💡 Plain English Explanation

This clause defines situations where disclosing confidential information is permitted despite the NDA. The most common permitted disclosures are responses to court orders, subpoenas, government investigations, and whistleblower reports. This clause also typically covers disclosures to professional advisors like attorneys and accountants.

Without this clause, a party could face the impossible choice between violating the NDA or defying a court order. Permitted disclosure provisions resolve this conflict and are increasingly important for legal compliance.

⚠ Why It Matters

Legal Reality: Courts and regulators can compel disclosure. An NDA cannot override legal obligations. Permitted disclosure clauses acknowledge this reality.

Whistleblower Protection: The Defend Trade Secrets Act (DTSA) requires that NDAs include immunity notices for whistleblowers. Failing to include this can affect your ability to recover attorney's fees and punitive damages in trade secret cases.

Business Operations: Parties often need to share confidential information with attorneys, accountants, lenders, and potential acquirers. This clause provides the framework for those disclosures.

🚩 Risk Factors

📄 Clause Versions

Balanced Version: Includes standard legal carveouts with notice requirements and DTSA-compliant whistleblower immunity. 
Notwithstanding any other provision of this Agreement, the Receiving Party may disclose Confidential Information:

(a) To the extent required by applicable law, regulation, or legal process, provided that the Receiving Party (i) gives the Disclosing Party prompt written notice of such requirement prior to disclosure (to the extent legally permitted), (ii) cooperates with the Disclosing Party's efforts to obtain a protective order or other appropriate remedy, and (iii) discloses only that portion of the Confidential Information that is legally required to be disclosed;

(b) To its attorneys, accountants, and other professional advisors who have a need to know and are bound by professional duties of confidentiality;

(c) To government agencies, regulators, or in legal proceedings, to the extent necessary to enforce rights under this Agreement.

WHISTLEBLOWER IMMUNITY NOTICE: Pursuant to 18 U.S.C. Section 1833(b), the Receiving Party shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret made (i) in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
Disclosing Party Favor: Stricter notice requirements, approval rights, and assistance obligations before compelled disclosure. 
If the Receiving Party is required by law, regulation, or valid legal process to disclose any Confidential Information, the Receiving Party shall:

(a) Provide the Disclosing Party with immediate written notice (and in no event less than ten (10) business days prior to such disclosure, unless legally prohibited) so that the Disclosing Party may seek a protective order or other appropriate remedy;

(b) Cooperate fully with the Disclosing Party in seeking such protective order or remedy, at the Disclosing Party's expense;

(c) Not disclose any Confidential Information until the Disclosing Party has had a reasonable opportunity to seek such protective order or remedy, or until the Disclosing Party waives compliance with this provision in writing;

(d) Disclose only that portion of the Confidential Information that is specifically and expressly required by such law, regulation, or legal process;

(e) Use reasonable efforts to obtain assurances that confidential treatment will be accorded to the disclosed Confidential Information; and

(f) Provide the Disclosing Party with copies of any disclosure made pursuant to this section.

Nothing in this Agreement shall restrict disclosures protected under 18 U.S.C. Section 1833(b) (whistleblower immunity).
Receiving Party Favor: Broader permitted disclosures, minimal notice requirements, and expanded categories of permitted recipients. 
The Receiving Party may disclose Confidential Information without the Disclosing Party's consent in the following circumstances:

(a) As required by any applicable law, regulation, court order, subpoena, civil investigative demand, or other legal or regulatory process;

(b) To any governmental, regulatory, or self-regulatory authority having jurisdiction over the Receiving Party;

(c) To the Receiving Party's directors, officers, employees, attorneys, accountants, auditors, consultants, advisors, agents, and representatives who have a need to know;

(d) To actual or potential investors, acquirers, lenders, or financing sources, and their advisors, in connection with any financing, sale, or other transaction;

(e) In connection with the enforcement of any rights under this Agreement; or

(f) To comply with any professional, ethical, or regulatory obligation.

The Receiving Party shall use reasonable efforts to provide notice to the Disclosing Party prior to any disclosure pursuant to subsection (a) above, to the extent such notice is legally permitted and practically feasible. The Receiving Party's obligations under this Agreement shall continue with respect to any Confidential Information disclosed pursuant to this section.

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