Developing a software product is a complex process that involves much more than coding and design.

It is important not to lose sight of the legal perspective to avoid future risks such as disputes, copyright infringements or data privacy breaches.

In this article, you will find the main legal issues to consider when developing a software product that you plan to put on the market (e.g., a web platform, a mobile application).

1. Company (i.e., legal entity)

From the mere idea to the development of a software product - even in a test form or already functional and ready for use or sale, there is a complex process involving several steps.

Initially, when you start working on the idea, you do not necessarily need a company (or technically, a legal entity).

But as the idea starts to take shape and you put the product on the market, attract investment or hire/contract personnel, a company becomes necessary. In practice, the most common is the limited liability company (ro., SRL).

2. Contracts with the team

It is important to sign contracts with the team that helps you develop the software product and to regulate your business relationship. This helps you avoid the risk of potential misunderstandings, and each party has a clear overview of their obligations.

You can even include in your contracts specific clauses to protect your business, such as a non-compete, exclusivity or non-solicitation obligations for your collaborators.

Read more about the importance of signing a contract and the main issues you need to consider in our article here .

Also, if there are other founders besides you, it is useful to conclude a Shareholders Agreement (SHA) - setting out all the rules of cooperation among you (including mechanisms for settling disagreements, how to exit the company etc.).

3. Intellectual property

Intellectual property is one of the key issues to consider. In today’s world, intellectual property is among the most important, if not the most important, asset of a company developing a software product.

Source code, interface design and other elements of the software product are protected by copyright, which usually originates with the creator (author/individual) - such as the programmer who writes the code.

In other words, with a few exceptions, intellectual property will not by default belong to the company developing the product, but additional steps may be necessary to obtain it. You can obtain the intellectual property by including in your contracts with the team, a clause transferring the intellectual property rights from them to the company. If you have already signed the contracts and there is no such clause, you can sign an addendum. In this way, there will be no risk that at the end of the project you will not own the intellectual property rights in the developed software product.

Ownership of intellectual property is even more important in the context of an investment, as most investors want the business (company) they invest in to own the copyright of the software product. There are many cases where investors make their investment conditional on the company entering contracts to obtain intellectual property even from the founders.

Also, make sure that in developing the software product you do not infringe other persons’ intellectual property rights.

4. Protection of confidential information

Another thing to keep in mind is protection of confidential information about your product, business and the like. Whether it is information you provide to your team or to other contractual partners, make sure they cannot disclose or use it in a way you do not want them to.

For example, you can enter a non-disclosure agreement (NDA) with the team even before signing the product development contract. Or you can include confidentiality clauses in the product development contract itself.

You can read more about NDAs and their usefulness in our article here .

5. Protection of personal data “by design”

If you process personal data of the software product users, you will have to comply with the data protection legislation, including GDPR.

According to the GDPR, you must ensure data protection “by design and by default”. Briefly, this means that the product has to comply with the GDPR requirements from the development stage, including by taking technical and organisational measures to ensure that data protection principles and safeguards are in place to protect users’ rights.

6. Online legal documents

Together with the product, the terms and conditions of use, privacy policy and cookie policy should also exist and be available to users. These should provide clear information about the use of the product, how personal data is processed and the cookies you use.

Make sure that users cand easily find and understand these documents. Read more about the terms and conditions here and the privacy and cookie policies here .

7. Compliance with legislation

Finally, it is important to make sure that you take all measures to comply with the applicable legislation, whether we are talking about national or international legal provisions.

Keep in mind that there are certain domains where there are specific regulations that need to be observed, such as telemedicine, fintech or insurance distribution.

Developing a software product involves several legal issues that you should not ignore. By taking the time and resources to understand and comply with these issues, you will be able to develop a successful and legally compliant software product.