That's how their licensing verification stuff works. The problem is that someone could copy your app's code (the .APK file) and alter it to not communicate wit

That's how their licensing verification stuff works. The problem is that someone could copy your app's code (the .APK file) and alter it to not communicate with the server, or ignore its response. There's nothing the licensing code or library can do once it the attacker has gone in and disabled it; their main suggested defense, for now, is obfuscating the code so that alteration is hard to do.