Ownership of confidential information clause provides that all proprietary rights are retained by the disclosing party and that the disclosure of information does not convey any right or license to use the information other than for the stated purpose.

Standard Clause

Additional Elements

(a) Derivative Property

“All right, title and interest in and to the Confidential Information and intellectual property produced based on the Confidential Information is and shall remain the sole property of the Disclosing Party. Subject only to the Receiving Party's limited use of the Confidential Information for the purpose set forth above in this Agreement, the Receiving Party acknowledges and agrees that nothing in this Agreement shall be construed as granting any rights, license or otherwise, to any Confidential Information disclosed pursuant to this Agreement, and the Receiving Party shall not violate any of the Disclosing Party's intellectual property or other rights in or to the Confidential Information.”

(b) Express Reservation of IP Rights

“Each party acknowledges and agrees that no license, implied or otherwise, is granted hereby under any patent, copyright, trademark, any application for any of the foregoing or any other intellectual property right. If Confidential Information is or becomes the subject of a patent, copyright, trademark or any application for any of the foregoing, the party originating such Confidential Information will have all the rights and remedies available under such patent, copyright, trademark or application.”

Discussion

1. Derivative Property

The disclosing party may seek to claim ownership of “intellectual property based on the confidential information.” This broad standard would likely include all modifications and extensions short of a “derivative work” as defined by the Copyright Act, in 17 U.S.C. § 101, which would remain the property of the creator.

A “derivative work” is a work based upon one or more pre-existing works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a “derivative work”.

For copyright to be claimed in a derivative work, it must display some creativity of its own to meet the requirement of an “original work of authorship.” The US Copyright Office provides further guidance: “To be copyrightable, a derivative work must be different enough from the original to be regarded as a "new work" or must contain a substantial amount of new material. Making minor changes or additions of little substance to a preexisting work will not qualify the work as a new version for copyright purposes. The new material must be original and copyrightable in itself. Titles, short phrases, and format, for example, are not copyrightable.” US Copyright Office Circular 14: Derivative Works.

2. Ownership of Media

“Ownership retention may even extend to the documents or media in which the secrets are disclosed such that the owner controls not only the underlying intellectual property rights but also the physical embodiment of such rights whether in the form of a document or a tape or disk.  This allows the owner to call in such documents or other media when the relationship which was the occasion for disclosure terminates.” A Practitioner’s Guide to Confidentiality Agreements, Jere M. Webb, page 8.

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