Marking of Confidential Information

Contract Type:

The Disclosing Party shall clearly mark as "confidential" all Confidential Information provided to the Receiving Party in writing. For Confidential Information that is orally disclosed, the Disclosing Party shall within [30] days provide the Receiving Party with a written summary of such Confidential Information and clearly mark such summary as "confidential". The Receiving Party shall treat such summaries as Confidential Information. The Receiving Party shall have no obligation to maintain the confidentiality of any information that is not marked or summarized as confidential in accordance with this clause.


This clause specifies that:

1) Any confidential information provided by the disclosing party to the receiving party in written form must be clearly marked as "confidential" when first communicated. This is required to designate the written material as containing sensitive information subject to the confidentiality obligations under the agreement.

2) For confidential information that is disclosed verbally or orally in the first instance rather than in writing, the disclosing party has 30 days to provide the receiving party with a written summary of the verbal/oral information and mark this summary as "confidential". The summary enables the confidential nature of the oral information to be recorded in written form for clarity.

3) The receiving party must then treat these written confidential summaries in the same way as any directly provided confidential written information under the agreement - by keeping them private and restricting access/use. The obligation to maintain confidentiality extends to the summaries.

4) If the disclosing party fails to properly mark any written confidential information as "confidential" or provide a written confidential summary of any oral information within 30 days, the receiving party has no ongoing obligation to treat such unmarked or unsummarized information as confidential under the agreement. The disclosing party is deemed to have waived confidential status through lack of proper notice and record.

5) The marking requirement puts the onus and responsibility on the disclosing party to actively designate which information disclosed to the receiving party is confidential in nature before any protections or obligations regarding use arise. Without clear identification, information passes without constraint.

Key purposes and rationale for including a marking of confidential information clause are:

1) Clarity: The clause ensures that the confidential nature of any information subject to protection under the agreement is made abundantly clear through conspicuous marking or written recording/summary within defined time periods. Ambiguity is avoided.

2) Notification: By requiring notice through marking/written summary, the clause ensures that the receiving party is formally notified when information passes between the parties is confidential before any obligations or constraints on use arise. They can handle and treat the information appropriately from the outset.

3) Waiver: Lack of appropriate and timely marking or written summary of confidential information under the process set out in the clause amounts to a deemed waiver by the disclosing party of any expectation of confidential status or obligations attaching to such unmarked information. The receiving party is free to treat it as non-confidential due to absence of proper notice.

4) Restriction: The marking requirement delimits which information disclosed between the parties will actually attract and be subject to the confidentiality protections and obligations specified in the agreement. Only that formally designated passes with confidential constraint. Everything unmarked or unsummarized flows without restriction or obligation.

In summary, a marking of confidential information clause is designed to formally identify and give proper notice of what particular information disclosed between the parties needs to be kept private under the terms of their agreement before protections and obligations come into effect. At their fairest, these clauses aim for clarity and mutual understanding.

However, they also allocate risk and demand diligence if benefits of confidential basis are to be retained. Overall effectiveness requires active partnership from both sides - they falter where process fails through irresponsibility or neglect despite provision being made. Means must be employed with ends in view or mechanism alone achieves little without motive in users to comply. Purpose is found where design aligns with intent through shared good faith, not construction alone.

History of the clause (for the geeks)

Early commercial contracts rarely addressed treatment of confidential information explicitly, relying on general duties of good faith and doctrines of unfair competition. However, as trade secrets and proprietary knowledge became crucial to competitive advantage, this approach proved inadequate. Interests were left exposed, and uncertainty loomed over rights to restrain use or restrict dissemination of sensitive information once shared.

Into the 19th century, confidentiality clauses emerged to fill this void by stipulating protections and obligations attaching to commercially valuable information disclosed between parties. But scope remained limited and oversight strict - private deals could not prevent "inevitable" disclosure or restrain ordinary use of skills/knowledge. Efficiency and opportunity outweighed imparted advantage alone. Equity mattered in balancing control with flow of ideas and open competition.

By the early 20th century, confidentiality clauses proliferated to enable partnerships through sharing sensitive data. However, they varied significantly, and courts scrutinized terms for reasonableness - property rights in information were not absolute, and restraints on trade were suspect. Legitimacy looked to actual necessity and proportionality relative to situation, not contractual claim alone. Mutuality and limited scope were key; and irresponsibility waived protection. Mechanisms signaled understanding, but effect required diligence and restraint.

Mid-century, as knowledge grew crucial and mobile, calls increased to shore up protections for intangibles through expanded contractual terms. But confidentiality clauses remained subject to equity - oversight weighed competitive effects and public benefit against private assertion of strict control. While business sought to maximize proprietary claims, transparency also mattered to commerce and community. Purpose looked beyond narrow self-interest; and consequences were judged, not just construction. Irresponsibility ceded entitlement even where provided.

Today, robust confidentiality regimes aim to encourage knowledge-sharing partnerships. But prudent clauses recognize control is not absolute - restraint requires reason, and irresponsibility waives rights. Effectiveness relies on environment: shared standards of fair practice and oversight curb overreach; public interests balance private profits; and diligence earns trust. At their best, these clauses signify understanding more than entitlement - a shared quest for open exchange through good faith that eschews irresponsibility, and restrains claims exceeding necessity or commensurate benefit. They forge relationships as much as stipulate terms. Purpose adapts to situation through wisdom, not formula. Equity informs advantage by duty to forbear as well as enjoy one's due. In the end, shared gain alone sustains where parties relinquish rather than retain rule and work towards partnership beyond supremacy of will.

Overall, confidentiality clauses reflect the delicate task of crafting conditions that enable sensitive information to pass between parties to their private benefit but in a manner that also respects broader values of open conduct, public good and fair competition. The most prudent aim for facilitate through restraint, protect through responsible use rather than hoarding behind strict control, and sustain relationships through long-run benefit to and viability of shared environment. Purpose finds distinction not through entitlement but through commitment to steward rather than just exploit resources held in trust. Equity relies on restraint informed by duty to balance interests wisely for mutual gain, not concentrate power without consequence or accountability.

At their best, these clauses point beyond mechanism to the insight, judgement and goodwill needed to achieve workable governance over a scarce and crucial resource that no party can viably retain for themselves alone without loss through mistrust, resistance or breakdown. Shared prosperity emerges where power-with subordinates power-over through wisdom that curbs excess for the sake of continuity and abundance. Partnership proves the more productive path where these clauses achieve intent. But choice of means and manner remain, purpose looking to responsible agents and environment shaped not simple construction. Ultimate effectiveness reaches in, not down.