Android: app licensing, copy protection
1.
Yes they can, in rooted phones: http://theandroidsite.com/2009/11/22/how-to-backup-protected-and-paid-android-applications-for-root-users/
APKs are probably stored in /data/app: Does Android keep the .apk files? if so where?
Access at least via Java code or adb shell terminal from PC.
2.
yorkw already suggested using LVL.
I'm afraid you cannot make 100% bullet-proof copy-protection and thus shouldn't put your energy into that:
- Any user with a rooted phone can copy your APK and study it.
- With tools like dex2jar and jd-gui one can see all source code in your APKs.
- Is there a way to get the source code from an APK file?
- Most of the identifiers/names in the decompiled source code are scrambled (a,b,c...) but any solid programmer can figure out what your app does.
- Any dishonest party can copy-paste code from jd-gui to an Eclipse project, build, upload into one's Google Account, and put a price tag... smaller than yours.
My advice is to concentrate on building so good apps that no one can keep up with the pace of your innovation and development.