Disclosure of Third-Party Information

Disclosure of Third-Party Information

A common misunderstanding regarding the scope of NDAs is that if Party 1 signs an NDA with Party 2 (“NDA I”), and Party 1 also has an NDA with Party 3 (“NDA II”), then Party 1 may disclose information received from Party 2 under NDA I with Party 3 under NDA II. Party 2 is not a party to NDA II and is technically a “third party” for purposes of NDA II. Without express language permitting Party 1 to transfer Party 2 information to Party 3, Party 1 is not authorized to disclose any Party 2 information to Party 3, even if Party 3 has signed an NDA with Party 1 under NDA II.

The following exemplar does not permit a party receiving confidential information under the NDA to disclose such information to a third party:

Exemplar N9-1

This NDA shall not be deemed to: (a) modify or limit any separate non-disclosure agreement between two or more Parties (each, a “Separate NDA”); or (b) permit a Party to this NDA to disclose another Party’s Confidential Information to any third party (e.g. under a Separate NDA or to unaffiliated third parties) or for any reason other than the Purpose, except as expressly permitted by the other Party.

By contrast, in this exemplar, the receiving party acknowledges that its confidentiality obligations apply to third-party confidential information disclosed by the disclosing party:

Exemplar N9-2

Notwithstanding anything in this Agreement to the contrary, Recipient acknowledges and agrees (a) that certain information disclosed by or on behalf of Disclosing Party pursuant to this Agreement may relate to third parties with whom Disclosing Party owes confidentiality obligations pursuant to confidentiality or nondisclosure agreements, (b) to maintain the confidentiality of such information consistent with said agreements and (c) for the avoidance of doubt, any such information disclosed by or on behalf of Disclosing Party shall be deemed to be Confidential Information. Recipient will be responsible for any actions taken by its Representatives in violation of the terms of this Agreement or that would be deemed a breach of this Agreement if Recipient had taken such actions.

In the following exemplar, the parties specifically contemplate and permit one party (the Customer) to disclose confidential information received from a specific third party (i.e., the Customer’s agent, a Service Provider) to the receiving party, which shall treat such third-party information as it would confidential information of the Customer:

Exemplar N9-3

Customer’s Service Provider shall be deemed the “Receiving Party” and Company shall be deemed the “Disclosing Party” with respect to any Company Confidential Information disclosed by Customer to Customer’s Service Provider. Customer shall identify any Company Confidential Information as such at the time of disclosure to Customer’s Service Provider, but if such information is not so identified, Customer’s Service Provider shall nevertheless treat as Confidential Information any information a reasonable person should understand to be confidential or proprietary.