💡 Plain English Explanation

The "Definition of Confidential Information" clause is the foundation of every NDA. It establishes exactly what information is protected under the agreement. Think of it as drawing a boundary line: everything inside the boundary receives protection, while everything outside remains fair game for disclosure or use.

This definition determines the entire scope of your obligations. A poorly drafted definition can either leave critical information unprotected or create impossible compliance burdens. Getting this clause right is essential because courts will interpret your NDA based on what this definition actually says, not what the parties intended.

The definition typically addresses three questions:

⚠ Why This Clause Matters

For the Disclosing Party: A broader definition provides greater protection. You want to ensure trade secrets, business strategies, customer lists, technical specifications, and all valuable information shared during the relationship receives protection, whether or not someone remembered to stamp "CONFIDENTIAL" on a document.

For the Receiving Party: A narrower, more specific definition reduces your compliance burden and legal exposure. Overly broad definitions can make routine business operations risky, as every email and conversation could theoretically contain "confidential information."

For Enforceability: Courts have invalidated NDAs with definitions so broad they lacked reasonable boundaries. A definition that covers "all information of any kind whatsoever" may be unenforceable because it fails to provide clear notice of what is protected.

📄 Clause Versions

Balanced Version: Fair to both parties. Uses reasonable specificity with appropriate categories and includes marking requirements for oral disclosures. This version is commonly accepted in commercial transactions between parties of equal bargaining power. 
"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.

Confidential Information does not include information that falls within the exceptions set forth in Section [X] of this Agreement.
Disclosing Party Favor: Broader protection with no marking requirements and expansive categories. Use when you are primarily sharing sensitive information and want maximum protection. The receiving party bears more risk with this version. 
"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 programs (including source code and object code), databases, and technical data of any kind;
(b) all business information, including business plans, strategies, methods, practices, pricing, financial data, forecasts, budgets, personnel information, and customer and supplier lists and relationships;
(c) all product information, including specifications, designs, prototypes, samples, manufacturing processes, and product roadmaps;
(d) all marketing information, including market research, marketing plans, competitive analyses, and sales data;
(e) all information concerning the Disclosing Party's relationships with third parties, including partners, vendors, and customers; 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, electronically, or in writing, and shall not require marking, labeling, 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 at the time of disclosure.

The existence and terms of this Agreement, and the fact that the parties are engaged in discussions regarding the Purpose, shall also constitute Confidential Information of both parties.
Receiving Party Favor: Narrow definition with strict marking requirements. Use when you are primarily receiving information and want clear, manageable compliance obligations. This version minimizes ambiguity and reduces your exposure to claims. 
"Confidential Information" means only that information which:

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

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

Information that is not marked or confirmed in accordance with the foregoing requirements 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 strictly comply with the marking and confirmation requirements set forth herein.

For clarity, information shall not be deemed Confidential Information solely because:
(i) it relates to the Disclosing Party's business;
(ii) it was disclosed in a meeting or presentation; or
(iii) the Disclosing Party considers it to be valuable or proprietary.

💬 Key Considerations