ARTICLE
24 March 2025

API Licensing In Nigeria

BH
Balogun Harold

Contributor

Balogun Harold is a specialist law firm for investment and financing transactions focused on Africa. We routinely undertake debt finance, private equity, project finance, venture capital, market entry and technology transactions on behalf of clients. We deliver proven, guaranteed and exceptional outcomes by always aiming for the best level of legal and transactional support necessary to achieve our clients' strategic goals.

A U.S.-based software vendor, which provides financial analytics tools licensed its proprietary API to a local fintech startup.
Nigeria Technology

A U.S.-based software vendor, which provides financial analytics tools licensed its proprietary API to a local fintech startup. The API enabled the fintech company to integrate real-time financial data into its app for end users. A dispute arose when the software vendor alleged that (a) the local fintech start-up had exceeded the agreed-upon usage limits in the licensing agreement and; (b) the local fintech start-up was sharing data with unauthorized third parties. The fintech company countered by claiming that the agreement terms were unclear and that the vendor had unfairly terminated access, causing operational disruptions and customer complaints.

Approach & Outcome

In resolving the API licensing dispute, we (a) conducted a comprehensive review of the API licensing agreement to identify the relevant clauses on usage limits, fees, and data-sharing restrictions (b) advised on the need to engage forensic IT experts to analyze API logs to establish the claims of the software vendor, on a cost-shifting cost basis (c) Based on the outcome of the forensic audit, we engaged in mediation with the counterparty and presented objective evidence of unauthorised data sharing activities and excess usage. On the foregoing basis, the parties agreed to clarify the licensing agreement with regards to usage gaps, data sharing permissions and specific monetary penalties for breaches. The parties also agreed on updated terms reflecting a transparent and time-bound escalation mechanism before access termination.

Key Takeaways

The key takeaways for us on this instruction are that:

  1. Clear Contracts Are Crucial
    Ambiguities in licensing agreements can lead to costly disputes. It is essential to define usage terms, pricing, and penalties in detail and in such a way to recognise the jurisdictional and legal peculiarities of a customer in another jurisdiction.
  2. Forensic Evidence Strengthens Cases
    Leveraging IT forensics to verify breaches can be decisive in resolving technology disputes.
  3. Strategic Mediation Prevents Avoidable EscalationEarly-stage negotiations and settlements can save time, costs, and reputational damage for all parties involved.
  4. Legal Review and Negotiation of API Agreements are Crucial

API Agreements are often critical to the success and competitiveness of start-ups. It's often important to engage experienced legal counsel to review and provide strategic legal advice, as necessary. In this case, the local fintech start-up simply signed on to the standard license agreement provided by the software vendor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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