Understanding Confidential Information: Definition, Examples, and Importance

Confidential Information means any information disclosed by one party to the other party, before or after the date of this Agreement, that is marked as "confidential" or should reasonably be understood to be confidential given the nature of the information and the circumstances of disclosure. Confidential Information includes, but is not limited to, information relating to a party's business, operations, products, services, customers, suppliers, employees, finances, and intellectual property.

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Explanation

This defines what information is considered confidential under the agreement:

- It includes any information one party discloses to the other, whether marked "confidential" or reasonably obvious due to its nature and the circumstances.

- Confidential information covers details about business, operations, products, services, customers, suppliers, employees, finances, intellectual property, etc.

In plain terms, it broadly encompasses sensitive information exchanged between the parties, even if not labeled confidential, based on the context. This protects a wide range of proprietary, non-public data.

History of the clause (for the geeks)

Historically, confidentiality agreements lacked clear definitions of what constituted confidential information. This created ambiguity on what data was protected.

As confidential business dealings grew more complex, the range of sensitive information expanded. Parties wanted to protect trade secrets, strategies, designs, and other intellectual property, not just customer lists.

Confidential information definitions emerged to broadly describe protected data. They aimed to encompass both labeled confidential material and unlabeled information obviously sensitive in nature.

Provisions evolved listing examples of covered information like business plans, product designs, and supplier deals. This offered clarity on the wide scope without exhaustive enumeration.

Over time, tailored confidential information definitions became vital in delineating protections. They aimed to protect the full range of proprietary information exchanged, whether explicitly marked confidential or implicitly sensitive.

In effect, confidential information clauses developed to provide expansive and flexible protections for any non-public data that offered competitive value. This comprehensive approach aimed to adapt protections to business needs as diverse as the information itself.