Process Information

💡 Plain English Explanation

Process information encompasses the "how" of manufacturing: the specific methods, sequences, and procedures used to transform raw materials into finished products. This goes beyond formulas to include the detailed steps, timing, equipment settings, and quality checkpoints that make production possible.

Manufacturing processes often represent years of trial-and-error optimization. Even when the end product can be reverse-engineered, the efficient process for making it cannot. A competitor might know what your product contains, but understanding how to produce it at scale with consistent quality is what this clause protects.

This clause typically covers:

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  Production methods: Step-by-step manufacturing sequences, including order of operations, timing requirements, and process dependencies.
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  Assembly procedures: Component integration methods, sub-assembly sequences, and workstation configurations.
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  Quality controls: In-process inspection points, acceptance criteria, and corrective action procedures.

⚠ Why This Clause Matters

For the Disclosing Party: Your production processes are competitive differentiators. The ability to manufacture faster, with higher quality, or at lower cost stems from optimized processes developed over time. Sharing these with contract manufacturers, potential partners, or during M&A due diligence requires strong protection.

For the Receiving Party: Process information can overlap significantly with general manufacturing knowledge your team already possesses. Without clear boundaries, your engineers might be restricted from applying standard industry practices they've used throughout their careers.

Practical Importance: Process information is often more valuable than product formulas because it determines production economics. A competitor who learns your processes could undercut your pricing while matching your quality, even without your exact product specifications.

📄 Clause Versions

"Process Information" means confidential information relating to the Disclosing Party's manufacturing and production operations, including but not limited to:

(a) Production Methods: Manufacturing sequences, process flows, work instructions, standard operating procedures (SOPs), and production protocols specific to the Disclosing Party's operations;

(b) Assembly Procedures: Component assembly sequences, sub-assembly methods, integration procedures, workstation layouts, and line balancing configurations;

(c) Process Parameters: Operating temperatures, pressures, speeds, feed rates, cycle times, dwell times, and other process variables that have been optimized for the Disclosing Party's production;

(d) Quality Controls: In-process inspection procedures, statistical process control (SPC) methods, acceptance criteria, non-conformance procedures, and corrective action protocols;

(e) Production Planning: Capacity planning methods, scheduling algorithms, inventory management approaches, and production optimization techniques; and

(f) Process Improvements: Continuous improvement initiatives, lean manufacturing implementations, and efficiency optimization developed by the Disclosing Party.

The Receiving Party agrees to protect Process Information with at least the same degree of care used to protect its own confidential manufacturing information, but in no event less than reasonable care.

This clause does not restrict the Receiving Party's use of:
(i) General manufacturing principles commonly known in the industry;
(ii) Skills and knowledge that the Receiving Party's personnel possessed prior to this Agreement; or
(iii) Information independently developed by the Receiving Party without use of or reference to the Disclosing Party's Process Information.

"Process Information" means all information, in any form, relating to the Disclosing Party's manufacturing, production, assembly, and quality control operations, including without limitation:

(a) All production methods, manufacturing techniques, fabrication processes, assembly procedures, and finishing methods, regardless of whether such information is documented or exists as institutional knowledge;

(b) All process parameters, including but not limited to temperatures, pressures, speeds, voltages, currents, feed rates, cycle times, curing times, dwell times, and any other measurable process variables;

(c) All work instructions, standard operating procedures, job aids, visual work standards, and operator training materials;

(d) All quality control and quality assurance procedures, including inspection methods, testing protocols, measurement techniques, acceptance criteria, defect classifications, non-conformance handling, and corrective action procedures;

(e) All production planning and scheduling information, including capacity data, throughput rates, cycle time analyses, bottleneck information, and production forecasts;

(f) All lean manufacturing and continuous improvement information, including value stream maps, kaizen results, waste reduction initiatives, and process optimization data;

(g) All automation and control information, including PLC programs, robot programming, HMI configurations, and equipment control parameters;

(h) All process capability data, including Cp, Cpk, Pp, Ppk values, control limits, and historical process performance; and

(i) Any know-how, techniques, or insights acquired by the Receiving Party or its personnel through observation of, work with, or exposure to the Disclosing Party's manufacturing operations, including intangible knowledge that cannot be easily documented.

The Receiving Party acknowledges that exposure to the Disclosing Party's Process Information may unavoidably impart knowledge that enhances the Receiving Party's manufacturing capabilities. The Receiving Party agrees that such knowledge shall be treated as Process Information and shall not be used for the benefit of the Receiving Party or any third party.

No marking or designation shall be required for information to be protected as Process Information under this Agreement.

"Process Information" means only that manufacturing process information which:

(a) Is provided in written or documented form (including electronic documentation);

(b) Is clearly marked "Confidential Process Information" or with a similar legend at the time of disclosure;

(c) Is specifically identified on Exhibit B (Process Information Schedule) attached to this Agreement; and

(d) Constitutes information that is not generally known or readily ascertainable by proper means within the relevant manufacturing industry.

For Process Information disclosed through demonstrations, training, or facility access, such information shall only be protected if:
(i) It is identified as confidential at the time of disclosure;
(ii) It is documented in writing within fifteen (15) business days of disclosure; and
(iii) The documentation specifically describes the processes with sufficient particularity to enable identification.

The following shall expressly NOT constitute Process Information under this Agreement:

(a) General manufacturing methods, techniques, and practices that are commonly used in the industry or that are described in publicly available literature, trade publications, or equipment manufacturer documentation;

(b) Standard operating procedures that implement commonly known manufacturing principles;

(c) Process parameters that are within industry-standard ranges or are recommended by equipment or material suppliers;

(d) Quality control methods that follow industry standards (ISO, ASTM, SAE, etc.) or are commonly employed in the industry;

(e) Manufacturing knowledge and skills that the Receiving Party's employees possessed prior to exposure to the Disclosing Party's operations;

(f) Process improvements developed independently by the Receiving Party; and

(g) Information that becomes generally known in the industry through no wrongful act of the Receiving Party.

The Receiving Party and its personnel shall retain the unrestricted right to use general manufacturing skills, knowledge, experience, and know-how, including that which may have been enhanced through exposure to the Disclosing Party's operations, provided that such use does not involve the specific documented Process Information identified in this Agreement.

💬 Key Considerations

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  Document your processes thoroughly. Well-documented SOPs and work instructions make it easier to prove what was disclosed and establish that information qualifies as confidential.
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  Consider training and observation. Process knowledge often transfers through hands-on training and facility observation. Address how these disclosures are handled.
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  Distinguish from equipment knowledge. Equipment manufacturers often provide process parameters with their machines. Clarify what comes from equipment vendors versus your own optimization.
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  Address continuous improvement. Manufacturing processes evolve through kaizen and other improvement initiatives. Define how improvements made during the relationship are handled.
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  Consider regulatory requirements. Some industries require process documentation for regulatory compliance. Ensure your NDA doesn't conflict with required disclosures to regulators.