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Complete Description. This Confidentiality Agreement Template protects your confidential information from being publicly disclosed after you share it with another company, as well as that company’s confidential information, too, and covers marking requirements, exclusions, nondisclosure duties, use limits, advising employees, disclosures to agents and subcontractors, return of information, disclosures required by law, survival, and general boilerplate for a confidentiality agreement template.
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CONFIDENTIALITY AGREEMENT TEMPLATE EXPLAINED
How many times over the years have you been asked to sign a confidentiality agreement? Or do you do the same to others, insisting that they sign one before they can talk to you or visit your offices? Too often, the confidentiality agreement form becomes a gatekeeping function, where the people asking you to sign it and the people doing the actual signing give little thought to the purpose of the entire exercise. In many ways, a confidential disclosure agreement ends up reduced to the level of a car rental agreement or a software download clickwrap: quickly signed, rarely read and little remembered.
Believe it or not, though, a business confidentiality agreement carries with it serious, legally binding obligations which can be the source of litigation, so it makes sense to take confidentiality and nondisclosure agreements seriously and learn what they contain and how you might want to negotiate regarding the key provisions.
One mistake is to assume that most clauses in a contract are in the “legal” category and reside in the province of the lawyers. You call them up, hear what they have to say, and then usually follow their advice. But, ultimately, a confidentiality agreement form is essentially a business matter, and you need to take the lead in knowing why these forms exist and what you want them to say. Your lawyer is talented at telling you how to best express your positions in a legally enforceable manner, but punting as to who should formulate those provisions does not serve you well. After all, do you really want to end up obligated to follow restrictions that you never considered in the first place?
Let’s dive into the typical issues that you might care about:
A. Commercial Goal. First and foremost, you want to specify the exact reason why you share your confidential information. You want to avoid a “catch-all” approach and hone in on the specific business purpose that necessitates disclosing your proprietary materials. You might be discussing a joint venture, or negotiating a complex services contract, or performing an audit. Whatever the reason, you want to call out the commercial goal clearly in this business confidentiality agreement.
B. Marking Obligation. One of the most challenging issues to sort through in a confidentiality dispute is what exact information is or is not confidential under the tenets of the confidential disclosure agreement. Often times, the contract itself uses a broad ranging description that could potentially apply to anything and everything produced by the disclosing company. Courts won’t enforce these kinds of overly broad provisions, and sort through each item to determine whether or not the contract envisioned a restriction in each case. You can reduce this kind of problem with a marking requirement, which states that the disclosing party must stamp every document as its own confidential information before sharing. This way, you leave little room for doubt. However, you might find that your company plays fast and loose with its confidential data so there is no way you can be sure the marking requirement will be properly followed. In that case, you need to more finely tailor your description and exclusions to make sure that you cover the right data correctly.
C. Confidentiality Defined. You could make crystal clear the exact information to be disclosed, such as: “Clinical lab reports from office located at 75 Roseland Ave., New York, NY 10022 and created between July 1, 2012 and July 25th, 2012.” If you reviewed each report and are comfortable with sharing them under a confidentiality restriction, then there should be no argument later as to what documents are confidential going forward. Usually, though, because confidentiality agreements are not treated with sufficient respect, many companies will sign multiple, overlapping contracts, each with a broad ranging description, so that you don’t even know which agreement applies to which set of confidential materials. In that case, you rely on exceptions.
D. Exclusions. You can simply declare that all data you disclose under the commercial goal belongs to you and should be kept secret. Following that clause, add another one that provides exceptions to this definition so that a judge approves of your contract and won’t ignore it for being too broad and vague. The most common exceptions are:
- Materials in the Public Domain
- Materials Already Owned by the Receiving Party
- Rightfully Received Materials from a Third Party
In each of these cases, the disclosed materials really are not confidential because they are already out there in the corporate world or public domain so you should be comfortable carving them out of the confidential information definition.
Making sure that both parties feel happy and crystal clear as to the commercial goal, marking obligations, confidentiality definition and exclusions sets the stage for a strong basis of trust that a smart drafter wants to generate in a confidentiality agreement template.
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