Permitted Disclosures

💡 Plain English Explanation

Permitted disclosures carve out specific situations where sharing confidential information does not violate the NDA. These exceptions typically cover legally required disclosures (court orders, subpoenas, regulatory inquiries), disclosures to professional advisors (attorneys, accountants), and sharing with employees or contractors who need access to perform their duties.

Without these carve-outs, parties face impossible choices between complying with the NDA and complying with the law. Permitted disclosure clauses are not loopholes - they are essential safeguards that make NDAs enforceable and practical.

⚠ Why It Matters

Legal Compliance: No contract can override a court order or subpoena. Permitted disclosure clauses acknowledge this reality and provide a framework for handling compelled disclosures in a way that protects both parties.

DTSA Whistleblower Immunity: The Defend Trade Secrets Act of 2016 requires employers to notify employees and contractors of whistleblower immunity provisions. Failing to include this notice can cost you attorney's fees and exemplary damages in trade secret litigation.

Business Operations: Companies routinely need to share confidential information with lenders during financing, accountants during audits, and attorneys during legal matters. This clause ensures these essential business activities do not constitute breaches.

🚩 Risk Factors

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  Missing DTSA whistleblower notice - If you omit the required immunity notice and later sue for trade secret misappropriation, you cannot recover attorney's fees or exemplary damages under the DTSA.
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  No advance notice requirement - Without notice before compelled disclosure, the disclosing party cannot seek a protective order to limit what gets disclosed publicly.
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  Overly broad "employees" carve-out - Allowing disclosure to any employee without a "need to know" requirement opens the door to excessive internal distribution.
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  Missing professional duty requirement - Disclosures to advisors should be conditioned on those advisors being bound by professional confidentiality duties.

📄 Clause Versions

PERMITTED DISCLOSURES

Notwithstanding any other provision of this Agreement, the Receiving Party may disclose Confidential Information:

(a) Legal Process. To the extent required by applicable law, regulation, court order, subpoena, or other valid legal process, provided that the Receiving Party shall (i) give the Disclosing Party prompt written notice of such requirement prior to disclosure (to the extent legally permitted), (ii) reasonably cooperate with the Disclosing Party's efforts to obtain a protective order or other appropriate remedy, and (iii) disclose only that portion of the Confidential Information that is legally required to be disclosed.

(b) Professional Advisors. To its attorneys, accountants, financial advisors, and other professional consultants who (i) have a need to know such information for the purpose of rendering professional services to the Receiving Party, and (ii) are bound by professional duties of confidentiality at least as protective as those contained herein.

(c) Employees and Contractors. To those of its employees, officers, directors, and contractors who (i) have a need to know such information for purposes consistent with this Agreement, and (ii) are bound by confidentiality obligations at least as protective as those contained herein.

(d) Affiliates. To its corporate affiliates, provided such affiliates are bound by confidentiality obligations at least as protective as those contained herein.

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 that is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, 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.

PERMITTED DISCLOSURES

The Receiving Party's obligation of confidentiality shall not apply to disclosures made in strict compliance with the following provisions:

(a) Compelled Disclosures. If the Receiving Party is required by law, regulation, or valid legal process to disclose any Confidential Information, the Receiving Party shall:

    (i) Provide the Disclosing Party with written notice immediately upon learning of such requirement, and in no event less than ten (10) business days prior to such disclosure (unless a shorter period is mandated by law, in which case the maximum notice practicable shall be provided);

    (ii) Cooperate fully with the Disclosing Party, at the Disclosing Party's expense, in seeking a protective order, confidential treatment, or other appropriate remedy to limit the disclosure;

    (iii) Not make any disclosure until the Disclosing Party has had a reasonable opportunity to seek such protective order or remedy, or until the Disclosing Party provides written consent to the disclosure;

    (iv) Disclose only the minimum portion of the Confidential Information that is specifically and expressly required;

    (v) Use reasonable efforts to obtain reliable assurances that confidential treatment will be accorded to any disclosed Confidential Information; and

    (vi) Provide the Disclosing Party with copies of any disclosure made under this section within five (5) business days of such disclosure.

(b) Legal Counsel Only. To the Receiving Party's outside legal counsel, solely for the purpose of obtaining legal advice related to this Agreement or the transactions contemplated hereby, provided such counsel is bound by attorney-client privilege.

(c) Senior Personnel Only. To the Receiving Party's officers and senior employees on a strictly need-to-know basis, provided such individuals have executed confidentiality agreements with terms at least as protective as this Agreement.

Nothing in this Agreement shall restrict disclosures protected under 18 U.S.C. Section 1833(b) (whistleblower immunity for trade secret disclosures to government officials or attorneys for reporting suspected violations of law).

PERMITTED DISCLOSURES

The Receiving Party may disclose Confidential Information without the prior consent of the Disclosing Party in the following circumstances:

(a) Legal and Regulatory Requirements. As required by any applicable law, regulation, court order, subpoena, civil investigative demand, governmental request, or other legal or regulatory process. The Receiving Party shall use reasonable efforts to provide advance notice to the Disclosing Party where legally permitted and practically feasible.

(b) Governmental Authorities. To any federal, state, local, or foreign governmental or regulatory authority, self-regulatory organization, or securities exchange having jurisdiction over the Receiving Party or its affiliates.

(c) Representatives. To the Receiving Party's directors, officers, employees, agents, attorneys, accountants, auditors, consultants, advisors, contractors, and other representatives who have a reasonable need to know such information in connection with their duties.

(d) Affiliates. To the Receiving Party's parents, subsidiaries, and other affiliates, without restriction.

(e) Transaction Parties. To actual or prospective investors, acquirers, lenders, underwriters, financing sources, joint venture partners, and their respective advisors, in connection with any financing, sale, merger, acquisition, investment, or similar transaction involving the Receiving Party.

(f) Professional and Ethical Obligations. To comply with any professional, ethical, or regulatory obligation applicable to the Receiving Party.

(g) Dispute Resolution. In connection with the enforcement of any rights under this Agreement or in any legal proceeding relating to this Agreement or the relationship between the parties.

The Receiving Party's confidentiality obligations shall continue with respect to any Confidential Information disclosed pursuant to this section.