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First, why would you write an app containing ads ?
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It's a copyright violation. Whoever did it is being unethical, so a lawsuit would not be immoral. However, I'd try to get them to take down the pirated version first, although this may prove difficult given that it's already been shared.
Unless that app was the source of a substantial portion of my income, I might consider letting it go. Once lawyers get involved nobody wins (except the lawyers of course). But sometimes the threat of a lawsuit gets the job done. your case is made more difficult due to the app being shared with an unknown number of people.
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I think that you can write your own cease-and-desist letter and send it via a carrier that provides 'proof of delivery' (photograph of signature). You can then use the signature in the courts if you ever needed it. You should probably ask a lawyer for legal advice.
This, but it slightly depends on the EULA you have with your application, plus any copyright notice.
Generally speaking, an informal approach is generally your best bet initially; explain that your business depends on income from your software and when people copy it you are directly impacted. If they deny everything just mention your evidence, again in a not accusing way. If they still appear to be non-compliant, then a more formal cease-and-desist letter with POD as above. Escalate to a solicitor's letter, which won't cost much and simply mentions legal action. Actually going to court is expensive, stressful and can damage your reputation so avoid unless you think you'll (a) win and (b) at least get your costs back!
Here is the thing. The app isn't mine. The developers of said app are located in Korea. I am unsure as to their laws pertaining copyright stuff. There were some users that de-compiled their app, thus removing the ads. There were only 3 developers for the app and this was the source of their income. They have had to cut back on updates due to lack of funds, so are having to take on other projects. A group of us have tried defending the developers, but it hasn't been doing much good as the Developers aren't exactly in contact with us.
Is it moral to add ads?
Is it moral to not maintain the app?
Is it moral to decompile someone else's work?
Is it moral to decompile someone else's app because they fail to update it?
Is it moral to post that new version of the app?
Oh, the tangled apps we write. Oops, did I just violated copyright?
The only way to "fight" it (without deep pockets) is more releases with desirable features. Carrots versus sticks.
And with a bit of protection agains decompiling?
If something has a solution... Why do we have to worry about?. If it has no solution... For what reason do we have to worry about?
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To give you an idea of how times have changed, and just how ungodly freaking old I am, back when I was in college the group that managed activities for the student center used to show movies every Saturday night. One weekend the movie was Insatiable, starring the redoubtable Ms. Lovelace. My wife and I went as she was taking a class in human sexuality at the time and going to the movie was worth extra credit. The center was packed and the audience was pretty rowdy, which actually made it more fun. Almost 40 years later, I still remember one of the best ad-lib lines from the audience, when a guy wearing an eye patch walked into the scene: