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Protected information – points to consider

(See also the sample clauses.)

Combinations of (unprotectable) individual information items might be protectable

In litigation, the receiving party’s counsel might try to make a “where’s the beef?” argument, pointing out that all the individual “component parts” of the confidential information were well-known or otherwise not confidential. A clause in the contract, stating that even a combination of otherwise-nonconfidential information can itself be confidential, can give the disclosing party’s counsel some ammunition with which to counter that kind of argument.

Not just “owned” information

A disclosing party will want protected information not to be limited to information “owned” by the disclosing party, but also to include information of a third party that the disclosing party makes available to the receiving party.

In possession of the receiving party

A disclosing party will want protected information to include not only information proactively disclosed by the disclosing party, but also:

  • information simply made available by the disclosing party. This might include, for example, information that the receiving party happens to acquire while working on-site at the disclosing party’s premises or on its computer network; and
  • information disclosed by an intermediary, for example a third party that itself received the information in question from the disclosing party under an obligation of confidence.

“In connection with this Agreement”

A receiving party will want its confidentiality obligation limited to confidential information that is in its possession in connection with the Agreement. There may be situations in which information is disclosed outside the purview of the Agreement (the right hand doesn’t know what the left hand is doing) and in which the receiving party will not want the disclosed information to be be deemed protected.

HYPOTHETICAL EXAMPLE: Suppose that a different division of the disclosing party furnished information to the receiving party, but no one involved knew of the agreed confidentiality obligations and never contemplated that the information would be treated as confidential. In that situation, the receiving party would want the confidentiality obligations of the Agreement not to apply.

On the other hand, if the receiving party were simply to steal the disclosing party’s confidential information, without making use of any information access granted by the disclosing party pursuant to the Agreement (for example, by hacking into the disclosing party’s computer network), then the general law would apply just as it would to any other confidential-information “thief.”