Confidential Information: Definition and Descriptions

NDA

Confidential Information: Definition and Descriptions

Arguably the most fundamental term in any NDA is the definition of what constitutes “Confidential Information” subject to the non-disclosure/non-use obligations in the NDA. There are many ways to structure a suitable definition of the key term “Confidential Information.” Whatever way is used, the parties may generally prefer to avoid overly narrow definitions of what constitutes “Confidential Information” and instead be more inclusive than exclusive when it comes to what kinds of information should be protected under the NDA.

Lists

A party may be required to use an NDA that expressly lists out the types of information that is to be subject to the confidentiality obligations of the agreement. A problem with listing information types that constitute confidential information is that the list must be extremely comprehensive and/or open-endedly inclusive. If you are faced with an NDA that requires the actual enumeration of categories of protected information, the following exemplars contain some exemplary lists to cross-check against:

Exemplar N4A-1

“Confidential Information”: marketing strategy, product concepts, business models, development and time-to-market projections, product specifications, design and features, customer base, forecasts, service strategy, business terms, pricing and other financial data and conditions and/or distribution strategy related to Company’s proprietary solutions and related products.

Exemplar N4A-2

Notwithstanding anything to the contrary, the following information shall constitute Confidential Information whether or not marked as such: computer programs, technical drawings, algorithms, know-how, formulas, processes, ideas, inventions (whether patentable or not), schematics and other technical, business, financial, customer and product development plans, forecasts, pricing, strategies and information.

Exemplar N4A-3

Exemplar N4A-4

“Confidential Information” shall include (a) any materials, trade secrets, know-how, formulas, processes, algorithms, ideas, strategies, inventions, data, network configurations, system architecture, designs, flow charts, drawings, proprietary information, business and marketing plans, financial and operational information, and any other non-public information, material or data relating to the past, current and/or future business and operations of the Disclosing Party, or (b) any analyses, compilations, studies, summaries, extracts or other documentation prepared by the Receiving Party based on Confidential Information (collectively, “Studies”).

Exemplar N4A-5

As used herein, the term “Confidential Information” shall mean any and all information, technical data and know-how which one Party (the “Disclosing Party”) discloses to the other Party (the “Receiving Party”), which is or may be related to (a) the business, present or future, of the Disclosing Party or its affiliates, (b) the technology or products of the Disclosing Party or its affiliates, (c) the research and development or investigations of the Disclosing Party or its affiliates, (d) the business of any customer of the Disclosing Party or its affiliates, (e) the terms and existence of this Agreement, and (f) any other information which is or should be reasonably understood to be Confidential Information of the Disclosing Party or its affiliates.

Catch-All Buckets

The following exemplars contain language that create so-called “catch-all” buckets that are broad enough to capture documents and items that may elude other standard information-type categories. They do so by employing the following common standards:

Reasonableness or Reasonable Person Standard

Exemplar N4A-6

For purposes of this Agreement, “Confidential Information" means any information or materials disclosed by one party to the other party that: (i) if disclosed in writing or in the form of tangible materials, is marked "confidential” or “proprietary” at the time of such disclosure; (ii) if disclosed orally or by visual presentation, is identified as “confidential” or “proprietary” at the time of such disclosure, and is summarized in a writing sent by the disclosing party to the receiving party within thirty (30) days after any such disclosure; or (iii) due to its nature or the circumstances of its disclosure, a person exercising reasonable business judgment would understand to be confidential or proprietary.

Exemplar N4A-7

Confidential Information shall include only the information which (a) is marked or designated as such (orally or in writing) at the time of disclosure or, (b) under the circumstances surrounding disclosure, should reasonably be treated as confidential by the Receiving Party.

Exemplar N4A-8

Recipient shall keep confidential all information shared with it by Discloser about Discloser's business plan, internal affairs, confidential technical information about the technology of Discloser and/or other information: (a) which Discloser identifies as confidential; (b) which a reasonable person should judge to be private and confidential and should expect is not to be disclosed to competitors, to persons who do not need to know or use it, or to the public; or (c) which is nonpublic information disclosed by Disclosure to Recipient in connection with the discussion of a proposed business relationship (“Confidential Information”). Confidential Information may be written, oral, or in other forms and may or may not constitute the basis of protectable intellectual property.

This exemplar attempts to define the exercise of “reason”:

Exemplar N4A-9

As used in this Agreement, “Confidential Information” means information not generally known to the public, whether of a technical, business or other nature that relates to the Project stated above or that, although not related to such Project, is nevertheless disclosed as a result of the Parties’ discussions in that regard, and that should reasonably have been understood by the Receiving Party, because of (i) legends or other markings, (ii) the circumstances of disclosure or (iii) the nature of the information itself, to be proprietary and confidential to the Disclosing Party. Confidential Information may be disclosed in written or other tangible form (including information in computer software or held in electronic storage media) or by oral, visual or other means.

The following exemplars base reasonableness on the “context” or “nature” of the disclosure:

Exemplar N4A-10

“Confidential Information” shall include only the information which (a) is marked or designated as such (orally or in writing) at the time of disclosure or, (b) under the circumstances surrounding disclosure, should reasonably be treated as confidential by the Receiving Party.

Exemplar N4A-11

With respect to each party, for purposes of this Agreement the term “Confidential Information” means any information of the disclosing party or a third party, which if disclosed in a tangible form is marked using a legend such as “Confidential” or “Proprietary” or if not so marked, is reasonably understood by the receiving party from the context of disclosure or from the information itself, to be confidential.

Exemplar N4A-12

Any information provided by Discloser that (a) is in writing and marked “confidential” or other similar legend; (b) is in the form of device, product, materials samples, or benchmark results derived from the Confidential Information; (c) is disclosed in any other manner and identified as confidential at the time of disclosure; (d) by its nature would reasonably be considered of a confidential nature, and the Recipient, due to the context in which the information was disclosed, should have reasonably known it to be confidential; or (e) is information learned as a result of a visit to Discloser’s site.

Exemplar N4A-13

“Confidential Information” means any and all proprietary and/or confidential data and information that it may disclose (directly or indirectly, whether in writing or other tangible form, or orally, visually, electronically or other intangible form) to Recipient (including, without limitation, data and information related to: products and roadmaps, marketing plans, strategies, business plans, finances and prices, customers, suppliers, vendors, business partners, services, software, hardware, research and development, methods, techniques, drawings, designs, specifications, know-how, ideas, inventions (patentable or otherwise) or patents), which (a) is marked as “confidential” or “proprietary” or the like when disclosed, or (b) is unmarked (e.g., orally disclosed) but treated as confidential at the time of disclosure and is summarized and described as confidential in a writing that is delivered to Recipient within 30 days of disclosure, or (c) a reasonable person would recognize as confidential or proprietary considering the nature of the information and the circumstances of disclosure.

The following exemplar relies on a “reasonable business judgment” standard:

Exemplar N4A-14

“Confidential Information” means any data or information that is of value to the Disclosing Party, is not generally known in the industry or to competitors of that Party, and is identified as being confidential at the time of disclosure or would be understood by the Parties, exercising reasonable business judgment, to be confidential.

The following exemplars employ a hybrid of the “reasonableness” and “exemplary list” approaches:

Exemplar N4A-15

“Confidential Information” means nonpublic information disclosed by a party (“Disclosing Party”) to the other party (“Receiving Party”) under this Agreement. Confidential Information may include, but is not limited to, specifications, designs, process information, technical data, marketing plans, business plans, customer names, product roadmaps, pricing, prototypes, toolkits, software, and/or intellectual property. Confidential Information must be marked as “confidential,” “proprietary,” or similar legend. If disclosed in verbal or visual form, Confidential Information must be reduced in writing, marked, and delivered to the Receiving Party within thirty (30) days. Notwithstanding the foregoing, Confidential Information shall include all information that is known to the Receiving Party, or reasonably should be known to the Receiving Party, to be confidential.

Exemplar N4A-16

Confidential Information” means any information owned or disclosed by or on behalf of a Party or any of its Affiliates (the “Disclosing Party”) (a) that is marked as confidential, proprietary, or with a similar legend; (b) that is otherwise confirmed to be confidential or proprietary; or (c) that the Party or its Affiliate receiving the information (the “Receiving Party”) should reasonably believe to be confidential based upon its content, including, without limitation, any materials, trade secrets, know-how, formulas, processes, algorithms, ideas, strategies, inventions, data, network configurations, system architecture, designs, flow charts, drawings, proprietary information, business and marketing plans, financial and operational information, and any other non-public information, material or data relating to the past, current and/or future business and operations of the Disclosing Party. Confidential Information shall include any analyses, compilations, studies, summaries, extracts or other documentation prepared by the Receiving Party based on Confidential Information (collectively, “Studies”).

Obvious Standard

Exemplar N4A-17

All physical items, such as computer diskettes, written or printed materials, video or audio tapes, or electronically communicated materials furnished by one Party (“Providing Party”) to the other (“Receiving Party”) which the Providing Party may desire to be treated as proprietary or confidential shall be clearly marked “(Name of Party)” and “PROPRIETARY” or “CONFIDENTIAL” or with words of similar import. In the event that in the course of oral exchange of information any Party is informed that such information is of a proprietary nature, the information will be accorded the status of proprietary information. Furthermore, if it is obvious or otherwise apparent that the information provided is of a proprietary or confidential nature, it will be treated as such by the Receiving Party. If the Receiving Party is uncertain regarding the classification of information received, it will seek written clarification from the Providing Party.

Exemplar N4A-18

As used in this Agreement the term "Confidential Information" shall mean any and all technical or business information, including third party information, in whatever form or medium, furnished or disclosed by one Party to the other including, but not limited to, products/services specifications, prototypes, computer software, hardware samples, models, drawings, marketing plans, financial data, and personal statistics, which are marked as confidential or proprietary by the disclosing Party, or, for information which is orally disclosed, the disclosing Party indicates to the other at the time of disclosure the confidential or proprietary nature of the information and confirms this in writing to the receiving Party within thirty (30) days after such disclosure that such information is confidential, or, any information so disclosed, the nature of which makes it obvious that the information is proprietary or confidential.

“Should Know” Standard

Exemplar N4A-19

Notwithstanding the foregoing, any information that the Receiving Party knows (or should know under all of the circumstances), is confidential or proprietary information of the Disclosing Party, will be deemed to be Confidential Information whether or not confirmed in writing and whether or not marked as “Confidential” or with words of similar import.

“Ought To Be” Standard

Exemplar N4A-20

As used herein, “Confidential Information” shall mean information about the disclosing party’s (or its customers or suppliers’) business or activities that is proprietary and confidential, which shall include all business, financial, technical and other information of a party marked or designated by such party as “confidential” or “proprietary”; or information which, by the nature of the circumstances surrounding the disclosure, ought in good faith to be treated as confidential.

Exemplar N4A-21

“Confidential Information” shall mean all information, whether disclosed before or after the Effective Date, that is disclosed in written, oral, electronic, visual or other form by either party (each, as a “Disclosing Party”) to the other party (each, as a “Receiving Party”) and either (i) marked or designated as “confidential” or “proprietary” at the time of disclosure or (ii) disclosed under circumstance under which it ought to be treated as confidential by Receiving Party.

The following exemplar bases the “ought to be” standard on industry practices:

Exemplar N4A-22

The Confidential Information may or may not be marked as confidential by the Disclosing Party. Each party agrees to treat as Confidential Information any and all information that is either designated as proprietary and/or confidential or ought in good faith to be treated as proprietary and/or confidential based upon reasonable understanding of general industry practices.

Related to the Purpose

In the following exemplars, the parties also tie the breadth of confidential information to the stated Purpose of the agreement:

Exemplar N4A-23

All information disclosed between the parties in furtherance of the Purpose prior to, and in anticipation of, the execution of this Agreement shall be deemed “Confidential Information” for purposes of this Agreement.

Exemplar N4A-24

Notwithstanding the obligations to only use the information for the business purpose outlined above, information disclosed by the parties shall be subject to the restrictions of this section even if such information may be construed as beyond the scope of the above business purpose.

Automatically Deemed Confidential

In the following exemplars, the parties mandate that any information learned while on the discloser’s site is automatically deemed confidential.

Exemplar N4A-25

Information of a Disclosing Party shall be deemed to be confidential or proprietary only if it is Marked or otherwise identified by the Disclosing Party as being confidential or proprietary, provided that if it is orally or visually disclosed (including Information conveyed to an answering machine, voice mail box or similar medium), the Disclosing Party shall designate it as confidential or proprietary at the time of such disclosure. Notwithstanding the foregoing, a Disclosing Party shall not have any such obligation to so Mark or identify, or to so designate, Information that the Disclosing Party discloses to, or is otherwise obtained by, the Receiving Party’s employees, contractors, or representatives (i) who are located on the Disclosing Party’s premises; (ii) who access the Disclosing Party’s systems; or (iii) who otherwise obtain Disclosing Party’s Customer/Personal Information in connections with this Agreement; any such Information so disclosed shall automatically be deemed to be confidential and proprietary. Additionally, the failure to Mark or designate Information will not serve to waive the confidentiality thereof where it is reasonably obvious, under the circumstances surrounding disclosure, that the Information is confidential or proprietary; any such Information so disclosed or obtained shall automatically be deemed to be confidential and proprietary.

Exemplar N4A-26

No Waiver

Finally, the following exemplars ensure that nothing gets inadvertently waived due to some technicality:

Exemplar N4A-27

Additionally, the failure to Mark or designate Information will not serve to waive the confidentiality thereof where it is reasonably obvious, under the circumstances surrounding disclosure, that the Information is confidential or proprietary; any such Information so disclosed or obtained shall automatically be deemed to be confidential and proprietary.

Exemplar N4A-28

For the purposes of this Agreement, “Information” shall mean any information which is confidential in nature or that is treated as being confidential by the Disclosing Party, whether such information is or has been conveyed to the Receiving Party orally or in written or other tangible form, and whether such information is received directly or indirectly, in the course of business discussions or through other investigations by the Receiving Party. Without limiting the generality of the forgoing, Information shall include: (i) any trade secret, technical, financial or business information, data, idea, concept or know-how that is considered and treated as being confidential by the Disclosing Party or any of its affiliates; (ii) any notes, work papers or other documents prepared by the Receiving Party which contain, reflect or are based upon such Information; (iii) the fact that discussions between the Parties have been or are taking place; (iv) the fact that confidential information has been disclosed to the Receiving Party; and (v) the existence of, or terms and conditions of, this Agreement. Information disclosed in tangible or electronic form may be marked or otherwise identified with a legend as being confidential, but in no event shall the absence of such a mark or legend relieve the Receiving Party of the obligation to treat as confidential, information which would be considered confidential by a person exercising reasonable business judgment.

CC

Confidential Information: Definition and Descriptions

NDA

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