Confidentiality Clause

A Confidentiality Clause is a contract clause that requires parties to a contract to keep certain specified information confidential.

• Context:
  • It can (typically) appear in various types of contracts, such as Employment Contracts, Consulting Agreements, Non-Disclosure Agreements, etc.
  • It can (often) cover Trade Secrets, Proprietary Information, Know-How, and other sensitive Business Information.
  • It can range from covering a narrow set of Confidential Information to very broad categories of information.
  • It can include exceptions to allow for legally-required disclosures or other necessary sharing of Confidential Information.
  • It can (typically) contain Confidentiality Clause Provisions, such as:
    • Definition of Confidential Information Provision (with labels CONFIDENTIAL_INFORMATION_DEFINITION, SCOPE_OF_CONFIDENTIAL_INFORMATION, EXCLUSIONS), which clearly defines what information is considered confidential and protected under the agreement, such as:
      • Confidential Information shall include all non-public information, whether written, oral, visual, or in any other form, relating to the Disclosing Party's business, operations, products, services, plans, strategies, finances, customers, vendors, or personnel,_{(CONFIDENTIAL_INFORMATION_DEFINITION, SCOPE_OF_CONFIDENTIAL_INFORMATION)}¹ but shall exclude information that (a) is or becomes generally available to the public other than as a result of a disclosure by the Receiving Party, (b) was known to the Receiving Party prior to its disclosure by the Disclosing Party, or (c) is independently developed by the Receiving Party without use of or reference to the Confidential Information._(EXCLUSIONS)²
    • Obligation to Maintain Confidentiality Provision (with labels CONFIDENTIALITY_OBLIGATION, NON_DISCLOSURE_OBLIGATION, STANDARD_OF_CARE, DURATION_OF_OBLIGATION), which establishes the duty of the receiving party to keep the information confidential and not disclose it to third parties, such as:
      • The Receiving Party shall maintain the confidentiality of the Confidential Information using at least the same degree of care that it uses to protect its own confidential information, but in no event less than a reasonable degree of care,_{(CONFIDENTIALITY_OBLIGATION, STANDARD_OF_CARE)}¹ and shall not disclose such information to any third party without the prior written consent of the Disclosing Party,_{(NON_DISCLOSURE_OBLIGATION)}² for a period of five (5) years from the date of disclosure._{(DURATION_OF_OBLIGATION)}³
    • Permitted Use of Confidential Information Provision (with labels PERMITTED_USE, PURPOSE_LIMITATION, PROHIBITED_USE), which specifies the limited purposes for which the receiving party may use the confidential information, such as:
      • The Receiving Party may use the Confidential Information solely for the purpose of evaluating and engaging in discussions concerning a potential business relationship between the parties._{(PERMITTED_USE, PURPOSE_LIMITATION)}¹ The Receiving Party shall not use the Confidential Information for any other purpose, including but not limited to developing competing products or services, or reverse engineering the Disclosing Party's technology._{(PROHIBITED_USE)}²
    • Exceptions to Confidentiality Provision (with labels EXCEPTION_LEGAL_REQUIREMENT, EXCEPTION_PRIOR_KNOWLEDGE, EXCEPTION_INDEPENDENTLY_DEVELOPED), which outlines specific circumstances under which the confidentiality obligations do not apply, such as:
      • The confidentiality obligations under this Agreement shall not apply to information that (a) is required to be disclosed by law, regulation, or court order, provided that the Receiving Party gives prompt written notice to the Disclosing Party of such requirement and cooperates with the Disclosing Party's efforts to obtain a protective order or otherwise limit disclosure,_{(EXCEPTION_LEGAL_REQUIREMENT)}¹ (b) was known to the Receiving Party prior to its disclosure by the Disclosing Party, as evidenced by the Receiving Party's contemporaneous written records,_{(EXCEPTION_PRIOR_KNOWLEDGE)}² or (c) is independently developed by the Receiving Party without use of or reference to the Confidential Information, as evidenced by the Receiving Party's contemporaneous written records._{(EXCEPTION_INDEPENDENTLY_DEVELOPED)}³
    • Ownership of Confidential Information Provision (with labels OWNERSHIP_OF_CONFIDENTIAL_INFORMATION, NO_LICENSE_GRANTED, NO_WARRANTY), which clarifies that the confidential information remains the property of the disclosing party and that the agreement does not grant any rights or licenses to the receiving party, such as:
      • All Confidential Information shall remain the exclusive property of the Disclosing Party._{(OWNERSHIP_OF_CONFIDENTIAL_INFORMATION)}¹ Nothing in this Agreement shall be construed as granting the Receiving Party any right or license under any copyrights, patents, trade secrets, or other intellectual property rights of the Disclosing Party._{(NO_LICENSE_GRANTED)}² The Disclosing Party makes no representations or warranties, express or implied, with respect to the accuracy, completeness, or usefulness of the Confidential Information._{(NO_WARRANTY)}³
    • Non-Disclosure to Employees and Agents Provision (with labels DISCLOSURE_TO_REPRESENTATIVES, REPRESENTATIVES_CONFIDENTIALITY_OBLIGATION, RESPONSIBILITY_FOR_REPRESENTATIVES), which requires the receiving party to ensure that its employees and agents who have access to the confidential information are bound by similar confidentiality obligations, such as:
      • The Receiving Party may disclose the Confidential Information to its employees, officers, directors, consultants, and legal and financial advisors (collectively, "Representatives")_{(DISCLOSURE_TO_REPRESENTATIVES)}¹ who have a need to know such information for the purpose of evaluating or engaging in discussions concerning a potential business relationship between the parties, provided that such Representatives are informed of the confidential nature of the Confidential Information and are bound by confidentiality obligations no less protective than those set forth in this Agreement._{(REPRESENTATIVES_CONFIDENTIALITY_OBLIGATION)}² The Receiving Party shall be responsible for any breach of this Agreement by its Representatives._{(RESPONSIBILITY_FOR_REPRESENTATIVES)}³
    • Return or Destruction of Confidential Information Provision (with labels RETURN_OR_DESTRUCTION_OBLIGATION, CERTIFICATION_OF_DESTRUCTION, RETENTION_OF_COPIES), which requires the receiving party to return or destroy all confidential information upon request or termination of the agreement, such as:
      • Upon the written request of the Disclosing Party or upon termination of this Agreement, the Receiving Party shall promptly return all Confidential Information in its possession or control to the Disclosing Party or, at the Disclosing Party's option, destroy all such Confidential Information and certify such destruction in writing to the Disclosing Party._{(RETURN_OR_DESTRUCTION_OBLIGATION, CERTIFICATION_OF_DESTRUCTION)}¹ Notwithstanding the foregoing, the Receiving Party may retain one copy of the Confidential Information in its legal files solely for the purpose of determining its obligations under this Agreement._{(RETENTION_OF_COPIES)}²
    • Remedies for Breach Provision (with labels EQUITABLE_RELIEF, IRREPARABLE_HARM, CUMULATIVE_REMEDIES), which outlines the remedies available to the disclosing party in the event of a breach of confidentiality, such as:
      • The Receiving Party acknowledges that any breach of this Agreement may result in irreparable harm to the Disclosing Party for which monetary damages would be inadequate._{(IRREPARABLE_HARM)}¹ Accordingly, the Disclosing Party shall be entitled to seek injunctive relief to enforce this Agreement, without the need to post a bond or prove actual damages._{(EQUITABLE_RELIEF)}² The rights and remedies provided in this Agreement are cumulative and not exclusive of any other rights or remedies that may be available at law or in equity._{(CUMULATIVE_REMEDIES)}³
    • Governing Law and Jurisdiction Provision (with labels GOVERNING_LAW, CONSENT_TO_JURISDICTION, WAIVER_OF_JURY_TRIAL), which specifies the governing law and jurisdiction for the interpretation and enforcement of the confidentiality agreement, such as:
      • This Agreement shall be governed by and construed in accordance with the laws of the State of [State], without giving effect to any choice or conflict of law provision or rule._{(GOVERNING_LAW)}¹ Each party irrevocably submits to the exclusive jurisdiction of the federal and state courts located in [County, State] for the purposes of any action arising out of or relating to this Agreement, and waives any objection to the laying of venue in such courts._{(CONSENT_TO_JURISDICTION)}² Each party waives any right to a trial by jury in any action arising out of or relating to this Agreement._{(WAIVER_OF_JURY_TRIAL)}³
  • ...
• Example(s):
  • a Mutual Confidentiality Clause (with mutual confidentiality provisions) that requires both parties to preserve confidentiality, such as:
    • "Each party agrees that it will not disclose to any third party Confidential Information of the other party, except to its employees or consultants as necessary to perform its obligations under this Agreement, and that it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other party in its possession or control, which will in no event be less than the measures it uses to maintain the confidentiality of its own information of similar importance.".
    • an annotated version, such as:
      "Each party_(DEFINITION)¹ agrees that it will not disclose to any third party Confidential Information of the other party,_{(OBLIGATION, CONFIDENTIALITY_OBLIGATION, DISCLOSURE_PROHIBITION)}² except to its employees or consultants_(EXCEPTION)³ as necessary to perform its obligations under this Agreement,_{(CONDITION, PERFORMANCE_CONDITION)}⁴ and that it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other party in its possession or control,_{(OBLIGATION, CONFIDENTIALITY_OBLIGATION, REASONABLE_MEASURES_REQUIREMENT)}⁵ which will in no event be less than the measures it uses to maintain the confidentiality of its own information of similar importance._{(STANDARD_OF_CARE, OWN_INFORMATION_STANDARD)}⁶".
  • an Employee Confidentiality Clause (with employee confidentiality provisions) binding an employee to confidentiality as part of an employment agreement, such as:
    • "The Employee acknowledges that, in the course of performing their duties under this Agreement, they will have access to information of a confidential or proprietary nature owned by the Employer. The Employee agrees that, during the term of their employment and thereafter, they shall not disclose any such Confidential Information to any person or entity or use it for any purpose other than the advancement of the Employer's business interests, except with the prior written authorization of the Employer."
    • an annotated version, such as:
      "The Employee_(DEFINITION)¹ acknowledges that, in the course of performing their duties under this Agreement, they will have access to information of a confidential or proprietary nature owned by the Employer._{(ACKNOWLEDGMENT, CONFIDENTIAL_INFORMATION_ACCESS)}² The Employee agrees that, during the term of their employment and thereafter,_{(OBLIGATION, CONFIDENTIALITY_OBLIGATION, DURATION)}³ they shall not disclose any such Confidential Information to any person or entity or use it for any purpose_{(PROHIBITION, DISCLOSURE_PROHIBITION, USE_PROHIBITION)}⁴ other than the advancement of the Employer's business interests,_(EXCEPTION)⁵ except with the prior written authorization of the Employer._{(EXCEPTION_CONDITION)}⁶".
  • a Vendor Confidentiality Clause (with vendor confidentiality provisions) that a company includes in contracts with its vendors and suppliers, such as:
    • "The Vendor acknowledges that all information provided by the Company or obtained by the Vendor in performance of this Agreement shall be considered the Company's Confidential Information. Vendor shall hold such information in strict confidence and shall not disclose it to any third party nor use it for any purpose other than performing its obligations under this Agreement. Upon termination of this Agreement, or at any time upon the Company's request, Vendor shall promptly return all materials containing Confidential Information."
    • an annotated version, such as:
      "The Vendor_(DEFINITION)¹ acknowledges that all information provided by the Company or obtained by the Vendor in performance of this Agreement shall be considered the Company's Confidential Information._{(ACKNOWLEDGMENT, CONFIDENTIAL_INFORMATION_DEFINITION)}² Vendor shall hold such information in strict confidence and shall not disclose it to any third party nor use it for any purpose_{(OBLIGATION, CONFIDENTIALITY_OBLIGATION, DISCLOSURE_PROHIBITION, USE_PROHIBITION)}³ other than performing its obligations under this Agreement._(EXCEPTION)⁴ Upon termination of this Agreement, or at any time upon the Company's request,_(CONDITION)⁵ Vendor shall promptly return all materials containing Confidential Information._{(OBLIGATION, RETURN_OR_DESTRUCTION_OBLIGATION)}⁶".
  • a Unilateral Confidentiality Clause, such as:
    • "Each party agrees to retain in confidence the non-public information and know-how disclosed or made available by the other party pursuant to this Agreement that is either designated as proprietary and/or confidential, or by the nature of the circumstances surrounding disclosure, ought reasonably to be treated as proprietary and/or confidential ('Confidential Information'). Each party shall treat the Confidential Information of the other party with at least the same degree of care as it treats its own confidential information of like kind, but in no event shall it use less than a reasonable degree of care."
    • an annotated version, such as:
      "Each party agrees to retain in confidence the non-public information and know-how disclosed or made available by the other party pursuant to this Agreement_{(OBLIGATION, CONFIDENTIALITY_OBLIGATION)}¹ that is either designated as proprietary and/or confidential, or by the nature of the circumstances surrounding disclosure, ought reasonably to be treated as proprietary and/or confidential (Confidential Information)._{(DEFINITION, CONFIDENTIAL_INFORMATION_DEFINITION)}² Each party shall treat the Confidential Information of the other party with at least the same degree of care as it treats its own confidential information of like kind,_{(OBLIGATION, CONFIDENTIALITY_OBLIGATION, STANDARD_OF_CARE, OWN_INFORMATION_STANDARD)}³ but in no event shall it use less than a reasonable degree of care._{(MINIMUM_STANDARD_OF_CARE)}⁴"
  • ...
• Counter-Example(s):
  • a Non-Compete Clause, which restricts an employee's ability to work for a competitor.
  • an Ownership of Intellectual Property Clause, which specifies who owns IP created during a contractual engagement.
• See: Confidential Information, Trade Secret, Non-Disclosure Agreement, Injunctive Relief

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References

LLM

Label	Example 1: Mutual Confidentiality Clause	Example 2: Employee Confidentiality Clause	Example 3: Vendor Confidentiality Clause	Example 4: Unilateral Confidentiality Clause
DEFINITION	"Each party..."	"The Employee..."	"The Vendor..."	"Each party..."
OBLIGATION	"...agrees that it will not disclose..."	"...agrees that... they shall not disclose..."	"...shall not disclose it..."	"...agrees to retain in confidence..."
CONFIDENTIAL INFORMATION	"...to any third party Confidential Information of the other party..."	"...information of a confidential or proprietary nature..."	"...all information provided by the Company..."	"...non-public information and know-how..."
EXCEPTIONS	"...except to its employees or consultants..."	"...except with the prior written authorization of the Employer..."	"...other than performing its obligations under this Agreement..."	*No clearly stated exception*
OBLIGATIONS (Additional)	*No additional obligations*	"...shall hold such information in strict confidence..."	"...shall treat the Confidential Information...with at least the same degree of care..."
STANDARD OF CARE	"...in no event be less than the measures it uses to maintain the confidentiality of its own information of similar importance..."	*No specified standard*	*No specified standard*	"...but in no event shall it use less than a reasonable degree of care"

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