Before You Develop and Release Your New App . . . Legal Issues to Consider

As our business and social communications become increasingly based on mobile devices, there will be a continuing need for new applications (apps). As such, there will continue to be a strong market for new app developers.  It may be that a group of like minded and talented individuals have decided to form a joint venture and create a new application.  Or it may the instance where one is tired of being an employee, and has developed the skills, network, and talent to improve an app and develop a new app. It is sometimes difficult to predict the market success of an app, however, once you realize the potential of your venture there are some important legal issues that one should consider. 

First, and foremost if you are developing a new app, and have not yet retained the services an a business law attorney, you may want to consider your options for forming a registered entity. In other words, you should strongly consider forming a corporation to organize your business and to set up a deal with the other founders.  If you intend on seeking any funding rounds from venture capitalists or other private investors, you should strongly consider Delaware as your state for incorporation. Delaware has favorable corporate laws and, most importantly for venture capitalists and investors who will own shares of your company, does not tax shareholders. 

The second issue to consider when developing a new app, and you will certainly need an attorney specializing in intellectual property and/or business (corporate) law to secure your rights to valuable app (intellectual property). You will need non-disclosure and non-compete (non-competition) agreements for your employees, independent contractors, investors, vendors, and other parties. You may need a trade mark to secure your rights to a particular name or tag line for your product of company.  You may produce various media, art, graphics, designs, or other written materials that require Copyright protection so that you may restrict others from publishing or profiting from your intellectual property without your permission.  Finally, you may have a process or method that is unique to your app, and you will require a patent attorney to assist you filing a patent application with the United States Patent and Trademark Office. 

Another issue to consider is how your have structured your partnership with the other founders or key managers of your new app company. Who owns what and what that ownership interest provides (in terms of profits), voting on important corporate matters, etc.  What happens when one of the founders disagrees with the direction of the company, and wants a "buyout?" How do you intend to handle the admission of new shareholders to the corporation, such as venture capital firms and other investors? These are but a few issues that any new app company must discuss with a small business lawyer in an effort to draft a shareholder agreement.  It is essential to put down the deal in writing during the early development stages of any company to avoid potential financial and legal issues at a later date.  

If you are seeking an attorney that can provide advice, counsel, and legal work for your new application (app) venture, please contact the Law Office of Stefan Cencarik, PLLC, a Lynnfield, Massachusetts business and intellectual property lawyer, at 617-669-9780 or visit www.northshorebusinesslaw.com. 

The Sword and Shield - Non-Disclosure Agreements in Massachusetts

What purpose do Non-Disclosure Agreements (NDAs) serve, and why would I want to "complicate" my relationships with employees, other businesses, and investors?  The time for hand shake deals and unspoken understandings is over. No matter how strong your relationship with any individual or company, relationships and attitudes can change in an instant.  It is, therefore, impossible to predict how employees, other businesses, and investors will treat your private discussions, sensitive information, and intellectual property when a relationship suddenly deteriorates.

A non-disclosure agreement (NDA) drafted by a qualified Boston business lawyer will act as your shield and sword. What types of instances call for a NDA, and what types of benefits do these agreements provide your business? There are numerous situations that call for a non-disclosure agreement (NDA): 

- Protection of intellectual property internally - What measures to do you have in place to protect your contact lists, special methods,  unique processes,  knowledge base and best practices, formulas, and other trade secrets from your employees?  What is preventing your employees from quitting their position at your business, and then starting a new competing business in your market? What is precluding a key employee or manager from working for your competitors?  Intellectual property, in general, can be the essence of any Massachusetts business, and the exposure or misuse of this information could negatively impact the revenues of a business.  

An NDA can preclude internal misappropriation of intellectual property by entering into a contract that specifies the ability of a party to disseminate, use, copy, or appropriate intellectual property.  Typically, an NDA will provide the business a right to seek an injunction from a local Court so as to obtain an order to prevent the party from violating the terms of the NDA.  This Court order will compel the party to abide by the terms of agreement, or face any penalties for contempt of court. 

- Protection of intellectual property externally - What types of limitations do you place on external entities or individuals who may need to use your intellectual property from time to time? What rights do your consultants, strategic partners, and other parties have to your intellectual property, and what happens when  you stop doing business with one another. A well drafted NDA can set parameters on the use of your intellectual property outside of your business. And you will have an enforceable contract with pre-determined remedy for enforcing your rights to prohibit misuse of your property.  

-Confidentiality of sensitive discussions - How would your key employees, managers or minority shareholders or members react if they discovered that you were considering offering your ownership interest for sale? What do you think your competition would do if they found out that you were considering merging with another company, or planned on laying off a portion of your workforce? Would you want your proposal disclosed to a party other than your potential new customer? The list of the types of sensitive business discussions that need to remain confidential are endless.  A well drafted NDA can restrain other parties from disclosing information that may provide other parties a competitive advantage, or the disclosure of information that could negatively effect a business.  

The few examples above show that the benefits of an NDA far outweigh any concerns for complicating or scaring others while doing business in Massachusetts. It is, therefore recommended that you have a qualified business lawyer review your non-disclosure agreement, and other business contracts to ensure that your rights are protected and that they comply with Massachusetts law. And, if your business is not using a NDA, it is highly recommended that you accept that this protective measure is a best practice.