E-Commerce Law & Policy - November 2012

will not protect the functionality ofan app, its programming languageor the format of data files, becausethey consist of the overarchingideas behind the app. Theoverwhelming message comingfrom the CJEU and the UK courtsis that copyright protection in theunderlying software of the app willbe limited to the source code, andpatents are the right which shouldbe relied upon to protectfunctionality. The beauty of copyright, of

course, is that in the UK and therest of the EU it arisesautomatically, which is valuablegiven the commercial imperative ofbringing apps to market quickly,for example. The downside is thatcopyright requires you to proveownership and a causal connectionbetween the source work and theinfringing work, which may bedifficult to demonstrate.Developers should date and putcopyright notices on all of theirdesign materials to establish anaudit trail for their own designdocuments (copyright notices arenot required under English law butwould help defeat any defendant'sclaim to be an 'innocentinfringer'). Since the act ofinfringement is the copying of theprotected work, it is possible toinfringe the copyright of othersunwittingly, either whendeveloping the app or if the apphosts user-generated content andthe developer chooses to moderatesuch content (the safer option isusually not to moderate, and toinstead rely upon the safe harbourafforded under the European E-Commerce Directive5 and/or theDigital Millennium Copyright Act1988 in the US), app developersshould always ensure appropriatelicences are in place to cover all ofthe ways in which they intend touse any protected material. Following the CJEU's decision in

Football Dataco & Ors v Yahoo! &

Ors6, it is now increasingly unlikelythat app developers will be able torely on copyright protection indatabases in the app (such aslistings of football fixtures orcompilations of news or data). Thecourt in Football Dataco held thatin order for copyright to subsist ina database, the database mustconstitute the 'original expressionof the creative freedom of itsauthor', free from technical orother restraints. Similarly, the EUsui generis database right, importedinto English law through theCopyright and Related RightsRegulations 2003, requires there tobe substantial investment in eitherobtaining, verifying or presentingthe data in the database, and notthe creation of the data itself,which will be very difficult formost app developers to establish(although it would appear thatdata does have to pre-exist inmaterial form for the right tosubsist7).Problems for developers can arise

particularly in the context of opensource software (OSS), madeavailable to the public under anumber of different 'copyleft'licences. OSS-derived source codeis the bedrock of many apps as it isfree to use, but OSS codes comewith a health warning. The mostcommon licence, the GNU GPL,allows OSS to be used anddeveloped only if the resultantcode is also made available andlicensed under the GPL. As a resultdevelopers should consider theterms of such licences carefully andseek legal advice before using OSS,as a developer who has investedconsiderable time and money in anapp may find (depending on whichlicence he uses) that he has lost allclaim over any copyright in hisproprietary code by havingincorporated even a tiny amountof OSS in the source code. Further,most app platform operatorsprohibit developers from

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Apps are a great way of boostingrevenue and brand equity. Butwhat are the main intellectualproperty issues app developersshould consider? There are variousintellectual property rights whichmay subsist in mobile apps,depending on the nature of theapplication, and various risks inrelation to IP of which developersshould be aware.

CopyrightMost users' experience of an appwill consist of (moving) images,text, sounds and videos - all ofwhich may be separately protectedby copyright to the extent they are'original' (a low threshold whichwill usually be met provided thatthe work has not been copied,although at least some degree ofcreativity is now required forcopyright protection in databases,and possibly also for software andphotographs, pursuant to statuteand recent decisions by the Courtof Justice of the European Union(the CJEU)). The design of the appicon will be copyright protectedand if the app icon is also a trademark, that will give doubleprotection. Copyright may alsosubsist in the app's underlyingsource code. However, followingthe CJEU's ruling in SAS InstituteInc v World Programming Ltd1

and a series of cases in the UK andEurope234, it is plain that copyright

Intellectual property in mobileapplications: the practicalitiesSmartphone applications are a newroute to market for businesses, butthey touch on many grey areas thatneed to be considered in regards tointellectual property rights. StevenJames, an Associate, and RuthArkley, a Trainee Solicitor at Latham& Watkins, examine the risks thatcan arise with regard to IP rights inapps, and consider the methodsused to protect IP in this area.

combining their code with opensource code in their operatoragreements (and ask for warrantiesthat the app submitted does notinfringe third party IP rights andwill ask for an indemnity in respectof the same) and many will removethose apps which use OSS.

Patents Patent protection may be sought inrelation to the novel functionalityof an app. The enormous value ofpatent rights, which confer 20 yearsof monopoly protection, as well asan increasingly lucrative andcrowded smartphone market, hasled to the patent wars a streamof well-publicised patent casesbetween many of the majortechnology companies. It also helpsexplain one of the motives behinda series of huge patent acquisitions,including Googles acquisition ofMotorola in 2011, which hasincreased Googles patent portfoliotwentyfold to over 18,000.The software itself is unlikely be

patentable in the UK unless itproduces some kind of novel effectoutside the app8 to take it beyondthe realms of being software assuch (which merely causes acomputer to execute a number ofcommands relating to the runningof the software but nothing outsideof this). Further, apps which purelyconsist of methods of doingbusiness as such are likely to beexcluded from patent protection(applications such as identifying auser of internet or telephoneservices or incorporatingcompanies house documents havebeen rejected as business methodsas such in the past). However, therules relating to the patentability ofsoftware are generally interpretedin a more relaxed fashionelsewhere in Europe, especially inthe EPO (where if thesoftware/business method providesa solution to a technical problemand is novel and inventive, it

should pass muster) and evenmore so in the US, where courtshave stated that the starting pointis that anything under the sun thatis made by man should bepatentable9 and where Amazon(unlike in the UK and in Europe)managed to patent its one clickmethod of ordering retail gifts. Ingeneral, merely implementing amethod used in the offline worldthrough an app is unlikely to bepatentable something further,such as a technical effect outside ofthe computer program or method,is required to render such programor method patentable.One important practical

consideration to bear in mind isthat it is expensive to registerpatents - often several thousandpounds, which will vary dependingon in which countries you arelooking to register the patent. Italso usually takes at least 24months to register a patent, bywhich time the commercial valueof the app may have peaked andthe technology might have movedon.Although it is likely to be rare

that app developers would rely onthe law of confidentiality once theapp has been published (as it isunlikely that any part of the app,once disclosed to the public, wouldbe capable of protection),maintaining the confidentiality ofinitial ideas and developmentconcepts for the app is critical. Inthe UK, such confidentiality mayarise under common law butNDAs should also be entered intowith all third parties developersdiscuss the idea with (externaldesigners, potential financiers etc)to ensure that there is contractual,as well as common law protection.

Trade marksAnother method of protecting theIP in an app is to register its nameand logo, as well as any distinctiveimages, slogans and characters, as

trade marks. Developers shouldregister their marks early (ideallybefore launching the app tomarket), and they shouldformulate, and ensure othersadhere to, strict brand guidelines toprevent their marks frombecoming generic. Such is thegrowth of the apps market thatonce distinctive terms, such assmartphones and app store, can nolonger designate one entity as theyhave become generic/descriptiveterms in the industry. Strong trade mark protection is

essential for businesses to capitaliseon the goodwill accumulated intheir products. In the UK an actionfor passing off may protect thelook-and-feel or get-up of the app,although the evidential burden ofproving passing off renders astand-alone claim for passing offrarely viable on its own. Thisunderlines the importance ofregistering key trade marks.Some registration classes for app

developers to consider are classes 9,38 and 41. Even if the developerdoes not wish to apply for a trademark, clearance searches should becarried out to ensure that no thirdparty owns pre-existing rights inthat mark in the jurisdictions inwhich the developer wishes tomarket the app.

Design rightThe images in an app may beregisterable as design rights if theyare new and have individualcharacter. The definition ofproduct under the EC DesignsDirective 98/71/EC and RegisteredDesigns Act 1949 is sufficientlybroad enough to include get-up,graphic symbols and typographictype-faces, so could include manyaspects of the appearance of theapp. Although designs are relativelycheap and quick to register,designers may well be moreinclined to rely on EU unregistereddesign protection, which arises

E-Commerce Law & Policy - November 2012 13

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Maintainingtheconfidentialityof initial ideasanddevelopmentconcepts forthe app is stillcritical.

E-Commerce Law & Policy - November 2012

the outset who will own the IP inan app. Further, given the potentialscope for third party actions, anyagreement should includewarranties and indemnities fromdevelopers to cover anyinfringement claims.

Jurisdictional issuesEstablishing jurisdiction in theevent of a dispute can be difficult.In Europe, the basic position underthe Brussels Regulation (No.44/2001) is that the claimantshould sue in the domicile of thedefendant, although there areexceptions, so that where thevalidity of IP is challenged, thequestion of validity must be triedin the country of registrationregardless of whether it is used as aclaim or a defence. Following theSupreme Court's judgment inLucasfilm v Ainsworth10 it is nowmuch more likely that Englishcourts will accept jurisdiction of anon-EU copyright infringementclaim, while in patents cases theEnglish courts have shown thatthey will look behind thetechnology to examine from wherethe infringement is beingcontrolled. With patents the issue istheir national scope, which can putpressure on claim construction,even where the patentee relies onthe use of means essential to thecarrying out of the invention (e.g.under Section 60(2) of the UKPatents Act 1977). Claims need tobe written around the possibilitythat only part of the relevantprocess may be undertaken in anyparticular locality.

ConclusionIn many ways the IP issues toconsider when building an app areno different to those you shouldconsider when developing awebsite or other software. But appsbring into play most, if not all, IPrights simultaneously and do so ina spatial vacuum, such as the

cloud, where it is very easy to tripup and make mistakes. Added toall of this are usually very onerousplatform operator terms andconditions with which developersmust comply. There is also thecommercial issue of weighing upthe advantages of registering rightsagainst the initial costs and the factthat the technology might havemoved on before you have evengone through the application stageof securing registration for aregisterable interest. The key is toensure that at least some of thebuilding blocks of the app havebeen considered and implementedthrough careful management andexploitation of the IP, whetheryour app is the next Angry Birds orjust an extension of your existingbrand portfolio.

Steven James AssociateRuth Arkley Trainee SolicitorLatham & Watkins LLPsteven.james@lw.comruth.arkley@lw.com

1. (Case C-406/10).2. Nova Productions Limited v MazoomaGames Limited and others [2006] EWCACiv 1044.3. [2004] EWHC 1725 (Ch).4. Bezpe_nostn softwarov asociace -Svaz softwarov ochrany v Ministerstvokultury (Case C-393/09)(BSA).5. 2000/31/EC.6. (Case C-604/10).7. Football Dataco Ltd v SportradarGmbH [2012] EWHC 1185 (Ch).8. Symbian Limited -v- ComptrollerGeneral of Patents [2007] EWCA Civ1066.9. Diamond v Chakrabarty [1980] 447US 303, 206 USPQ 19310. [2011] UKSC 39.

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automatically and lasts for 3 years(which may be sufficientprotection for the commerciallifetime of the app), althoughcopying of the design will have tobe demonstrated in order to proveinfringement. As a consequence,registered design rights havebecome more valuable for thedevice hosting the app rather thanthe app itself, as it is likely that theimages in an app will already beprotected by copyright or trademarks. A case in point is Applesregistered design of its iPad, whichit has relied upon in a series ofinfringement cases in the US, UK,the Netherlands and Germanyagainst other devicemanufacturers. There will be anoverlap between design right andcopyright in relation to the designof the app itself.

Who owns it?In England and Wales, the defaultposition is that intellectualproperty will first belong to theperson who created it. However,this is not always the case, the mainexception being that the IP in workdone by employees in the normalcourse of their job will belong tothe employer. However, work doneby contractors will not, save inrespect of UK registered designsand unregistered design right,automatically belong to the partycommissioning the work (althoughthere will often be an impliedlicence for the commissioningparty to use the IP), and workdone by employees using their owntime and resources will usuallyremain the employees' ownintellectual property. In the US, thework-for-hire doctrine makes thecommissioner the owner of therights in the work. In any situation, it is safest to

ensure that express agreements arein place between businesses,developers, contractors andemployees so that it is clear from