Exclusion - Compelled Disclosure

Contract Type:

The obligations of confidentiality and non-use in this Agreement will not apply to any information that: (a) is or becomes publicly known through no fault of the Receiving Party; (b) is rightfully received by the Receiving Party from a third party without a duty of confidentiality; (c) is independently developed by the Receiving Party without use of the Disclosing Party's Confidential Information; or (d) is required to be disclosed by the Receiving Party pursuant to applicable law, regulation or court order, provided that the Receiving Party provides prompt written notice of such requirement to the Disclosing Party, and cooperates with the Disclosing Party to limit the scope of such disclosure.


This clause provides exceptions to the confidentiality obligations in the agreement for certain types of information disclosure by the Receiving Party. Key points:

1) Publicly known: If the information enters the public domain through no fault of the Receiving Party, the obligations no longer apply. Public availability of the information excuses further duty.

2) Rightfully received: If the Receiving Party obtains the same information from another source that has no obligation to keep it confidential, the Receiving Party is released from its duties under the agreement. Independent lawful access overrides responsibilities.

3) Independently developed: If the Receiving Party develops the information itself, unassociated with any provided under the agreement, confidentiality obligations do not attach or no longer apply. Internal origination excludes it from protection.

4) Legally compelled: If the Receiving Party is obliged by law, regulation or court order to disclose the information, it may do so without breaching the agreement provided it promptly notifies the Disclosing Party and cooperates to minimize scope. Mandatory disclosure overrides contractual duty.

The key purposes and benefits of including compelled disclosure exceptions in a confidentiality agreement are:

1) Recognizing situations where maintaining strict obligations may be impossible or unreasonable due to external events releasing the information from control or protection. This introduces flexibility and pragmatism.

2) Providing an "escape valve" or excuse from potential breach where disclosure is forced by matters legitimately outside the Receiving Party's control. Good faith efforts to avoid improper dissemination are assumed, but higher legal duties must be respected.

3) Accommodating necessary transparency requirements, compliance with law or cooperation with legal process. Legitimate mandated disclosure is permitted without fear of repercussion or implication of wrongdoing. Confidentiality is not absolute.

4) Clarifying status of independently obtained or pre-existing information to avoid disputes over restriction. If gained through other lawful and unassociated means, obligations under the agreement are avoided.

5) Allowing cooperation on limited disclosure by requiring notice and communication. Although forced to share, the Receiving Party must still work with the Disclosing Party to minimize implications, where possible. This maintains the collaborative spirit of the relationship.

In summary, compelled disclosure clauses recognize confidentiality obligations cannot always reasonably or practically apply, especially where external events mandate sharing of information or it arises through entirely independent means. They provide exceptions to protect the Receiving Party and allow compliance with law while still requiring best efforts at limitation and cooperation.

Rather than maintaining strict and potentially unreasonable obligations, they introduce flexibility and accommodation of legitimate external demands that may override the parties' control or original intentions. The aim is reasonable protection and accountability without imposing unachievable standards or liability for unpreventable events.

History of the clause (for the geeks)

Early common law imposed strict liability for breach of confidence, only excusing disclosure if expressly consented or under legal compulsion. This aimed to limit unrestrained spread of sensitive information but risked unreasonableness if taken too far. Confidentiality agreements provided limited exceptions, usually only referencing consent.

By the 19th century, courts recognized some events may excuse breach, e.g. information entering the public domain or shared to prevent harm. But approaches were ad hoc, and confidentiality clauses still commonly only referenced consented disclosure. Legally compelled release was included in some agreements but without mechanisms for cooperative limitation.

Into the early 20th century, recognition grew that reasonable confidentiality obligations should accommodate legitimate external events mandating disclosure or where information originated independently. Some agreements began providing exceptions for these scenarios but without consistency. Notice requirements started emerging for compelled disclosure to foster cooperation in limiting implications. However, confidentiality was still often treated as near absolute, risking liability for uncontrollable events.

By the mid-20th century, legally compelled and public domain exceptions were common in agreements, but approaches to notice and minimization varied. Exemptions for independently gained information developed more slowly over concerns around verifying origins. Courts weighed public interest and unpreventable events more frequently in finding exceptions to breach of confidence, but legislation and contracts often lagged. Reasonableness remained discretionary, and liability was still sometimes imposed for events beyond control.

Today, exemption clauses are widely used, covering mandatory disclosure, public availability and independent development. Mechanisms for notice and cooperation to limit harm are common but vary in robustness. Data protection laws provide some compelled disclosure exceptions but confidentiality duties otherwise remain subject to interpretation. Liability for unpreventable events is more frequently excluded, but risks still exist where contracts demand absolute obligations or fail to recognize legitimate reasons why confidentiality may be impossible. Disclosure authorization and consent also now typically allow wider release.

In summary, the trend is toward recognizing confidentiality as relative rather than absolute and crafting reasonable exceptions and limitations in agreements to accommodate this. But while mandatory, public domain and independent access exemptions are now standard, levels of notice, cooperation and consent required vary significantly in contracts.

Some risks remain for liability from events beyond control where strictly imposed. Legislation and case law provide some direction but mostly depend on voluntarily adopted policy and procedures. Like confidentiality itself, exceptions rely heavily on good faith and reasonable expectations between parties. They aim for accountability without unachievable standards. Overall, compelled disclosure clauses show efforts to balance prudent information controls with workable flexibility.