By Cliff Ennico
www.succeedinginyourbusiness.com
This week's emails demonstrate just how far social media has come in only a couple of years:
"Some friends and I have created a mobile phone application, or 'app,' that will help people find local bars and restaurants.
I realize most mobile phone apps are tied to a website, but we're not planning to do that. For a while at least, this will be a stand-alone app. Once we're convinced that there's a market for this app, then we'll set up a website.
For now, what sort of legal documents do we need just to sell the app on Apple's App Store?"
Up until recently, most creators of mobile phone "apps" used them as a marketing tool to direct users to a website where the creators were offering goods or services (that's why, at least in the beginning, the creators would offer the app for free or for a small amount under $1).
But as the above email indicates, things have gotten a bit more complicated since then. With more than 700,000 apps for the iPhone alone available on Apple, Inc.'s App Store, the field is extremely crowded and it's getting tougher and tougher for a new app to stand out. Many new app creators are "testing the waters" by offering their apps for free and then building a website later once the app has proven itself in the marketplace.
A wise decision, perhaps, but how does such a creator protect itself legally?
Let's begin with the basics. A mobile phone "app" is basically a software tool that allows users to do something cool on their mobile phones. As such, the app is "software," and is licensed to the user, not sold. At the very least, an app creator needs a "license agreement" or "user's agreement" making it clear that:
- the creator owns all intellectual property rights to the app;
- users have only a license (although a fully paid-up one), not ownership, when they download the app from the iTunes store; and
- users are not allowed to reverse engineer, copy, or do anything with the app that might infringe on the creator's ownership and intellectual property rights.
Once the app has been downloaded and users start using it, the creator will also need some basic disclaimers in case bad things happen. For this particular app, I would recommend, among others:
- a disclaimer limiting the developer's liability for any malfunction to a small amount (for example, $1 or the cost of the app if greater);
- a warning that users must be of legal drinking age (21 in virtually all states) to order alcoholic beverages using the app, and must be legally able to enter into binding contracts if they are using the apps to make restaurant reservations; and
- a statement that the app creator cannot guarantee the user will have a positive experience with any bar or restaurant they find through the app.
I also strongly recommend a privacy policy if the app creator is collecting user information from people who use the app. Call an attorney, or look at apps in the "food and beverages" section of Apple's App Store to see what other app developers are using.
"I have just set up a Facebook page to launch a new business selling a certain type of service to people. I'm not planning to set up a separate website for the business, at least not yet. My services will be offered exclusively on Facebook, where people can sign up for specific 'bundles' of services and pay by credit card directly from the Facebook page.
Facebook has its own user's agreement and privacy policy, so do I really need my own versions of these?"
The short answer is "yes." Whenever you are selling goods or services online using a "shopping cart" that enables customers to pay by credit card, virtually all carts will allow you to include a "dialog box" as part of the checkout process, by which a customer must "accept" your terms and conditions if they wish to proceed with their purchase. Take advantage of that feature.
Your "dialog box" should give the customer the option of "accepting" or "rejecting" your terms. I would also recommend that you include a feature requiring the customer to scroll through your terms and conditions to the very bottom of the document before being given the opportunity to "accept" or "decline" them.
As soon as you can, set up your own website and stock it with inventory that is not available on Facebook or any other social media site. Social media is a great way to build a customer base, but ultimately you want to be selling stuff from a website you own and control. That website will still be the only place on the entire Internet where you can sell stuff and keep 100 percent of the money you make.
Cliff Ennico (
www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of
Small Business Survival Guide,
The eBay Seller's Tax and Legal Answer Book, and 15 other books. COPYRIGHT 2013 CLIFFORD R. ENNICO. Permission granted for use on DrLaura.com.
