What Beta Test Legal Agreements Do You Need for Your App?

A well-conducted beta test takes a great deal of planning and effort to ensure that you receive valuable feedback and insights and, often, small mistakes or oversights can make the difference between a resounding success and a big flop.

When planning for a beta test, a common mistake made by app developers is not considering the legalities of the test. Just because the app is still in the pre-release phase doesn't mean that it's OK to forego the formalities. In fact, it is doubly important for a beta test specifically because it isn't out of development yet and has not been released to the public.

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The legal agreements used for beta testing are usually combined into one legal document or agreement. While there isn't a standard naming for this agreement, it is usually called "Beta Participation Agreement" (BPA), "Beta Tester Agreement", "Pre-release Software Agreement", or something along those lines.

Besides the legal aspects, getting your beta testers to sign a BPA has many indirect perks. To begin with, it will set your testers' expectations regarding what to expect from the program and what is required of them. Moreover, formalizing the agreement will help your testers appreciate the importance of the roles they are assuming and make them more likely to provide useful feedback.

The non-disclosure agreement (NDA) or clause is imperative for a closed beta to make sure your trade secrets are not revealed to the market before you have validated and perfected your app. In the beta stage, your app will still have some annoying bugs and stability issues to work through. Discussions about these issues should remain private to avoid having them affect how your release version is received; especially since these issues should be resolved by the time you release.

Additionally, even if your app is fairly bug-free and well-received, keeping the beta private will give you more control over your marketing message upon release. This lets you control how and when your app is revealed and the messages you are trying to convey through your marketing efforts.

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Overview

Beta test agreements are a combination of three agreements, namely "terms of service", "privacy policy", and "non-disclosure agreement". The terms of service detail the terms on which you are going to grant testers access to the app. This includes the responsibilities of each party, license details, and matters of copyright and ownership.

The privacy policy is used when you plan to gather any kind of user information. In this part, you mention the type of data gathered, how it is stored, and its intended use. If any data is to be shared with any third parties, you will need to mention how and why in a Data Processing Addendum (DPA).

Finally, the NDA establishes the confidentiality of the test and its data. This is where you specify what your testers can talk about and what they should keep to themselves and for how long.

Now let's take a closer look at the clauses most commonly included in a beta test agreement, their meanings, and importance.

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Arrangement and Definitions

This clause introduces the parties involved in the agreement and the arrangement's desired outcome. It also provides a definition of any special terms used in the agreement. Terms like "beta test", "beta feedback", etc. are explained in detail to specify what they refer to throughout the agreement.

Here is an example from Paragon Software:

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Eligibility and Enrollment

You will definitely have some criteria defining who will be eligible to participate in your beta test, and this is where you specify them. A "no-conflict" provision should be included to keep your competitors out of your beta test. You will also want to mention the enrollment channels and process through which your testers can join the program. This clause is often skipped for closed betas since the participating testers have been reviewed and selected by the developer beforehand. However, for an open beta agreement, these rules and mechanisms must be clearly stated and specified.

Here is an example from Square Enix:

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Copyrights and Ownership

Here you will want to establish your ownership of the app, its code, design, trademarks, and any intellectual properties associated with it. You will also want to make it clear that testers are not granted any rights unless they are expressly mentioned in the agreement.

Here is an example from Parallels Software:

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License and Acceptable Use

Under this clause, you indicate what type of license is granted to the tester and any restrictions that may be put on it. Additionally, this is where the developer needs to specify what constitutes "acceptable use" of the product. For a beta test, a non-exclusive, non-transferable, non-sublicensable, revocable, limited license is a common choice, with the usual restrictions on copying, reverse engineering, and redistribution. As for the use of the product, it should be tied to its documentation and restricted from live data and environments.

Here is an example from Atari:

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Disclaimer of Liability and Warranties

Also called "Beta Disclaimer", this clause expressly states that the provided app is licensed "AS IS" and is known to contain bugs and stability issues. Testing is the only purpose behind using the application and the developer disclaims any liability for data loss, damages, or loss of profits incurred through the use of the beta app. Likewise, the developer disclaims all express and implied warranties for the application under test and the tester uses the app at their own risk. Furthermore, since you will be sending beta updates, explicitly stating that they are subject to the same terms is a good idea.

Here is an example from Paragoni Apps:

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Term and Termination

This is just legal-speak for "duration of beta test". Here you will want to specify the initial intended duration of your beta test after which the granted license will be terminated. If your beta test is not time-boxed, you will also want to mention extensions to the test and how they will be announced. Moreover, this is where you should establish both parties' right to terminate this agreement and on what grounds. Generally, in beta test agreements, both parties are granted the right to terminate the agreement for any or no reason upon providing a notice.

Here is an example from Talend:

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Feedback

Feedback is what beta testing is all about, and in this clause, the testers' feedback responsibilities are specified. In most cases, feedback is explicitly stated to be a responsibility of the tester and mentions some of the expected types of feedback (bug reports, feature requests, etc.). Less often, the clause will include the feedback and reporting channels to be used by the testers. More importantly, developers need to use this clause to acquire the needed licensing over the feedback provided. This is necessary as a legal safeguard before using the feedback in development or marketing.

Here is an example from Slitherine:

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Confidentiality and Non-Disclosure

Obviously, this clause is only used in closed beta test agreements and is used to maintain its confidentiality. Here, the testers agree to not disclose any information related to the app (features, code, architecture, etc.), or its testing (bugs, crashes, performance, etc.) without prior written consent from the developer. Often, testers also acknowledge that any breach of this clause can cause irreparable damage to which the developer is entitled to injunctive and/or equitable relief.

Some provisions are made for information that might be publicly available and the duration through which the NDA remains effective. Additionally, you will want to specify the duration throughout which the NDA will remain in effect and whether it will survive the termination of the agreement and for how long.

Here is an example from Syngli:

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Support

You may or may not be providing support for your app to your testers, either way, this is where you list your support terms. Regardless of what level of support you decide to provide, you want to state that it is provided at your sole discretion to assist them in their testing activities.

Here is an example from Apple:

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Privacy Policy

If you plan for your app to collect any user information (which you probably will), especially personal information, you will need to include a privacy policy. Privacy policies are required by law in the US, Canada, Europe, and many other countries for any company that gathers personal data from their customers. Furthermore, Apple, Google, Microsoft, and many other third parties require developers for their platforms to have a privacy policy in place.

This is where you address the collection, storage, and use of tester data and their purpose. If any of that information is to be shared with a third party, you should explicitly mention it along with its purpose as well. There can be additional requirements depending on the region you operate in to comply with regulations like the GDPR, CCPA, or others.

Here is an example from TheScore:

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Fees and Payment

In case you are not providing the beta app free of charge, this is where you set your payment terms. Specify the price you will be charging and the methods of payment you prefer or accept. On the other hand, paid testers are usually handled by a third-party service.

Here is an example from Kony App Playground:

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Modification

In this clause, the developer establishes his right to modify the terms of the beta agreement and whether that requires the tester's consent. It should also include the developer's responsibility, if any, to notify the testers of these changes and the accepted channels for this notification. Generally speaking, the more beta testers you include, the more flexibility you will want to have for modifications.

Here is another example from Talend:

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Assignment

Assignment refers to a party's right to assign or delegate any of their responsibilities or obligations to other entities. Developers will want to restrict testers from assigning their obligations as it is uncalled for in beta testing. On the other hand, occasionally, the developer might need to delegate some of their responsibility to a third party. In that case, you should establish that in this clause, detailing the obligations you may assign and whether prior consent is required from the tester.

Here is an example from Kidizen:

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Severability

In the event that a court finds any clause or provision in the agreement illegal or unenforceable, severability ensures that only that clause is voided with the rest of the agreement remaining in effect. It can also be drafted to enable a revision of the clause to make it enforceable rather than nullifying it altogether.

Here is an example from Ampetronic:

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Governing Law and Jurisdiction / Arbitration

Parties entering the beta test agreement can specify their preferred dispute resolution method in this clause. You can specify a venue and jurisdiction where any disputes will be resolved, according to that jurisdiction's laws. Alternatively, both parties can agree to submit to binding arbitration, where they settle their disputes away from courts through mutually chosen arbitrators. Furthermore, a mix of both approaches can be used, if you specify the arbitration to be non-binding.

Here is an example from Splunk:

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After drafting your Beta Participation Agreement, you need to communicate it to your users and get their legal consent. Generally speaking, you will want to make your BPA available for your users on your website and/or in-app to better track the users' consent. There are two main approaches you can take:

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Browse-wrap agreements

Browse-wrap agreements use implied consent, i.e. the users do not express their consent but imply it through their use of the app. In this type of agreement, all you need is a notice that tells your users that by using the app they agree to your terms of service and privacy policy, and provide a link to the agreement. However, the notice must be conspicuous enough to avoid any claims that they were unaware of the agreement and the notice.

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Click-wrap agreements

Conversely, click-wrap agreements use explicit consent and require the user to indicate their consent by clicking a button or checking a box. In this case, users cannot claim that they were unaware of the agreement and are bound by its terms.

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While both approaches have their merits, click-wrap agreements offer a legal and a strategic advantage that makes them preferable for betas. First, the explicit consent provided by your users prevents situations where they may claim to have not been aware of the agreement notice. In legal precedents, browse-wrap agreements have a much longer record of being found unenforceable since it is up to the court to determine if your notice was conspicuous enough. Second, as we have mentioned before, formalizing the agreement with your testers helps them appreciate the importance of their roles. Click-wrap agreements, by requiring explicit consent, make your testers more likely to actually read the agreement and comply with it.