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App Developers Series: Products-Services Dichotomy & IP (Part I)

Posted by Samantha Cassar at Apr 10, 2014 01:10 AM |
Recently, the Centre for Internet and Society (CIS) held a series of interviews in attempts to better understand the ecosystem in which India's mobile app industry is emerging, how it is governed by India's current laws, and how mobile app developers are affected as a result. The following written series maps out the given responses and presents our findings from these interviews and accompanying conversations.

This preliminary round consisted of 10 interviews with app developers and an additional 6 with other individuals from differing perspectives within the mobile app development space; these being designers, lawyers, financial and legal advisers, and developer community mobilizers. Much insight was gained on the current legal practices of app developers within their work related to intellectual property rights (IPR), licensing, infringement and ownership. Through this preliminary research exercise, such practices are found to arise out of personal business models, sentiments towards the law, and how they are situated within the ecosystem to begin with.

Infographic1Question 1: “What is your IP?”

In the legal realm, mobile apps aren't simply mobile apps, but a final product composite of numerous forms of intellectual property (IP)—background processes, source code, user interface, brand, content and more. But who owns the apps that are being made? Are they protected, and if so, is this protection enforced? And how much do developers know about IP anyway?

The first of the predetermined set of interview questions begins to address these questions. Upon asking developers what it is exactly that constituted their intellectual property, the most frequent immediate responses consisted of “nothing” or one's own coding for their mobile app product. Other responses included created content, background processes, and works unpublished, as well as trademark and a pending patent. Discussions to follow often pertained to one's business model, as well as their different types of mobile app IP for clients and of their own products.

So what did these responses reveal then?

  • 70% of app developers interviewed generally do not own the products they create, and instead assign ownership of their IP over to their clients

  • 80% of app developers interviewed have either moved away from the services sector to create their own products or would like to

  • 75% of app developers interviewed within services have their own mobile app products, two thirds of which are in an early product phase

Services for SMEs

Across developers carrying out app development services, clients were often said to be based all over India, as well as the US and Europe. Despite this occurring trend within our interviews sample, Business Financial Strategist and CEO of Out Sourced CFO & Business Advisory Services, Jayant Tewari stresses that out-sourced 'mobile app services' is marginal as a business model here in India. Due to the fact that “apps are reasonably small in terms of code length and complexity, the concept is more important to and deliverable by a small skilled team,” he says. For this reason, mobiles apps is relatively a small-medium enterprise (SME) space: “some SMEs have grown but the ethos and challenges faced are entirely distinct from the Large Corporate.”

Tewari's insights reflect the few of the larger mobile app enterprises that had participated within our interviews. Of all app developers interviewed, it has been found that 80% have either moved away from the services sector to create their own products or would like to. The remaining 20%, on the other hand, represent larger enterprises that have now scaled up with teams from 70 to over 200 developers—one of which focus strictly on services for social enterprises and non-profits as clients.

Tewari continues in saying that “unless you're a 1000 man enterprise, there's no economic benefit in services; as competition has driven pricing so low, everyone's struggling to deliver $12-14 per hour.”

So then, if this is the case in India's mobile app economy and off-shore app development is marginal, why have we found developers are doing it then?

Vivek Durai, formerly a lawyer and now Founder of startup, HumblePaper, implies that this business model is not by first choice: “every startup in mobile development, especially, is doing services to stay afloat and would like to move toward a product model.” Accordingly and as mentioned above, 75% of those interviewed within services had their own mobile app products, the majority of which were only in an early product phase—suggesting the inclination for app developers to gradually move away from the services sector in pursuit of their own projects, as they are able to.

Infographic2Understandings of IP (and lack of)

Come the time for this transition away from services, however, app developer enterprises may be ill-equipped to sufficiently navigate this mobile app product space. Due to the fact that those within services assign ownership to their clients with the mere signing of a contract (if any), mobile app developers do not have any need to concern themselves with all the legal nuances related to ownership and licensing of IP. Put simply by Durai, “when you ask a question about IP to developers, they don't know what it means, because it doesn't have anything to do with what they're doing.”

Within the responses received, we have found that across those interviewed exist different personal understandings of the meaning of “IP.” Badrinath Kulkarni, Google Developer Group (GDG) Bangalore Coordinator, shares his concern regarding this area of greyed understanding in saying that “developers often do not know what part of their app is IP... there is a gap in understanding with respect to IP.”

For the most part, it seems, IP was considered to refer to content or code across interviews, and was even confused at one point with IPR within a response referring to an SME's trademark and pending pending. Although a subtle error, such may reflect the lack of a comprehensive understanding across individuals—even those that are applying for a patent.

For those who appeared to be better versed in matters related to IP, a recurring theme seemed to be the need for developers to broaden their understanding of what parts of their work are IP. Within a conversation with Samuel Mani, Founding Partner of Mani Chengappa & Mathur, Mani stresses that developers should recognize the value within not just the product or software itself, but the background business processes. According to Mani, the execution of the idea is the true source of innovation; how one accesses the market, and maybe who the market is as well.

IP understanding in services: irrelevant or important?

So what is the importance of having a concrete understanding of notions of intellectual property to begin with? Does it matter at all that those within development services are not as familiar with the concept since IP is irrelevant to them? Or can knowledge of IP work to one's advantage within a services agreement?

As we continue to examine the responses given across interviews pertaining to protection of one's intellectual property, perhaps these questions will answer themselves.

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Samantha Cassar

Samantha is from the University of Toronto, and has been undertaking preliminary policy research for the Centre for Internet & Society looking at the legal aspects of India's mobile app ecosystem to better enable developers within it. Her research has involved interviews with mobile app developers and other community members, as well as a nation-wide industry survey on legal practices within mobile app development.