Residual rights in confidential information

(See also the sample clauses.)

A residuals clause, allowing the receiving party’s people to use whatever protected information they happen to remember, might be appropriate in an agreement where the parties have a long relationship with lots of everyday exchanges of confidential information, and where it might be difficult for people to keep track of who owned what.

Most disclosing parties, however, would react to the suggestion of a residuals clause with something along the lines of, “are you out of your mind?”

Microsoft has been known to insist on a residuals clause in its confidentiality provisions — at least where it would not be disclosing its own confidential information. (In October 2006, however, I heard a credible source within Microsoft say publicly that the company had been reconsidering whether it would continue to do this.)