Mobile App Developer Series: Terms of Agreement – Part IV

We left off in our blog series considering the reported reasons why one would protect their mobile app by intellectual property means and how they relate back to (or contradict) their values as a mobile app developer in India. Here, we would like to get into more of the nitty gritty of contracts—which clauses are most important to mobile app developers, and what they think of them—followed by a cultural interpretation of the dynamics of this developer community with respect to contracts, and then lastly, a look at copyright, more generally.

Contracts in mobile app developing services

Previously, we shed light on the tendency for mobile app developers, in India particularly, to create mobile apps or mobile app components for clients, often overseas, within a work-for-hire agreement. Within such an agreement, the rights to (or ownership over) one's work is generally handed over to the client the moment the code comes into creation. Simply put, if paid to carry out a particular project, whatever is created within the project belongs to the client.

This is not the only instance where we encounter contract agreements in the mobile app ecosystem, however. For startups where team players are small in number, it is likely that all will have access to any contract agreements entered into with clients. For larger corporate software developer firms, there may be a specialized department for legal-related matters. In such cases, the mobile app developers themselves would seldom lay eyes on the legalese of contracts, for the primary reason being that it doesn't concern them. Instead, the terms of agreement more familiar to them would be those that they obliged to upon working for their employer.

However, after conversing with multiple stakeholders within India's mobile app space, what we came into understanding is that the importance of contract agreements for mobile app developers may be generally underestimated by the developers—both from within the startup to the corporate employer.

Clauses of caution

Within a work-for-hire agreement, it is commonplace for developers to enter into restrictive agreements that obstruct the freedoms of what they can do with the code created for the client. Across interviews with developers in startups and SMEs working for clients, this seemed to be a prevalent problem. Problematic areas proved to be those related to the time periods in which the developer was not allowed to take up future work for competing clients (i.e. the non-compete clause), or could not talk about their work for the client at all (the “quiet period”).

Designer, Rahul Gonsalves explains how these areas of their contracts with clients may impact his team at Uncommon: “The non-compete and the quiet periods are the two bits which are most germane to us, because if I can’t do work for a year in the same area, that impacts my ability to run my company.” Fortunately, Gonsalves says that less frequently are they obliged into quiet periods—in which they would not be able to talk about the work they do for their clients—as this poses an even bigger problem when trying to keep a portfolio for prospective clients, or when writing or speaking on behalf of their experience at conferences.

On several occasions Gonsalves and his team have tried to license their work to clients while retaining ownership... without much luck. “Clients typically do not want a perpetual license, but complete ownership.” Gonsalves goes on in explaining that, “this means they could make a derivative work or use it for another project. Depending on how bad we want the project, we'll work out some middle ground.” But it does not seem to be so easy for he and his SME to do so: “The thing about contracts is it’s all about a sort of differential bargaining power that the two parties have... you’ll have very little control about what happens once you’ve got paid.”

“The thing about contracts is it’s all about a sort of differential bargaining power that the two parties have... you’ll have very little control about what happens once you’ve got paid.”

Contract confusion

To have any sort of bargaining power within a work-for-hire arrangement requires a lot of time for negotiating, and the space for communication to begin with. In many cases, contracts may not even be introduced into a work agreement, leaving a lot of intricacies to the unknown.

“Getting these things down in a legal document is a big deal. It matters,” says Aravind Krishnaswamy of Levitum. The topic came up while speaking about the process of creating the content for one of his startup's apps, which entailed arranging contracts with several third parties involved in. Krishnaswamy and his team did so to ensure that they retained ownership (or co-ownership) over all of the content featured within their app, which features instructional videos on Indian music.

Another developer interviewed, Naveen*, shared with us his experience coming out of college and into employment. Upon joining his first employer, who happened to be a large company, he along with the new “batch” of employees attended a legal session within their training, “but that was Greek and Latin to us then,” he jokes. “We were fresh out of college and had no idea what a software license was... and it was after lunch, so everyone was sleeping.”

Lucky for Naveen, he didn't need to deal with that area too much, as his employer had a legal team to take care of such matters when it came to transactions with clients or third parties. For his current employer, on the other hand, Naveen explained that he could not recall the terms of his employment, as it had been a very long time ago when he signed his employment contract.

Not a contract culture?

Naveen suggests that the problem is one of contract-illiteracy, or simply not having the background knowledge to truly understand the legal facets of the industry, especially as you move away from India's entrepreneurial hubs: “In tier 1 cities, like Bangalore or Chennai, the colleges and students do have some knowledge about open source, licensing and terms, but when you go to tier 2 cities, that's where the problem is.”

But is anyone contract-literate anyway? With the exception of lawyers or legal departments, of course, don't we all have the immediate impulse to click “Next” or sign our signature as soon as we see the words “User Agreements” followed by infinite paragraphs in the smallest font?

However, for the developer in the increasingly-complex mobile app space with numerous parties and transactions involved, terms of contractual agreements may dictate everything from whether one can develop for competing clients, to whether an employee can contribute to open source projects on their own time. Still think that reading those clauses are a waste of time?

We are not arguing that the fact that the developer community seems to be far removed from “contract culture” is in itself a bad thing. As Jayant Tewari of Outsourced CFO & Business Advisory Services asserts: “How mobile app developers regard IP laws—or better yet, disregard—is fine for their sake.” What they must instead learn is to maneuver the landscape to avoid troubles as best as possible.

A good way of going about it, however, may be to begin with the agreements that a developer is already committed to—with clients, employers, and third parties, alike. One should be able to articulate: What is expected of me? Within what limitations? What am I not allowed to do?

Better familiarizing oneself with one's own responsibilities and commitments may be the first step for a mobile app developer to educating him- or herself and become aware of what sort of choices could stir about conflicts in the future, potentially threatening their relationships, reputation, or even livelihood.

But is it even possible to comply to all of the rules of the game?

Within such an overcrowded industry, creation and innovation does not occur in a vacuum, and as a result, many may adjust their own creations as they see fit, according to whatever ways are most convenient and carry out the best function. But at what cost—or more appropriately, what risk?

The next, and final of this blog series will shed light on responses given across interviews to the question of infringement. Here, we intend to connect the dots between the legal practices of mobile app developers and cases of infringement. We hope that after examining such numerous and wide sweeping—yet interconnected—facets of how mobile app developers in India engage with the law within their work, we will be able to comprehensively illustrate the role that these developers play in this economy, and ultimately, pass judgement on the laws that govern this space.