The cyber-industry of mobile application development for smartphones and tablets Apps is an area that has gained exponential growth over recent years.
A report compiled by Kleiner Perkins Caufield & Byers, an American venture capital firm, in 2015 revealed that over half of South Africa’s internet traffic came from mobile devices. The report further revealed that there are currently approximately 23 million smartphone users in South Africa. These numbers continue to grow and as a result have created a massive market for the development of mobile applications.
Mobile Apps developed in South Africa have transformed into immensely lucrative business platforms that continue to grow. Examples include “Snapscan” – which allows a person to pay at stores using their mobile phone; “MarkitShare” – which is designed specifically for estate agents to increase lead volumes, sales performance, and secure sole mandates; and “Price Check” – which allows a person to compare millions of products, across thousands of stores.
Although an exciting and inviting industry for a person to enter into, one must always be mindful of the legal formalities and/or consequences that may be applicable to an App’s design and implementation.
It is impossible to cover every single aspect of the law that may be applicable to all mobile Apps, because their functions and purposes differ. This article will touch on a number of general legal aspects that a creator or developer of a mobile App should bear in mind.
There is a variety of legislation that can apply to a mobile App at any one time.
For general purposes, we will discuss the Consumer Protection Act 68 of 2008 (“CPA”), the Electronic Communicates and Transactions Act 25 of 2002 (ECTA), the Copyright Act 98 of 1978, and the Protection of Personal Information Act 4 of 2013 (“POPI”).
The Consumer Protection Act
The CPA has been enacted to promote and advance the social and economic welfare of consumers in South Africa.
The CPA affects mobile Apps in a number of ways, such as the implementation of the App, and the advertising and selling of goods and services via the App. Accordingly, a person who is launching a mobile App must be abreast of the various requirements before blindly launching it to consumers.
The CPA further provides strict requirements with regard to the wording of content within the App. Advertisements must be in plain and understandable language, the price of the goods or services must be clearly displayed, and the trade description of the goods or services must not be defined in such a way as to mislead the consumer.
If the App is constructed in such a way that it acts as an agent between a retailer and the consumer, for example, it must be clearly disclosed to the consumer who the intermediary – the App – represents.
It is thus essential that any and all mobile Apps be accompanied by complete and comprehensive terms and conditions of use, which will protect both the end user and the creator of the App. It is of particular importance that these terms and conditions must comply with the CPA in that they must not be unfair, unreasonable or unjust, nor must there be prohibited terms as described in the CPA. Failure to adhere to these requirements will result in penalties being imposed on the owner or developer of the App.
Electronic Communications and Transactions Act
E-commerce law has been codified in the ECTA. The ECTA facilitates and regulates electronic communications and transactions and is thus pertinent to all mobile Apps.
The ECTA will regulate things such as making sure the consumer is provided with an opportunity to review the entire electronic transaction, correct any mistakes, and withdraw from the transaction before finally placing an order within the App. A consumer has the right to a “cooling off period” in terms of which they may cancel any order done through the App within 7 days of receiving the goods or services, or within 7 days of concluding the contract. This can be done by the consumer without reason and without penalty, and the only costs that may be levied on the consumer are the direct costs of returning the goods. Any payment that was made by the consumer prior to the consumer cancelling the agreement must be refunded within 30 days.
The ECTA further stipulates that a supplier – in this case when making use of a mobile App – must utilise a payment system that is sufficiently secure with reference to accepted technological standards. A supplier may not accept payment directly from the consumer as it is prohibited due to security reasons. The supplier is obligated to employ a payment gateway provider, as well as have a merchant bank account, which authorises the supplier to accept debit and credit card payments through the App. In addition, an SSL certificate is necessary to establish a secure connection with the browser through several visible trust indicators.
Copyright law is of particular importance to ensure the developer maintains ownership of their Intellectual Property.
In terms of section 21(1)(a) of the Copy Right Act, ownership of a copyright shall vest in the author. The definition of an “author” in the Act includes an author in relation to a computer program, or the person who exercised control over the construction of the computer program.
It is, therefore, essential that any person who conceptualises a mobile App specifically contract terms that regulate ownership of the intellectual property associated with the App. This ensures that ownership of the coding involved in creating the App will remain with the person who has cultivated the idea and not with the coder or developer who has been hired to construct the App.
The coder and/or developer should be made to sign a Non-Disclosure Agreement (NDA) prior to commencing work as a safeguard to prevent them from reproducing the App, or anything similar, once the mandate for work with the copyright owner has ended.
Protection of Personal Information Act
When a person signs up for a mobile App, and personal information is given, it is crucial that the information which is provided is limited to that which is necessary for its specific purpose. The consumer must be informed that their personal information is being collected, that retention of the personal information will not be kept for any longer than is necessary for achieving the purpose for which the information was collected, and that the integrity and confidentiality of the information is secured through safeguards.
It is apparent that mobile Apps and the shift into an e-commerce society has created boundless opportunity for the creation of successful businesses. This is not, however, without a number of legal obstacles. The above only briefly touches on the legislation and legal aspects that can affect one’s mobile App business. One should always be aware of all the relevant legal requirements associated with the development and implementation of an App before investing time and capital in a venture that may not be legally feasible. Bear in mind that it is also necessary to ensure that all rights relating thereto are sufficiently protected. It is, therefore, advisable that one seeks legal advice to overcome the legal obstacles that are likely to occur before embarking on such a venture.
Candidate Attorney at Schindlers Attorneys
Phone: +27 (0) 11 448 9634