At the commencement of negotiations or in particular types of deals such as M&A or IP or R&D it is always advisable to use extensive confidentiality agreements either as stand-alone contracts (non-disclosure agreements) or as long-form (extended) clauses in other documents e.g. in a letter of intent, LOI. You will need to take time and great care, particularly if you are a potential disclosing party, when drafting provisions on dealing with your organisation’s information. Information is knowledge and knowledge is power and, at the end of the day, a valuable commercial asset.
Below you will find the beginnings of such an extended non-disclosure boilerplate clause as is often employed under English law. A full-form clause contrasts with shorter form versions (see Confidentiality in brief ) because of its length and its attention to details and definitions.
Here is a useful checklist for such extended non-disclosure clauses/agreements. Depending on your party’s position and interests, confidentiality agreements should contain:
1. a full definition of the material covered (confidential information); see text below,
2. a set of exclusions for information disclosed in particularly circumstances (e.g. as required by law or court order) or, for particular types of information (e.g. already in the public domain),
3. an explanation of exactly how and for what purposes information may be disclosed to third parties or employees etc. (e.g. for the purpose of contract performance only),
4. an express exclusion of any transfer of IP rights to information,
5. a description of what is to happen at the ending of the contract/application of the clause,
6. an exclusion of (implied/express) warranties and representations related to the accuracy or completeness of information disclosed or its fitness for purpose,
7. a definition of the exact period of effectiveness of the confidentiality undertakings (e.g. survival clause)
8. a definition of the parties covered (e.g. affiliates, subcontractors, employees etc.) and an undertaking to make such subject to the confidentiality obligations/rights.
The first point of the checkpoint mentions a definition of confidential information. This is the foundation on which the rest of a confidentiality clause is built. Here is an example of such a long-form definition:
1.1 “Confidential Information” means all confidential information (in whatever tangible or intangible form and however recorded or preserved, stored or otherwise retained) which is disclosed directly or indirectly by one Party (“Disclosing Party”) through or by its employees, officers, agents, representatives or advisers (hereinafter all referred to as “Representatives”) to the other Party or that Party’s Representatives whether before or after the date of this Agreement in connection with [DESCRIBE EXACTLY THE TRANSACTION OR CONTRACT] concerning:
(a) the existence and terms of this Agreement [ and DESCRIBE ANY OTHER AFFECTED CONTRACTS]
(b) any information that would be regarded as confidential by a reasonable business person relating to:
(i) the business, affairs, customers, clients, suppliers, plans , forecasts, intentions, financial status, assets, employees, structure, organisation, procedures, customers or market opportunities of the Disclosing Party or of any member of the group of companies to which the Disclosing Party belongs; and
(ii) the operations, processes, product information, know-how, designs, trade secrets or software of the Disclosing Party or of any member of the group of companies to which the Disclosing Party belongs;
(c) any information developed by the Parties in the course of carrying out this Agreement; and
(d) any information detailed in Attachment [NUMBER] as well as any information which is labelled as being confidential by Disclosing Party.
You can fill in the rest. Try using the checklist to help you.