Most confidentiality agreements define the term "Confidential Information." We propose a new concept called "Protected Information," which is intended to align the term with other emerging standards of data protection, such as personal and government information.
The Confidential Information clause defines what the parties deem to be proprietary and protected by the terms of the agreement. The clause typically defines what is, and what is not, confidential.
Scope: what is the scope confidential information? What is included?
(a) Broad (all non-public)
(b) Narrow (date defined)
(d) Specific information (business, financial, technical)
Our analysis shows that the definition of the excluded items is very consistent, while the definition of the information covered by the provisions is highly variable.
As noted by Yoichiro ("Yokum") Taku, a partner at Wilson Sonsini Goodrich & Rosati, "[th]e discloser will want a broad definition of confidential information and may also want third party confidential information to be deemed confidential. The receiver will want to narrow the definition of confidential information in order to limit the scope of the information requiring compliance with confidentiality obligations. What is important in a confidentiality agreement or non-disclosure agreement (NDA)? VCs may not want an agreement fearing such attribution of information and may prefer a Non-Confidentiality Agreement, providing that the parties may freely use all information disclosed.
Confidential Information. "Confidential Information" means all material, non-public, business-related information, written or oral, whether or not it is marked that is disclosed or made available to the receiving party, directly or indirectly, through any means of communication or observation.
Confidential Information. For purposes of this agreement, "Confidential Information" includes:
any trade secret, know-how, invention, concept, software program, source code, object code, application, documentation, schematic, procedure, contract, information, knowledge, data, database, process, technique, design, drawing, program, formula or test data, work in progress, engineering, manufacturing, marketing, financial, sales, supplier, technical, scientific, customer, employee, investor, or business information, whether in oral, written, graphic, or electronic form;
any non-public business information, including personnel data, correspondence with any Governmental Authority, historical customer information and data, historical cost information such as budgets, operating expenses, and capital costs, and projected capital additions, operating cost information, and other business, and financial reports and forecasts;
any document, diagram, photograph, drawing, computer program, or other communication that is either conspicuously marked "confidential", or is known or reasonably should have been known by the Receiving Party to be confidential; and
any advice, information, exhibits, documentation, or any other information that the Receiving Party should reasonably expect would be protected by attorney-client privilege or work product doctrine or other applicable privileges.
Confidential Information. For purposes of this agreement, "Confidential Information" shall mean:
financial statements, business plans, strategic plans, proprietary market information, analyses, compilations and any other strategic, competitively sensitive or proprietary information shared between the parties as a result of the discussions contemplated by this agreement;
this agreement and all documents and materials relating thereto and to the negotiation and execution thereof, including, without limitation, the existence of this agreement and the fact of negotiations taking place between the parties; and
all observations, estimates, conclusions, ideas or concepts reasonably related to Confidential Information disclosed to the other party.
Confidential Information. For purposes of this agreement, "Confidential Information" means:
all trade secrets, proprietary, and other information that is disclosed to or acquired by the Employee during or in the course of employment that relates to the business of the Employee and is not generally available to the public, or generally known in the industry;
customers' identities and requirements, customer lists, suppliers' identities and products, pricing information, product price discount information, manufacturing processes and procedures, new product research, financial information not generally available to the public, and other non-public information; and
any techniques, know how, processes or combinations thereof, or compilations of information, records and specifications, utilized or owned by the Employer, development, marketing, pricing, business methods, strategies, financial or other analyses, policies, or business opportunities.
Confidential Information. "Confidential Information" means all trade secrets, know-how, business and financial information, and other proprietary information or data disclosed to one party by the other, or incorporated in materials or products provided to one party by the other and marked or indicated to be confidential.
Confidential Information. In this agreement, "Confidential Information" means all material, non-public, business-related information, written or oral, whether or not it is marked as confidential, that is disclosed or made available to the recipient, directly or indirectly, through any means of communication or observation by the disclosing party or any of its Affiliates or Representatives.
1. Breadth: in general
Mary Hanson notes that if the definition is too broad, it may risk being unenforceable. "If [the] definition is too broad or vague, the agreement can't be enforced. This description needs to define the confidential information well enough to be enforceable, yet not disclose the confidential information itself."
The California business lawyer continues, stating "Trying to cover too much information by defining the confidential information as "all business information" may backfire. It is important to try to identify particular information, without giving out valuable information." Id
The clause may even attempt to cover anything the discloser wants to be treated as confidential, such as "Confidential Information means information that any Party desires to maintain as confidential or secret, which is supplied or provided to any other Party." This clause, may, however, be too vague to be enforceable.
Note the use of the term "observation" which indicates an intention to include residual or derivative information, discussed below.
2. Specific and Marked Information
The breadth of confidential information can be narrowed by limited the scope to (i) marked information, (ii) written information, (iii) specific categories of information, (iv) information given during a specific period of time
3. Information Defined by Categories
In addition to defining information with specific categories; other examples apply broad categories such as "information that which is not generally known outside [the Disclosing Parties] or its subsidiaries or affiliates" or "information not otherwise available to the general public at the time of such disclosure" or "information that under the circumstances surrounding disclosure, ought to be treated as confidential."
4. Third Party Information
The clause may seek to include third party information, such as "information disclosed …whether or not prepared by the disclosing party."
5. Residuals or Derivatives
"Residual clauses are recipient-friendly exceptions to the prohibitions against the use and disclosure of confidential information and may be used to protect the recipient when the recipient is in the same field of business or developing a similar product as the discloser. Generally, a residual clause allows the recipient to use information that is retained by the unaided memory of employees who had access to it."