💡 Plain English Explanation

This clause makes absolutely clear that sharing confidential information does not give the receiving party any rights to use that information beyond the NDA's stated purpose. Just because you show someone your trade secrets, patents, or copyrighted materials doesn't mean they get to use, modify, or commercialize them.

Think of it like showing someone your house - you're letting them see it, not giving them the keys or the deed. This clause prevents any argument that disclosure created an implied license to the underlying intellectual property.

⚠ Why It Matters

For the Disclosing Party: This is essential IP protection. Without this clause, a court might find that you granted an implied license by disclosing information without expressly reserving rights. This is especially critical for patents, where disclosure without reservation can create complex licensing implications.

For the Receiving Party: This clause defines the limits of what you can do with information you receive. Understanding this clause helps avoid accidental IP infringement - even if you've seen the information, you can't necessarily use it to build competing products.

For Both Parties: This clause sets clear expectations about the transaction. The NDA allows evaluation and discussion, not exploitation. This clarity prevents disputes about what rights were actually transferred.

🚩 Risk Factors

📄 Clause Versions

Balanced Version: Clearly reserves all IP rights while acknowledging the limited purpose of the disclosure. Covers patents, copyrights, and trade secrets explicitly. 
No License Granted. Nothing in this Agreement shall be construed as granting any rights, by license or otherwise, to any Confidential Information disclosed pursuant to this Agreement, except as expressly set forth herein.

All Confidential Information shall remain the sole property of the Disclosing Party. No license or right under any patent, copyright, trademark, trade secret, or other intellectual property right is granted or implied by the disclosure of Confidential Information under this Agreement.

The Receiving Party shall not reverse engineer, disassemble, or decompile any Confidential Information, or use the Confidential Information to create any derivative works, without the prior written consent of the Disclosing Party.
Disclosing Party Favor: Maximum IP protection with explicit reservations for all forms of intellectual property, including future rights and no implied licenses of any kind. 
No License or Rights Granted; Reservation of Rights.

(a) Reservation of Rights. The Disclosing Party reserves all rights in and to its Confidential Information and all patent, copyright, trademark, trade secret, and other intellectual property rights therein. Nothing in this Agreement shall be construed as granting to the Receiving Party any right, title, interest, license (whether express, implied, by estoppel, or otherwise), or ownership in or to any Confidential Information.

(b) No Implied Rights. Without limiting the foregoing, no license or right is granted to the Receiving Party by implication, estoppel, or otherwise under any patent, patent application, copyright, trademark, trade secret, mask work right, or other intellectual property right, whether now existing or hereafter acquired, owned or controlled by the Disclosing Party.

(c) Prohibited Activities. The Receiving Party shall not: (i) reverse engineer, disassemble, decompile, or otherwise attempt to derive the composition, structure, or source code of any Confidential Information; (ii) modify, translate, adapt, or create derivative works based upon any Confidential Information; (iii) use any Confidential Information to develop, manufacture, market, sell, or distribute any products or services; or (iv) use any Confidential Information in any manner that would infringe the intellectual property rights of the Disclosing Party.

(d) Survival. The provisions of this Section shall survive any termination or expiration of this Agreement.
Receiving Party Favor: Acknowledges no license is granted while preserving flexibility for permitted use and independent development rights. 
No License Granted. The Disclosing Party retains all right, title, and interest in and to its Confidential Information. No license or other rights to Confidential Information are granted or implied hereby, except for the limited right to use Confidential Information for the Purpose set forth in this Agreement.

For clarity, nothing in this Agreement shall restrict the Receiving Party from:
(a) independently developing products, services, or technology without use of Confidential Information;
(b) using general skills, knowledge, and experience acquired during the course of this Agreement that do not constitute Confidential Information; or
(c) engaging in activities with third parties that do not involve the use or disclosure of Confidential Information.

Nothing in this Agreement shall be construed to limit the Receiving Party's pre-existing rights in any intellectual property that the Receiving Party independently developed prior to receiving Confidential Information under this Agreement.

🔑 Key Points to Understand