Confidentiality Clause (Pro-Service Provider)

Explaining Confidentiality

This clause sets out mutual nondisclosure obligations. In most service arrangements, the service provider is more likely to receive the customer’s information than the reverse so this pro-service provider provision:

• Requires that confidential information be explicitly marked as confidential information. Note, however, that even if something is not marked as confidential, a court could still find a service provider liable for unauthorized disclosure if that information qualifies as a trade secret.
• Avoids options, such as making the receiving party explicitly responsible for breaches by its representatives.

The confidentiality obligation in this clause can be included in the general list of obligations that survive expiration or termination of the agreement in the survival clause of your framework agreement. If, however, you intend for the confidentiality obligations to only survive for a certain period after termination of the agreement, that should be specified in this clause.

• If the transaction includes disclosure of a significant amount of confidential information by you as the service provider, you should consider entering into a separate, more detailed confidentiality agreement. For more information on drafting and negotiating a stand-alone confidentiality agreement, contact us.

Sample Clause

Confidentiality.

From time to time during the Term of this Agreement, either Party (as the “Disclosing Party”) may disclose or make available to the other Party (as the “Receiving Party”), non-public, proprietary, and confidential information of Disclosing Party that, if disclosed in writing or other tangible form is clearly labeled as “confidential,” or if disclosed orally, is identified as confidential when disclosed and within 5 days thereafter, is summarized in writing and confirmed as confidential (”Confidential Information”); provided, however, that Confidential Information does not include any information that: (a) is or becomes generally available to the public other than as a result of Receiving Party’s breach of this Section; (b) is or becomes available to the Receiving Party on a non-confidential basis from a third-party source, provided that such third party is not and was not prohibited from disclosing such Confidential Information; (c) was in Receiving Party’s possession prior to Disclosing Party’s disclosure hereunder; or (d) was or is independently developed by Receiving Party without using any Confidential Information. The Receiving Party shall: (x) protect and safeguard the confidentiality of the Disclosing Party’s Confidential Information with at least the same degree of care as the Receiving Party would protect its own Confidential Information, but in no event with less than a commercially reasonable degree of care; (y) not use the Disclosing Party’s Confidential Information, or permit it to be accessed or used, for any purpose other than to exercise its rights or perform its obligations under this Agreement; and (z) not disclose any such Confidential Information to any person or entity, except to the Receiving Party’s Group who need to know the Confidential Information to assist the Receiving Party, or act on its behalf, to exercise its rights or perform its obligations under this Agreement.

If the Receiving Party is required by applicable law or legal process to disclose any Confidential Information, it shall, prior to making such disclosure, use commercially reasonable efforts to notify Disclosing Party of such requirements to afford Disclosing Party the opportunity to seek, at Disclosing Party’s sole cost and expense, a protective order or other remedy. For purposes of this Section 7 only, Receiving Party’s Group shall mean the Receiving Party’s affiliates and its or their employees, officers, directors, attorneys, accountants, and financial advisors.