API license agreement template

API License Agreements allow businesses to share their APIs with third parties while maintaining control over their intellectual property.

But what are API License Agreements, who uses them, and how can you create one? Keep reading to find out.

What is an API License Agreement?

API stands for Application Programming Interface, and an API License Agreement is a legal document that outlines the terms and conditions under which a third party can use a company's API.

APIs are used to allow different software applications to communicate with each other. They are a key tool for businesses that want to extend their services to third-party developers, enabling them to build applications that interact with the original software.

If businesses want to share their APIs while protecting their intellectual property and maintaining control over how their APIs are used, an API License Agreements is crucial. They can also be called API Terms of Service or API Terms of Use. Check out the sample API agreement above to get an idea of what this agreement looks like.

When should you use an API License Agreement?

API license agreements can be used in a variety of situations. We've broken down the most common use cases for you below.

1. Sharing your API with third-party developers

‍When you share your API with third-party developers, you want to ensure that they use it in a way that aligns with your business goals and doesn't infringe on your intellectual property rights. An API License Agreement can help you set clear terms and conditions for the use of your API.

2. Integrating your software with other applications

‍If you're integrating your software with other applications, you'll likely need to use their APIs. In this case, you'll need to agree to their API License Agreement.

3. Building a developer community around your software

‍If you're building a developer community around your software, you'll likely want to share your API with those developers. An API License Agreement can help you set clear expectations for how your API can be used.

4. Monetizing your API

‍If you're monetizing your API, an API License Agreement can help you set clear terms for payment and usage.

Who creates API License Agreements?

API License Agreements are used by businesses that provide APIs to other businesses, developers, or users. These could be tech companies, software developers, or any business that has developed an API as part of its services.

The agreement is typically entered into when a third party wants to use the API to integrate their own software or services with the API provider's services.

However, you may find that legal counsel will often create and own the API License Agreement templates, and they will usually have approval rights too.

This makes sense because API license agreements are particularly complex, as there's a level of technical and legal expertise required when drafting them.

What information should be protected by an API License Agreement?

The information that your API License Agreement covers will depend on the needs of your business and how you choose to operate.

However, certain categories of information almost always warrant protection. Here are some common examples of API License Agreement-protected information:

• API documentation
• API keys
• Usage limits
• Payment terms
• Intellectual property rights
• Confidentiality obligations
• Termination rights

With all of this in mind, what should an API license agreement template actually include?

What is in an API License Agreement template

Creating a comprehensive API License Agreement is key to ensuring that your company’s API and associated intellectual property remain protected against misuse.

Therefore, it is critical that you include all of the important information and necessary clauses within your API License Agreement. We've listed out a few of these elements below to help you get the basics right.

1. Details of the parties involved

‍Your API License Agreement should include basic information about the parties involved and the people that the agreement will cover. This should refer specifically to the different groups and individuals involved in the agreement.‍

2. Definition of the API and its use

‍When drafting an API License Agreement, you need to set out a clear scope of what the API is, how it can be used, and any restrictions on its use.

This may vary between parties and case uses, but each and every API License Agreement needs to define clearly what the API is and how it can be used.

3. Restrictions on use

Your agreement should clearly state any restrictions on the use of the API. This could include prohibitions on reverse engineering, modifying, or sublicensing the API, or using it for illegal activities.

4. Term of the agreement

‍As with all contracts, API License Agreements should clearly define the contract's duration. This describes how long the API license agreement will be effective for / how long it will last.

5. Intellectual property rights

‍The API License Agreement should clearly state who owns the intellectual property rights to the API and any associated materials. It should also outline the extent of the license granted to the user.

6. Confidentiality obligations

‍The API License Agreement should include a clause that outlines the user's obligations to keep certain information confidential. This could include technical information about the API, business information, or other sensitive data.

7. Termination rights

The API License Agreement should outline the circumstances under which the agreement can be terminated. This could include breach of the agreement, non-payment, or other specific conditions.

8. Legal jurisdiction

‍An API License Agreement should also outline what jurisdiction(s) the legal agreement will be governed under if a dispute arises.

9. Additional clauses

‍Depending on the situation, some API License Agreements may require additional clauses on issues like indemnity, limitation of liability, and future contract amendments, all of which should be outlined from the offset.

Are API License Agreements legally binding?

Like all other business contracts, API License Agreements are legally binding, which means that they are enforceable by law and within courts - so long as they are written and used correctly.

That's why it's important to get them right first time.

How are API License Agreements typically managed?

However, even with an exhaustive list of what to include, creating an API License Agreement can be hard work.

Currently, it's repetitive with lots of tools and an abundance of back and forth.

The process

1. The individual that needs to create an API license agreement reaches out to the legal team to request one. The legal counsel, usually buried in low-value admin work already, tells them to look for an existing API license agreement template on the shared drive.

2. The contract owner eventually finds a contract template (not necessarily the most current version) and populates it by filling out all of the fields.

3. They then email the first draft to the legal team to review. Legal makes their corrections and send the revised version back, probably via email again.

4. Once approved internally, the API License Agreement is shared with the the counterparty for negotiation.

5. They add their comments, suggestions and redlines before emailing back a new version. If there are still disagreements over the terms, this back and forth will continue until terms are agreed.

6. Eventually, an agreement is reached and both parties sign the API license agreement, either with a wet signature or an eSigning tool.

7. Once signed, the API License Agreement is emailed to the relevant parties and stakeholders (legal, sales, and so on), and hopefully saved on a shared drive.

Although, its worth noting that the data within the API license agreement is rarely tracked.

Limitations of manually creating API License Agreements

As we've just outlined, creating API License Agreements from scratch is no easy task.

Here are some of the common hurdles our clients have encountered before they transitioned to an automated contract workflow:

• Time wasted: "As the Chief Legal Officer, I'm in charge of all legal matters for the company, yet I find myself repeatedly guiding colleagues to locate a document on our shared drive."
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• Uncertainty over versions: "As a product manager, I'm always unsure if I'm using the latest template - are these terms current?"
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• Unprofessional: "Our API License Agreements are inconsistent and not standardized - this not only poses legal risks but also appears unprofessional."
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• Confusing: "Negotiations over these API License Agreements are getting lost in my email threads."
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• No visibility "I don't have post-signature visibility of our API License Agreements - I'm unsure about the commercial relationships governed by these agreements."

Automate your API License Agreements

The good news is, there's a more efficient and quicker way to create API License Agreements - you can automate them in Juro.

By adopting an all-in-one contract management solution like Juro, you can save time, reduce your tech stack, and free up your legal team for more strategic tasks.

With Juro's automated templates, you can generate API License Agreements in a matter of seconds. Here's how:

1. Create automated API License Agreement templates

‍In most companies, the legal team will want to maintain control over the content of an API License Agreement and its usage.

In an automated workflow, in-house lawyers establish and modify the terms of the API License Agreement using a contract template.

This allows other departments to self-serve on contracts from the template without changing the core language of the agreement. In other words, they can create API license agreements themselves without inviting risk.

2. Generate API License Agreements from templates

‍At Juro, we see a diverse range of business users self-serving API License Agreements from templates.

This is most commonly done by product and engineering teams, who send API License Agreements to third-party developers. But in an automated workflow, parties can use the Q&A flow to input key data in smart fields, such as the counterparty's name and email address, the contract's effective date, etc.

This data then auto-populates the contract template, generating a draft API License Agreement in seconds.

3. Negotiate API License Agreements in your browser

Once the draft API License Agreement is generated, the user can send it to the counterparty for negotiation.

Instead of emailing the contract back and forth, the parties can negotiate in-browser, with changes tracked in a detailed audit trail. This provides visibility into who made changes and when.

4. Sign API License Agreements electronically

‍Once the parties have agreed on the terms of the API License Agreement, they can sign it electronically.

This eliminates the need for a separate eSignature provider and makes getting contracts signed much quicker and easier.

5. Store API License Agreements in Juro's repository

‍After the API License Agreement is signed, it is automatically stored in a searchable contract repository. This makes it easy to find and reference the contract in the future.

The repository also provides analytics on the contract, such as how long it took to negotiate and sign, and when it will expire.

6. Track your API License Agreements

As the expiration date of the API License Agreement approaches, the contract automation platform can send automated reminders to the relevant parties.

This helps to ensure that the contract is renewed in a timely manner and that the business relationship continues uninterrupted.

Ready to automate your API License Agreements?

If you're ready to start automating your API License Agreements, get in touch with us today to see how Juro can help.

We can show you how to create API License Agreements in seconds, negotiate them in-browser, sign them with eSignature, and store them in a searchable repository.

Plus, with automated reminders, you'll never miss a renewal date again. Hit the button below for your personalized demo.