and to eliminate any possible legal actions that may arise in the future?
Do I need a limited company with an insurance for the business, or just an End User Agreement to link to the app saying I do not take any responsibility for any wrong outcomes etc.?
Thanks for your question and I’m pleased you found my article helpful.
First, you must carry out a risk assessment to understand the potential risks you are exposed to.
To find out, you need to know three things:
1. all possibilities of what could go wrong;
2. the consequences of each of them going wrong; and
3. the likelihood of each of them going wrong.
When you understand all of this, you can determine the resources you will need to eliminate or reduce the risks and prioritise the actions you will take to deal with them.
For example, if you identified a risk with severe consequences that was highly likely to occur, fixing it would be your top priority. If you couldn’t, because you didn’t have the resources to do so, you may have to delay the launch of your app.
On the other hand, a risk with minimal consequences that is probably unlikely to occur can be addressed in later releases of the app.
I don’t know the details of what your app does, but you say it works out distances and bearings.
Does this mean you can you use it for navigation?
If so, (and I’m just guessing for the purposes of this example) an example of one thing that could go wrong is a miscalculation in the bearing someone has to take.
If the calculation is wrong, could this mean that they get lost?
The consequences of getting lost could be vastly different depending on who is using the app.
It would be a minor inconvenience if someone is five minutes late for a meeting because they were using your app to navigate across town. However, it would be severe if they were on a camping trip, became lost at night and then caught hypothermia because they couldn’t find their way back to their tent.
However, you also have to look at reality. It’s highly unlikely that someone is going to get lost and end up suffering from hypothermia just because of a miscalculation by your app. To get themselves out of trouble, they could use other map apps on their phone or call for help etc.
Another potential risk may be a claim against you for intellectual property infringement.
If a rival app developer thinks your app is too similar to theirs, they may claim it infringes their technology. You may need to take legal advice to understand the reality of this risk and the consequences of it.
Dealing with risk
No matter how hard you try, it will be impossible to eliminate all risks and prevent people from taking legal action if that’s what they intend to do. However, there are simple things you can do to give yourself the best chance of winning any claim they make.
You should add a disclaimer to the app that limits your liability. Without knowing more details, I can’t say exactly what it should include, but you will likely say that it’s not guaranteed to be 100% accurate and you shouldn’t rely on it as a sole means of navigation etc.
You asked whether you should distribute the app through a limited company. I can’t answer this without knowing far more details about the app and your future plans for it.
For example, have you built this app for fun or does it form part of a larger business idea?
If you’re intending to build a business around the app, then a limited company may be a good idea.
If your app is very similar to other apps and there’s a risk of an intellectual property infringement claim then a limited company could, again, be a good idea to offer you some protection.
If the app doesn’t form part of a larger business idea and the risks of IP infringement are low, setting up a limited company is probably unnecessary.
Whether or not you need insurance depends very much on the risks you have identified and whether you are running a business or releasing the app for fun.
I hope this gives you a good starting point for identifying the potential risks you are exposed to. If you have any specific questions after you have carried out your risk assessment, please feel free to email me again at email@example.com.
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