How to protect your intellectual property in software or App development

Why copyright isn’t enough to protect your ideas and intellectual property


It all starts with an idea – an idea for a new app that hasn’t yet hit the market.


It all starts with an idea. Your new app will be revolutionary. You know how you want it to work but…you don’t know how to make it work.


Not being an IT whiz, or someone willing to dedicate several hundred hours learning to code, you decide to engage a developer to bring your baby to life. That’s when one small problem comes to mind.


Once you share your idea, what’s to stop the developer from claiming it as their own and how do you protect yourself while getting the app developed and out into the market?


Won’t my idea be protected by copyright?


Not exactly. Copyright is a form of protection for intellectual property that has been reduced into an identifiable form. This includes text, art (including music), computer programs, sound recordings and video. It is focused on protecting the form of expression of an idea, rather than the idea itself.


This means that copyright doesn’t protect the idea (particularly while it is in your head). Rather, copyright protects the way in which your idea is expressed. This means that if you start to document your idea for your app in notes, sketches or drawings, then that documentation is protected by the Copyright Act 1968 (Cth).


But copyright doesn’t protect others from independently coming up with their works, software or app that does the same thing as what you intend from your app. It also doesn’t protect your brand name or app title. So, what else can you do to protect yourself?


Well, what about trade marks?


Trade marking the name or logo will give you the exclusive rights to use and exploit the trade mark in Australia. This means that other businesses are prevented from using your registered trade mark in Australia for similar goods or services.


Trade marks can be registered and anyone can search to see who is the owner of the trade mark via the Australian Trade Marks Register. A trade mark doesn’t have to be just an image (such as a letter, number, word, phrase or logo). They can also include sounds, movements, shapes or even scents.


However, trade marking your name or logo won’t protect your idea. It will only protect your name or logo (which becomes very important when you are ready to go to market). At this time, it is helpful to have a trade mark because, in the app development world, most app stores, social media platforms and domain name regulators are more likely to shutdown competitors who are using your app’s name, assuming its trade marked and registered.


If you do not have a registered trade mark for your app name or logo, there is a real risk that others may attempt to try to use your name and leverage goodwill and custom from your app.


So, the question still remains – how can you protect yourself and your idea?


Confidentiality and Non-Disclosure Agreement


Unless you can develop the app yourself, an IT expert or software developer is usually engaged to develop your app. The developer will need your ideas, notes, drawings and plans for the app so they can work with you.


The best way to stop that developer (or anyone else such as employees, financiers or other consultants such as graphic artists) from exploiting your idea is to ensure, before any information or documents are handed over to anyone, that you have a confidentiality and non-disclosure agreement with the developer (or third party) (NDA). An NDA is a comparatively simple and cost-effective way to protect your intellectual property during the app development phase. This document is basically a legally binding contract that prevents whoever signs it from using an information provided to them for their benefit. If the other person breaches the NDA, then you can obtain a court order to restrain then from using the information further and also for any damages you suffer because of their use of your idea (which includes any monetary gain they received from using your idea).


An NDA is drafted to prevent the developer (including any staff members of the developer) from using, exploiting or sharing your proposed app idea with anyone else. If the developer refuses to sign such an agreement, this would be a red flag regarding whether the developer is serious about protecting your idea.


NDAs are also further reaching than copyright and trade mark laws and cover all the areas where these fail. For example, an NDA will protect:


1. Unauthorised use of exploitation of your idea;

2. Your notes, diagrams, drawings, text and code (amongst other things);

3. Your logos and other branding; and,

4. Any innovations developed as part of the idea.


The only downside to NDAs is that they must be signed by the recipient of the information. This means they’re only suitable for early development and won’t offer any protection once your idea is ready to go to market (that’s when you’ll need one of the above forms of IP protection).


App or Software Development Agreement


Assuming you are then happy with a developer and want to proceed with the development of your app, it is critical that an App or Software Development Agreement is put in place between yourself and the developer. A considerable amount of effort needs to be put into this document because it will set out what your expectations are from the developer both during and after the app is developed.


Some specific topics that the agreement needs to cover include:

  • The scope of work to be completed by the developer and your expectations about what the “end product” will be able to do;

  • Assurances from the developer that the app will be able to be sold on external platforms such as Google Play or the Apple App Store;

  • The fees payable by you;

  • The timeframes for the development of the app, and consequences for a failure to meet those timeframes;

  • The opportunities you are given to “test” the app both during the development phase and before it is completed;

  • How to communicate about any issues with the app during development;

  • Who will own the app at the end of the development;

  • Who will own the source code and how the source code will be transferred;

  • Whether any ongoing maintenance and support services will be provided including to fix any “bugs” in the app; and,

  • Situations where the agreement could be terminated and the consequences of any such termination.

If you do not have an appropriate App or Software Development Agreement, then, if things turn sour with the developer you may need to spend a significant amount of money to deal with a dispute about who actually owns the app and the associated intellectual property rights.


Terms and Conditions of Use


The end “product” app must have terms and conditions of use for the public to be able to use it.


These terms will regulate how people use your app. They usually must be accepted by a customer prior to using your app. Such terms and conditions include:

  • What your app will do;

  • How a customer can use the app;

  • How much the app costs (if any);

  • How the end user pays for the app (if paid);

  • How your intellectual property (or ideas) are protected;

  • Disclaimers of your liability to limit customers making claims against you arising out of the use of the app; and

  • Termination of a customer’s use of the app.

If you do not have appropriate terms and conditions, then you are at risk of the end consumer attempting to copy your app (or associated intellectual property rights). The terms will also offer you some protection from claims from disgruntled customers about how the app works or any “errors” that might occur in the app.


Privacy Policy


While not all businesses are legally required to adopt a privacy policy, if the app collects any personal information from its users, it is good practice to have a privacy policy. This policy sets out what information is collected, how and why it is collected whether you disclose the information to third parties.


If you don’t have a privacy policy, this may be a breach the Australian Privacy Principles and the Privacy Act 1988 (Cth). There are very significant penalties of up to $2.1M under the Privacy Act 1988 (Cth) for engaging in conduct that is a serious, repeated or interfere with an individual’s privacy.


It is therefore much more risk effective to have a privacy policy (and comply with it) to avoid such a large penalty.


Summary


The gig-economy has never made it easier to develop and launch digital products. In a world of Fiverr, Upwork and Freelancer, there is no shortage of developers, coders and other IT wizards to make your business idea a reality.


Unfortunately, it has also never made it easier for the same person you engage to help to exploit your idea for their own benefit.


Kimberley Forman, Director

(07) 3307 4523

kforman@shandtaylor.com.au


Charlie Hodgetts, Lawyer

(07) 3307 4513

chodgetts@shandtaylor.com.au


Emma Lewis, Lawyer

(07) 3307 4546

elewis@shandtaylor.com.au

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