💡 Plain English Explanation

This clause carves out what is NOT protected by the NDA. Even if information would otherwise qualify as "confidential," these exclusions create safe harbors where the receiving party has no obligations. Standard exclusions include information that becomes public, was already known, was independently developed, or was received from a third party.

Think of exclusions as the escape hatches in your NDA. Without them, a receiving party could be liable for "disclosing" information they learned from a newspaper article or developed on their own years before signing the NDA.

⚠ Why It Matters

For the Disclosing Party: Narrower exclusions mean more information stays protected. You want to ensure that exclusions require proper proof and don't create easy loopholes.

For the Receiving Party: Robust exclusions are essential for operating your business. Without proper exclusions, you could be accused of misusing "confidential" information you already knew or developed independently.

Courts and Enforceability: NDAs without standard exclusions are often viewed skeptically by courts. The exclusions make the NDA reasonable and enforceable.

🚩 Risk Factors

📄 Clause Versions

Balanced Version: Standard exclusions with reasonable proof requirements. Fair to both parties. 
Confidential Information shall not include information that the Receiving Party can demonstrate:

(a) was publicly known and generally available 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;

(c) was in the Receiving Party's lawful possession prior to the disclosure and was not obtained by the Receiving Party either directly or indirectly from the Disclosing Party;

(d) is lawfully disclosed to the Receiving Party by a third party without restriction on disclosure 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.
Disclosing Party Favor: Narrower exclusions with stricter proof requirements. Harder for receiving party to claim exclusions apply. 
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, as evidenced by published materials existing prior to such disclosure;

(b) entered the public domain through no fault of the Receiving Party or any person or entity to whom the Receiving Party disclosed such information;

(c) was in the Receiving Party's possession prior to receipt from the Disclosing Party, as evidenced by written records created prior to the date of disclosure; 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.

The Receiving Party shall bear the burden of establishing that any of the foregoing exceptions apply. 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.
Receiving Party Favor: Broader exclusions with easier proof requirements. More flexibility for the receiving party. 
The obligations of this Agreement shall not apply to any information that:

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

(b) was known to the Receiving Party 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, is not under any obligation of confidentiality to the Disclosing Party;

(d) is independently developed by the Receiving Party or its employees, contractors, or agents without reference to or use of the Confidential Information;

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

(f) is disclosed pursuant to the requirements of a governmental agency, court order, or operation of law.

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 who can demonstrate independent knowledge or development.

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