The Recipient's obligations under Clauses [X] (Confidentiality) and [Y] (Restrictions on Use) shall apply to the Disclosing Party but the Disclosing Party's obligations under those Clauses shall not apply to the Recipient. The Disclosing Party shall not have any rights to prevent or restrict the Recipient from using or disclosing any information, whether the same as or similar to the Confidential Information, which the Recipient can prove: (a) was in the public domain at the time of disclosure or has subsequently entered the public domain other than as a result of a breach of this Agreement; (b) was already known to the Recipient prior to disclosure; (c) is received by the Recipient from a third party free to disclose the same; or (d) is required to be disclosed by law or regulation or by a court or regulatory authority of competent jurisdiction provided that, where legally permitted, the Recipient gives the Disclosing Party as much written notice as possible of the intended disclosure. The effect of this Clause is that only the obligations on the Recipient under this Agreement with respect to the Confidential Information shall apply and not vice versa. The Disclosing Party shall not have any rights to prevent or restrict the Recipient from using or disclosing any information, whether the same as or similar to the Confidential Information, which the Recipient can prove was in or has entered the public domain, was already known to the Recipient, was received by the Recipient from a third party free to disclose the same or is required to be disclosed by law or regulation."
This is a non-mutual non-disclosure agreement (NDA) clause that makes the confidentiality obligations one-sided. It states:
- Only the Recipient is bound by the confidentiality and restrictions on use of the Disclosing Party's confidential information.
- The Disclosing Party does not have any confidentiality obligations or restrictions on how it uses the Recipient's information.
- The Disclosing Party cannot prevent or restrict the Recipient from using or disclosing any information that:
1) Is already public
2) The Recipient already knew
3) Was obtained from third parties without restriction
4) Must be disclosed by law/regulation
In simple terms, this non-mutual NDA makes confidentiality a one-way street - the Recipient must keep the Disclosing Party's information confidential, but the Discloser has no duty to keep the Recipient's information confidential.
The Recipient is restricted in how it uses the Discloser's information, but the Discloser is not restricted in how it uses the Recipient's information
Non-mutual non-disclosure agreements emerged in commercial practice as companies sought to protect their confidential information when discussing potential business relationships or transactions.
Traditionally, NDAs were mutual - imposing confidentiality duties on both parties involved in a discussion. However, companies realized that in some situations mutual confidentiality was unnecessary or problematic. For example, in preliminary acquisition talks, the target company has much confidential data to protect, while the potential acquirer may have little to no confidential data to protect. Requiring mutual confidentiality could hamper the acquirer's ability to conduct due diligence.
Thus, non-mutual NDAs became a tool to make confidentiality obligations lopsided in certain contexts. The company possessing the sensitive information, like the target firm, could require NDA protection from potential partners. Meanwhile, potential partners, like the acquirer, could participate in preliminary discussions without restricting their existing businesses.
Since the 1970s, non-mutual NDAs have grown commonplace alongside the growth of technology licensing, joint ventures, and other business collaborations involving unequal possession of proprietary information. They allow conversations to occur while crafting confidentiality duties to the specific needs of each party.
Today, non-mutual NDAs remain an important contractual mechanism for controlling use of confidential information in business negotiations and protecting valuable intellectual property.