💡 Plain English Explanation

This clause is the foundation of your entire NDA. It defines exactly what information is protected by the agreement. Think of it as drawing a circle around what counts as "confidential" - everything inside the circle is protected, everything outside is fair game.

The definition can be broad (everything disclosed is confidential) or narrow (only specifically marked documents are confidential). The breadth of this definition directly impacts how much protection the disclosing party gets and how much burden the receiving party bears.

⚠ Why It Matters

For the Disclosing Party: A broader definition means more protection. You want to capture trade secrets, business plans, customer lists, technical specifications, and anything else valuable that you might share.

For the Receiving Party: A narrower definition means less compliance burden. Overly broad definitions can make it nearly impossible to do business, as you'd need to treat every conversation and email as top secret.

For Both Parties: An unclear or overbroad definition can make the entire NDA unenforceable. Courts have struck down NDAs where the definition was so vague that a reasonable person couldn't know what was protected.

🚩 Risk Factors

📄 Clause Versions

Balanced Version: Fair to both parties. Uses reasonable specificity with appropriate categories and includes marking requirements for oral disclosures. 
"Confidential Information" means any non-public information disclosed by one party (the "Disclosing Party") to the other party (the "Receiving Party"), whether orally, in writing, or in any other form, that is designated as confidential or that reasonably should be understood to be confidential given the nature of the information and the circumstances of disclosure. Confidential Information includes, but is not limited to:

(a) trade secrets, inventions, ideas, processes, formulas, source code, and software;
(b) business and marketing plans, financial information, and projections;
(c) customer lists, supplier information, and pricing data;
(d) technical specifications, designs, drawings, and prototypes; and
(e) any other information that provides a competitive advantage.

For oral disclosures to be considered Confidential Information, the Disclosing Party must identify the information as confidential at the time of disclosure and confirm such designation in writing within thirty (30) days thereafter.
Disclosing Party Favor: Broader protection, no marking requirements, and expansive categories. Use when you're primarily sharing information. 
"Confidential Information" means all information, in any form whatsoever, disclosed by or on behalf of the Disclosing Party to the Receiving Party, or to which the Receiving Party gains access in connection with this Agreement or the Purpose, including without limitation:

(a) all trade secrets, know-how, inventions, techniques, processes, algorithms, software, source code, object code, and technical data;
(b) all business information, including business plans, strategies, methods, practices, pricing, financial data, forecasts, personnel information, and customer and supplier lists;
(c) all product information, including specifications, designs, prototypes, samples, and manufacturing processes;
(d) all marketing information, including market research, marketing plans, and competitive analyses;
(e) all information concerning the Disclosing Party's relationships with third parties; and
(f) any other information that has commercial value or that the Disclosing Party treats as confidential.

Confidential Information shall include information disclosed orally, visually, or in writing, and shall not require marking or other designation to be protected hereunder. All information disclosed in connection with this Agreement shall be presumed to be Confidential Information unless expressly stated otherwise in writing by the Disclosing Party.
Receiving Party Favor: Narrow definition with strict marking requirements. Use when you're primarily receiving information and want clear compliance obligations. 
"Confidential Information" means only that information which:

(a) is disclosed in writing or other tangible form and is clearly marked "Confidential," "Proprietary," or with a similar legend at the time of disclosure; or

(b) is disclosed orally and is identified as confidential at the time of disclosure, provided that such oral disclosure is summarized in writing, marked as confidential, and delivered to the Receiving Party within ten (10) business days of the oral disclosure.

Information that is not marked or confirmed in accordance with the foregoing shall not be considered Confidential Information, regardless of its nature or the circumstances of disclosure. The Receiving Party shall have no obligation to treat as confidential any information that does not comply with the marking requirements set forth herein.

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