Identify the legal entity to which the information will be disclosed, including the state of incorporation and the principal business address. This provides valuable information if an issue arises during or after the agreement that requires a party to consider litigation.
Identify as specifically and narrowly as possible the information to be disclosed or exchanged. An overly broad description could lead to the exchange of too much information that contaminates a party and defeats the purpose of the agreement. For example, a description that says “all information related to business discussions for a flu vaccine” could mean a number of things. A description that says “all market research conducted in 2004 related to the sale of vaccine XY1-2005 for the bird flu in the United States” is much more limited and easier to comply with.
Specify the purpose for the disclosure and limit use of the disclosure to that purpose. For example, “The disclosing party is providing confidential information to the receiving party so that the receiving party may evaluate funding the disclosing party?s research project and may not use the disclosed information for any other purpose.” The limitations on disclosure and use protect both the discloser and receiver from misuse of the information.
Define “Confidential Information,” which could be any information exchanged in writing, orally, or visually (e.g., a tour of a plant or lab). If nonwritten information (oral or visual disclosure) is allowed, there should be a requirement to commit the disclosure to writing within a specified time or else it will not be considered “confidential information.” This eliminates the uncertainty of what is included. Any disclosure should contain a notice--“confidential and not to be copied or distributed.” This informs a person viewing the information of its confidential status.
Exempt certain disclosed information from the obligations of confidentiality and non-use. The exclusions usually include information: i) in the possession of the receiver at the time of the disclosure; ii) already known to the public; iii) that becomes public after the effective date of the agreement through no fault of the receiver; iv) received from independent third parties with no obligation of confidentiality to the disclosure; v) independently developed by the employees of the receiver, provided the employees have no knowledge or access to the disclosed information; and vi) that a receiver is legally compelled to disclose, usually with the proviso that the receiver must give the discloser notice of the requirement and allow them an opportunity to challenge the legal requirement to compel. The exclusions protect the receiver from perpetual obligations of confidentiality and non-use for information that might otherwise be public and available for use by its competitors.
Designate a term of disclosure. The disclosure should be made within some time period from the effective date of the agreement (which is usually the signature date, but may be different). This will obligate the disclosing party to act diligently and eliminates a disclosure just prior to expiration of an agreement.
Designate a term of the agreement. The agreement obligations?nonuse and confidentiality?should automatically expire after a specified time. Without a specified time, the obligations of confidentiality and non-use remain in perpetuity (subject to the exclusions). The term may be measured from the effective date of the agreement, the date of signature of the last to sign, or the date of receipt of the disclosed information (which is difficult to manage, particularly if information is disclosed on multiple dates).
State whether information is to be returned or destroyed (with a certification of destruction) after termination or expiration of the agreement.
Include a signature line for an authorized (someone with authority to bind the party) representative.
