Hiring Mobile iOS App Developer? Make Sure You Know Who Owns What

Posted by Davzo Inc

Posted in Development

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Are you planning to hire an app developer for your unique app idea? Before you hire an iOS app developer, you must first be aware of one of the common issues when it comes to app development. Issues on ownership rights have plagued many successful apps up to this day. It might not seem to be a big issue at first, but you should know that when your app becomes a huge success and is valued at thousands or even millions of dollars, everybody would want a piece of the pie. Thus, before you proceed with major spending of resources on your app, think seriously about ownership rights to avoid nasty issues later on.

Take the story of the Yik Yak app. The app has enjoyed a meteoric success with millions of users just 12 months after its launch. It is now estimated to be worth close to $400 million. Yet, one person is claiming to own a third of the app. Needless to say, the story is lengthy and complicated and the court case is still ongoing. Another controversial app is Snapchat wherein Reggie Brown sued and settled with the other 2 founders although the terms of the settlement agreement have not been disclosed. Nonetheless, the dispute lasted for around 18 months. Then, of course, everyone knows about the Facebook ownership scandal depicted in the movie, The Social Network (2010). If you are developing an app, consider these precautions to prevent something similar happening to you.

Who are the Founders?

Often, an app is the brainchild of more than one person. It takes a team to build an app. While you may have the idea, other people help you create the app. It is possible that everyone involved in the development of the idea will claim to be a founder. In fact, it isn’t rare to find those who come into the game a little late but still get awarded the title “co-founder.” Problems can also start when during the development stage, the founders disagree and part ways with an unfinished app.

Establishing the founders and co-founders at the start of an app development is critical because:

  • Founders are most at risk in terms of time and money invested, but more importantly, with their reputation
  • Founders usually have the highest equity
  • Successful founders will have an easier time selling succeeding apps and attracting the right people
  • Founders enjoy the most personal satisfaction with a successful app
  • Disputes on ownership cost a lot of money, bad publicity, and personal aggravation

Before you start developing the app or the app idea, sit down with everyone who will help you create the app and create a legal entity or document that will detail the terms of your business arrangement. By doing this, you protect everyone who is with you from the start regardless of whether they stick it out with your app or not. You could put in a clause about founders obligated to give up all or part of their rights if they decide to leave without completing their assigned responsibilities before the app is launched. There is no law that the business agreement be short and simple. You can and should address all possible scenarios.

What about Employees?

Employees are salaried workers who do not own any part of your company or app. That is, unless you offer them some kind of equity agreement based on output or length of stay with the company. Whatever benefits you want to give employees should be documented properly before the employee starts working for you.

This employer-employee contract should specifically state that any work done by the employee is the property of the employer. You own the copyright because you paid for the work. Under the law, however, you should also protect yourself and your business with intellectual property ownership. This means that the employee must assign intellectual property ownership of everything he or she creates or develops to you. In addition, you should also require all employees to agree to a confidentiality clause and to not transfer to a company that is in direct competition with you.

What about Independent Contractors and Outsourcing?

Independent contractors are experts who you agree to pay for specific work. It can be considered outsourcing. This is common in app development because the required skills to produce an app are varied and hiring in-house is costly. Before you assign work to anyone outside your company, you should have a written contract. This contract should include the transfer of copyright ownership of work to be done to you. Do not agree to licensed use of the work because this license can be revoked by the contractor or lead to a situation wherein you will be forced to pay more than the agreed amount to use the license or to buy the copyright. Critical to this ownership agreement are the legal terms to be used so there is no room for misinterpretation. This will help you tremendously when you start soliciting for investors or marketing your app because any hint of trouble with ownership is a red flag for investors who not want a drawn-out legal will battle on their hands. Keep in mind the millions of other apps fighting for a share of investors’ money.

Protecting & Owning Your Developer Code, Third Party Code

Understand exactly what is going on when you are not the app developer but choose to hire or contract a developer. It is possible for the developer to claim ownership of all or part of the code or IP to be used for your app. If so, that section of the code must be specified in detail in the developer agreement while any other code that is developed specifically for your app belongs to you. If the developer wishes to use the code that you own copyright of, then the developer must ask for your permission first. If these details are not ironed out before the work begins, you leave yourself vulnerable to ownership issues.

  • If you are not a developer or programmer, ask as many questions as you can to understand exactly what you are buying and what you are borrowing.
  • Research about generic codes so you know if you are being scammed or not
  • Make sure you get an irrevocable license to use the code used by the developer for your app

As for third party code, it is best that you are firm about the developer not using any as much as possible. However, if this is not possible, then an agreement must be reached in writing with the third party.

Avoid Open Source Code

Ownership problems are rampant when open source code is used for obvious reasons. An open source code in an app makes that app open source and free for all. In cases when you need to use an open source code, have a lawyer go over the license and set up the terms for use of open source code.

Finally, avoid writing the legal documents from a template online. Hire a lawyer to handle all the legal aspects surrounding your app development. Taking these precautions before you embark on your app development will guarantee your ownership and legal rights as well as protect everyone who will help you create something amazing for the rest of the world.

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