The Anatomy of an API License Agreement

Application Programming Interfaces, or API’s, were once internal tools for companies. Now, entire businesses are built off API products. But, selling an API product isn’t exactly like selling a Software as a Service or a licensed software.

There are some specific nuances that need to be contractually identified to protect your business and your intellectual property when it comes to APIs.

This post will give you a high level overview of what goes into an API License Agreement.

  1. Definitions – each contract has a “Definitions” section to outline what specific meanings are being given to terms throughout the contract. For API License Agreements, this section should specifically identify what your API does, what an API Key means, and what the product the API will be interfacing with. “Licensor” is you, the maker of the API, and “Licensee” is your customer.
  2. License Grant – this section will specifically lay out what kind of limited, non-transferable license you are offering your customers to the API integration, and ensuring that your customer is using the API integration for specific purposes.
  3. Use Restrictions – this section will lay out what your customer is NOT allowed to do with the API – such as reverse engineer, or do downlight illegal activity with.
  4. Licensee Responsibilities – use this section to lay out the responsibilities of your Licensee, including but not limited to ensuring that the Licensee is liable for all uses of the API resulting from the access provided, and specifying that the licensee should comply with all terms and conditions of your product as well.
  5. Support and Updates – this section lays out what kind of support you are offering your licensee, and how they can get updates to the API product.
  6. Fees and Payment – self explanatory, but this is how you get paid.
  7. Confidential Information – it’s best practice to have built in confidential information clauses in any agreement relating to software. This section will identify what is considered confidential, and what can and cannot be done with that information.
  8. Security – this section lays out what kind of information security standards you and your licensee will be held to.
  9. Collection and Use of Information – this section allows you, the licensor, to collect information from your licensees use of the API – and use that information to improve upon your product.
  10. User Agreements – this ensures that your licensee enters into valid and binding licensing agreements with all end users of the application the API interfaces with.
  11. Intellectual Property Ownership and Feedback – the all-important section that ensures that you own the intellectual property to the API and all feedback given by the customer to improve upon the product, and you are not signing over anything to your licensee.
  12. Term and Termination – how long does customer have access to this license, and under what circumstances can either of you terminate the agreement.
  13. Representations, Warranties, and Covenants – an important section that should have API specific terms that ensures that your licensee has notified all users of the applications that their data will be transmitted outside of their service, and disclaiming your responsibility.
  14. Warranties, Indemnification, and Limitation of Liabilities – important terms that should be discussed with your attorney about how to best protect your business.
  15. Miscellaneous Provisions – which include important terms around notices, amendments, choice of law, arbitration, and equitable relief.

Let us Help

This post is just a high level overview of what should be in your API License Agreement. There are many more nuances and specifics around this, and you should have an experienced attorney help you through it to make sure you and your customers are protected.

Kader Law can help you draft a solid API License Agreement, review incoming MSA’s, and negotiate for you. If you’re interested, feel free to contact us.

This post is not legal advice, and does not establish any attorney client privilege between Law Office of K.S. Kader, PLLC and you, the reader.