Confidential Information - Definition & Exclusions

Contract Type:
Generic Contract

For the purposes of this Agreement, ""Confidential Information"" means any information disclosed by one party to the other, either directly or indirectly, in writing, orally or by inspection of tangible objects, that is designated as ""Confidential,"" ""Proprietary"" or some similar designation. Information communicated orally shall be considered Confidential Information if such information is confirmed in writing as being Confidential Information within 30 days after the initial disclosure. Confidential Information shall not include any information that: (i) is or becomes publicly known other than through a breach of this Agreement; (ii) is lawfully received by the receiving party from a third party without breach of any obligation of confidentiality; (iii) was already in the receiving party's possession prior to disclosure by the disclosing party; (iv) is independently developed by the receiving party without access to or use of the Confidential Information; or (v) is approved for release in writing by the disclosing party."


Here is a plain English explanation of the Confidential Information Definition and Exclusions clause:

This clause defines what types of information count as confidential information under the agreement.

It includes any information one party discloses to the other either in writing, verbally, or through showing physical objects. The disclosing party must designate the information as confidential, proprietary or similar.

For verbal disclosures, the disclosing party must confirm the confidentiality in writing within 30 days.

However, certain information is excluded from the definition, even if disclosed. This includes information that:

- Is or becomes public through no breach of the agreement

- The receiving party obtains legally from a third party without confidentiality duties

- The receiving party already possessed

- The receiving party develops independently without using the confidential information

- The disclosing party approves in writing for release

In summary, this defines confidential information broadly while carving out reasonable exclusions to balance contractual protection.

History of the clause (for the geeks)

The confidential information definition and exclusions clause emerged from common law duties and trade secret protections.

Key aspects of its development include:

- In the 19th century, common law implied confidentiality duties for sensitive information shared in certain relationships.

- As trade secrecy law developed, definitions and exclusions became important for protection scope.

- Early confidentiality contracts used vague terms like "secrets," leading courts to imply broad duties.

- From the 1950s, contracts started specifying defined terms like "confidential information."

- Form contracts adopted detailed definitions to control scope, often excluding public and pre-existing information.

- Implied exclusions were made express for clarity. Independent development and third-party sourcing became standard carve-outs.

- Approval requirements were added so disclosers could allow selective release of information.

- Customization increased for industry needs and to prevent overbroad obligations.

In summary, the modern confidential information clause emerged from trade secrecy law and common law duties, balancing clear definitions against customary exclusions to right-size confidentiality.