💡 Plain English Explanation

The exclusions clause defines what information is NOT protected by the NDA, even if it would otherwise meet the definition of "Confidential Information." Think of this as the escape hatches that prevent the NDA from being impossibly broad.

Without proper exclusions, a receiving party could be liable for "disclosing" information they learned from a public news article, developed on their own before signing the NDA, or received legitimately from someone else. Courts generally require reasonable exclusions for an NDA to be enforceable.

⚠ Why This Clause Matters

For the Receiving Party: Robust exclusions are essential for operating your business without constant fear of NDA breach claims. Without proper exclusions, you could be accused of misusing "confidential" information you already knew, developed independently, or learned from legitimate public sources.

For the Disclosing Party: While you want strong protection, overly narrow exclusions can make your NDA unenforceable. Courts view NDAs without standard exclusions as unreasonable. A balanced approach actually provides better protection.

For Enforceability: NDAs missing standard exclusions are frequently challenged in court as overbroad and unconscionable. Including recognized exclusions makes your NDA more likely to be upheld.

📄 Clause Versions

Balanced Version: Standard exclusions with reasonable proof requirements. This version is commonly accepted in commercial transactions and provides fair protection for both parties. 
Confidential Information shall not include information that the Receiving Party can demonstrate:

(a) was publicly known and generally available in the public domain prior to the time of disclosure by the Disclosing Party;

(b) becomes publicly known and generally available after disclosure by the Disclosing Party through no wrongful action or inaction of the Receiving Party or any of its Representatives;

(c) was already in the lawful possession of the Receiving Party prior to disclosure by the Disclosing Party, as evidenced by the Receiving Party's records, and was not acquired directly or indirectly from the Disclosing Party;

(d) is lawfully obtained by the Receiving Party from a third party who has the right to make such disclosure without restriction and without breach of any obligation of confidentiality; or

(e) is independently developed by the Receiving Party without use of or reference to the Disclosing Party's Confidential Information, as demonstrated by documented evidence.

The burden of establishing that any of the foregoing exceptions applies shall rest with the Receiving Party.
Disclosing Party Favor: Narrower exclusions with strict proof requirements. Makes it harder for the receiving party to claim exclusions apply. Use when protecting highly sensitive information. 
Confidential Information shall not include information that the Receiving Party can demonstrate by clear and convincing evidence through contemporaneous written documentation:

(a) was in the public domain at the time of disclosure by the Disclosing Party, as evidenced by published materials existing prior to such disclosure;

(b) entered the public domain after disclosure by the Disclosing Party through no fault, act, or omission of the Receiving Party or any person or entity to whom the Receiving Party disclosed such information, whether authorized or not;

(c) was in the Receiving Party's possession prior to receipt from the Disclosing Party, as evidenced by written records created and dated prior to the date of disclosure and maintained in the ordinary course of business; or

(d) was independently developed by the Receiving Party without any use of, reference to, or access to the Disclosing Party's Confidential Information, as demonstrated by written development records maintained in the ordinary course of business that establish a clear chain of independent creation.

The Receiving Party shall bear the burden of establishing by clear and convincing evidence that any of the foregoing exceptions applies. Information shall not be deemed to fall within an exception merely because it is embraced by more general information that is publicly available or in the Receiving Party's possession. A combination of features shall not be deemed within an exception merely because individual features are publicly available unless the combination itself, and its principles of operation, are publicly available.
Receiving Party Favor: Broader exclusions with easier proof requirements. Provides more flexibility and protection for parties receiving confidential information. 
The obligations of confidentiality under this Agreement shall not apply to any information that:

(a) is or becomes publicly available through any means, whether through publication, commercial use, or otherwise, regardless of how it entered the public domain;

(b) was known to the Receiving Party or its Representatives prior to receipt from the Disclosing Party, without obligation of confidentiality;

(c) is received by the Receiving Party from a third party who, to the Receiving Party's knowledge after reasonable inquiry, is not under any obligation of confidentiality to the Disclosing Party with respect to such information;

(d) is independently developed by the Receiving Party or its Representatives without reference to or use of the Confidential Information, which independent development may be demonstrated by any reasonable evidence;

(e) is approved for release or use by written authorization of the Disclosing Party;

(f) is disclosed pursuant to the requirements of a governmental agency, by operation of law, or by court order, provided the Receiving Party uses reasonable efforts to give the Disclosing Party advance notice where legally permitted; or

(g) is general skills, knowledge, or experience of a type normally acquired in similar work performed for others in the ordinary course of business.

The Receiving Party may establish that any of the foregoing exceptions apply by any reasonable means, including but not limited to oral testimony of employees or contractors who can demonstrate knowledge or independent development through any credible evidence.

💬 Key Considerations