1. Non-Disclosure Agreements are NOT a One Size Fits All Agreement
Introduction
Non-Disclosure Agreements are not a one-size-fits all contract. Many firms provide clients with a
“standard” NDA, but this might not be in the client’s best interest. An NDA can cover a wide
range of discussions/interactions and it is important that your company tailor the NDA to best suit
your needs. A sales discussion with a potential customer might be treated completely different
from a discussion with a potential IP partner. In the first, your company might not be providing
highly sensitive information and the NDA would be tailored around protecting the confidentiality
of future product features. In the second, your company might be concerned about receiving
certain information from the potential partner that might taint your future development efforts. If
the potential partner shares ideas or information pertaining to your own product, your company
may be barred from using those ideas in the future. When our clients want to enter into an NDA,
we ask a few standard questions in order to best evaluate the client’s needs and the appropriate
clauses to include. The attached NDA document demonstrates some of the trade-offs and issues
that a client should consider when entering into an NDA. Obviously, we encourage you to seek
the assistance of counsel when entering any legal agreement. Please don’t hesitate to contact me if
you have any questions (Cameron Sellers: cameron@ascendalaw.com).
Guidance for Template
Below is a form of mutual confidentiality agreement (also known as a “nondisclosure agreement”
or “NDA”), which is drafted so that each party may disclose confidential information to the other
in connection with a possible commercial transaction. A unilateral confidentiality agreement
should be used in situations where only one of the parties needs to disclose confidential
information. The provisions in a mutual confidentiality agreement bind and benefit both parties in
the same manner, enabling each party to gain access to the other's confidential information under
one contract. Confidentiality agreements generally have two purposes:
 Preserve the confidentiality of sensitive information disclosed by one party to the other.
 Restrict the receiving party's use of the other party's confidential information except for
limited purposes that are expressly permitted under the agreement.
The parties may add additional provisions, either to address industry- or deal-specific concerns or
to include other terms that are indirectly related to confidentiality (for example, a non-solicitation
provision, although, please note, in California (and some other states) there are some special
circumstances relating to non-disclosure agreements and non-compete clauses.

2. When preparing or reviewing a mutual confidentiality agreement, consider whether you will
primarily disclose or receive information, and the relative value and sensitivity of the information
to be exchanged, and adjust the operative provisions accordingly. For example, if your company is
the customer in an outsourcing transaction, the definition of confidential information should be as
broad as possible and the receiving party's nondisclosure obligations should be strict. Conversely,
if you are representing the service provider, you might want less restrictive obligations and a
narrower definition of confidential information, possibly even a restriction on the types of
information that will be disclosed, to minimize liability.
NOTE: The template below has a number of bracketed clauses that may or may not be relevant or
appropriate for your particular agreement. In most cases we have provided endnotes to explain the
purpose of the bracketed language or clauses. If you contact me, I can send you a copy of the
template in Word format so you can properly use the endnotes and also modify according to your
needs (Cameron Sellers: cameron@ascendalaw.com).
MUTUAL NON-DISCLOSURE AGREEMENT
THIS AGREEMENT is made and entered into as of the date last signed below (the “Effective
Date”), by and between [insert full corporate name of Party A], a [insert Party A State of
Incorporation] [insert entity type of Party A] having its principal place of business at [insert Party
A address] (“Party A”) and [insert full corporate name of Party B], a [insert Party B state of
incorporation] [insert entity type of Party B] having its principal place of business at [insert Party
B address] (“Party B”) (each, a “Party” and together, the “Parties”).*1
WHEREAS, in connection with [insert the purpose of the NDA][evaluating a potential business
relationship] (the “Purpose”)*2, each Party (the “Disclosing Party”) desires to share certain
confidential information (defined below) that is non-public, confidential or proprietary in nature
with the other Party (the “Receiving Party”) [before,] on or after the Effective Date. [Confidential
Information also includes all notes, analyses, summaries and all other materials prepared by or for
the Receiving Party that contain, are based on, or otherwise reflect or are derived from, in whole or
in part, the Confidential Information (the “Notes”).]
NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth
herein, the Parties agree as follows:
1. Confidential Information* 3 . “Confidential Information” of a Disclosing Party shall
include, without limitation, (a) products, plans, planning information, marketing or promotion
plans or strategies, financial information, pricing, operations, vendor relationships, customers or
customer relationships, customer profiles, transaction data, sales estimates, business plans or
practices, trade secrets and internal performance results relating to past, present or future business
activities of the Disclosing Party, its affiliates or any of its customers or vendors; (b) any scientific
or technical information, design, process, procedure, formula, methodology or improvement that is
commercially valuable; (c) all documentation, reports, data, specifications, computer hardware or
software, computer programs, source code, object code, flow charts, mappings, interfaces,
databases, inventions, engineering and laboratory notebooks, drawings, diagrams, schema,

3. prototypes and models, and any other tangible manifestation (including data in computer or other
digital format) of any of the foregoing, whether or not patentable or copyrightable; and (d) all
proprietary secret or confidential information relating to either Party and their operations,
employees, products or services[, whether disclosed orally or disclosed or accessed in written,
electronic or other form or media, and whether or not marked, designated or otherwise identified as
“confidential.”].*4 [Confidential Information shall be subject to the restrictions of this Agreement
only if [clearly marked as proprietary when disclosed to the Receiving Party or, if not in tangible
form, only if summarized in tangible form conspicuously marked “Confidential,” “Proprietary” or
the like and delivered to the Receiving Party within thirty (30) days of the original disclosure]*5[,
or provided that ][a reasonable person would understand such information to be confidential or
proprietary given the nature of the information or the circumstances of disclosure]*6.
2. Obligations of the Receiving Party.* 7 The Receiving Party agrees to (a) hold the
Confidential Information in confidence using the same degree of care as it normally exercises to
protect its own proprietary information of a similar nature, but in no event less than a reasonable
standard of care*8; (b) not disclose the Confidential Information to any third party without the
prior written approval of the Disclosing Party*9; (c) not use the Confidential Information, or permit
it to be accessed or used, for any reason other than the Purpose*10; (d) reproduce the Confidential
Information only to the extent necessary for the Purpose; and (e) not copy, reverse engineer,
disassemble, decompile or design around the Confidential Information.*11 [Each Party agrees
that it will not purchase or sell any stock of the other Party based on Confidential Information.]
[Except as required by applicable federal, state or local law or regulation, neither Party shall
disclose to any person (f) that the Confidential Information has been made available to it, or that it
has inspected any portion of the Confidential Information; (g) that discussions or negotiations may
be, or are, underway between the Parties regarding the Confidential Information or the Purpose,
including the status thereof; or (h) any terms, conditions or other arrangements that are being
discussed or negotiated in relation to the Confidential Information or the Purpose.]*12 [In addition
to the foregoing obligations, the Receiving Party acknowledges that all personal data, including all
personally identifiable information, is protected under certain privacy laws and agrees to comply
with all legal and regulatory requirements relating to the privacy and confidentiality of such
personal data.]
3. Permitted Disclosures. The Receiving Party may disclose the Confidential Information to its
employees, officers and directors with a need to know[ and who are identified to and approved in
writing by the Disclosing Party in advance]* 13 ; provided, the Receiving Party binds those
employees, officers and directors to terms at least as restrictive as those stated herein*14 and
advises those employees, officers and directors of their obligations with respect to the Confidential
Information*15. The Receiving Party agrees to be liable for any breach of this Agreement by its
employees, consultants and contractors*16. *17 [Upon request, the Receiving Party shall provide a
list of individuals to whom the Confidential Information has been disclosed.]
4. Exceptions to Obligations. The restrictions on the use or disclosure of Confidential
Information shall not apply to any Confidential Information that *18 (a) is or becomes generally
available or known to the public [other than as a result of[, directly or indirectly,] any violation of
this Agreement by the Receiving Party]; or (b) was in the Receiving Party’s possession or known
by it without restriction[, as established by documentary evidence,] prior to receipt from the

4. Disclosing Party; or (c) at the time of disclosure is, or thereafter becomes, available to the
Receiving Party on a non-confidential basis from a third-party source[, provided that, to the
Receiving Party’s knowledge, such third party is not and was not prohibited from disclosing such
Confidential Information to the Receiving Party[ by a[ legal, fiduciary or] contractual obligation to
the Disclosing Party]]; or (d) the Disclosing Party agrees in writing is free of such restrictions; or
(e) was or is independently developed by the Receiving Party[, as established by documentary
evidence,][ without reference to or use of, in whole or in part, any of the Confidential Information].
5. Mandatory Disclosure. Prior to making any disclosure that is required by applicable federal,
state or local law, regulation or a valid order issued by a court or governmental agency of
competent jurisdiction (a “Legal Order”), the Receiving Party shall* 19 [use commercially
reasonable efforts to] provide the Disclosing Party with (a) prompt written notice*20 of such
requirement so that the Disclosing Party may seek, at its sole cost and expense*21, a protective
order or other remedy; and (b) reasonable assistance, at the Disclosing Party's sole cost and
expense, in opposing such disclosure or seeking a protective order or other limitations on
disclosure. If, after providing such notice and assistance as required herein, the Receiving Party
remains subject to a Legal Order to disclose any Confidential Information, the Receiving Party
shall disclose no more than that portion of the Confidential Information which, on the advice of the
Receiving Party's legal counsel*22, such Legal Order specifically requires the Receiving Party to
disclose [and, upon the Disclosing Party's request, shall use commercially reasonable efforts to
obtain assurances from the applicable court or agency that such Confidential Information will be
afforded confidential treatment]*23. Any Confidential Information disclosed pursuant to a Legal
Order shall otherwise remain confidential and subject to the protections and obligations of this
Agreement.
6. [The Disclosing Party understands that the Receiving Party may currently, or in the future, be
developing information internally, or receiving information from other parties that may be similar
to the Disclosing Party’s Confidential Information. Accordingly, this Agreement shall not be
construed to limit the Receiving Party’s right to, without violation of this Agreement, develop
products, or have products developed for it, that compete with products or systems contemplated
by the Disclosing Party’s Confidential Information.]*24
7. [Residuals. Notwithstanding any other provision of this Agreement, either Party shall be free
to [disclose, publish, disseminate and] use for any purpose (including, but not limited to, use in the
development, manufacture, marketing and maintenance of its own products and services) the
Residuals resulting from access to or work with the other Party’s Confidential Information,
provided that the Party maintains the confidentiality of the Confidential Information as provided
herein. The term “Residuals” shall mean information in non-tangible form that is [obtained
without the intent to memorize by and] retained in the [unaided] memory by persons who have had
rightful access to the Confidential Information, including, without limitation, the ideas, concepts,
know-how or techniques contained therein. The Receiving Party shall not have any obligation to
limit or restrict the work assignments of any of its employees, consultants and contractors who are
provided access to the Confidential Information, or to pay the Disclosing Party any royalties for
any work product developed in reliance on or through the use of, in whole or in part, any Residuals,
provided, however, that this Section [7] shall not be deemed to grant to the Receiving Party any
right, title or interest (including, without limitation, any intellectual property rights) in or to any

5. Confidential Information. [Notwithstanding the provisions of this paragraph, during the term of
this Agreement, neither Party may avoid its obligations toward a particular item of the Confidential
Information merely by having a person commit such item to memory so as to reduce it to a non-
tangible form.]]*25
8. [Feedback. The Receiving Party may from time to time provide suggestions, comments or
other feedback with respect to Confidential Information provided originally by the Disclosing
Party (“Feedback”). Both Parties agree that all Feedback is and shall be given entirely voluntarily.
Feedback, even if designated as confidential by the Party offering the Feedback, shall not create
any confidentiality obligations on the receiver of the Feedback unless the Parties sign a separate
written agreement. The Receiving Party will not give Feedback that is subject to terms that seek to
require a license to (a) any product, technology, service or documentation incorporating or derived
from such Feedback; or (b) any intellectual property of the Party receiving Feedback. Furthermore,
unless otherwise provided in a separate subsequent agreement between the Parties, the receiver of
Feedback shall be free to use, disclose, reproduce, license or otherwise distribute and exploit the
Feedback provided as it sees fit, entirely without obligation or restriction of any kind on account of
intellectual property rights or otherwise.]*26
9. No Transfer of Rights. All Confidential Information shall remain the property of the
Disclosing Party and each Party hereby retains its entire right, title and interest, including all
intellectual property rights, in and to all of its Confidential Information. Except for the right to use
and reproduce the Confidential Information for the Purpose, the Disclosing Party does not grant
any license, express or implied, under any trademark, patent, copyright, trade secret, or other
proprietary rights of the Disclosing Party and the Disclosing Party reserves any rights not
expressly granted to the Receiving Party hereunder.*27
10. Term, Termination and Survival of Obligations. The term of this Agreement shall
commence on the Effective Date and shall expire [insert number] year[s] from the Effective Date,
provided that either Party may terminate this Agreement at any time by providing written notice to
the other Party* 28 . Notwithstanding anything to the contrary herein, each Party's rights and
obligations under this Agreement shall survive any expiration or termination of this Agreement [in
perpetuity][for a period of [insert number] year[s] from the date of such expiration or termination,
except for personal information or trade secrets, which shall remain confidential for as long as
such information is protected under law or regulation], even after the return or destruction of
Confidential Information by the Receiving Party*29.
11. Return or Destruction of Confidential Information. At any time upon the Disclosing
Party's written request, [or automatically upon termination of this Agreement,]*30 the Receiving
Party shall promptly*31 collect and surrender to the Disclosing Party, or confirm the destruction or
non-recoverable erasure of,* 32 (a) all originals, copies, reproductions and summaries of the
Confidential Information; (b) all other tangible documents or materials (and all copies of same,
including “copies” that have been converted to computerized media in the form of image, data or
word processing files either manually or by image capture) based on or including any Confidential
Information[; and (c) any Notes created by the Receiving Party,] and such return or destruction
shall be certified in writing to the Disclosing Party by an authorized officer of the Receiving Party

6. supervising such return or destruction.[ The Receiving Party may, however, retain one copy of all
written materials returned to provide an archive record of the disclosure.]*33
12. No Future Obligations. The Parties agree that neither Party shall be under any obligation of
any kind whatsoever to enter into any future business or contractual relationship with the other
Party or to purchase products or services from the other Party.*34
13. NO REPRESENTATIONS OR WARRANTIES. NONE OF THE CONFIDENTIAL
INFORMATION WHICH MAY BE DISCLOSED OR EXCHANGED BY THE PARTIES
SHALL CONSTITUTE ANY REPRESENTATION, WARRANTY, ASSURANCE,
GUARANTEE OR INDUCEMENT BY EITHER PARTY TO THE OTHER PARTY OF ANY
KIND, AND, IN PARTICULAR, WITH RESPECT TO THE NON-INFRINGEMENT OF
TRADEMARKS, PATENTS, COPYRIGHTS, MASK WORK PROTECTION RIGHTS OR ANY
OTHER INTELLECTUAL PROPERTY RIGHTS, OR OTHER RIGHTS OF ANY KIND.
CONFIDENTIAL INFORMATION IS PROVIDED SOLELY ON AN “AS IS” BASIS, AND
THE DISCLOSING PARTY DOES NOT MAKE ANY REPRESENTATION OR WARRANTY,
EXPRESSED OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF THE
CONFIDENTIAL INFORMATION DISCLOSED TO THE RECEIVING PARTY HEREUNDER.
THE DISCLOSING PARTY SHALL NOT BE LIABLE TO THE RECEIVING PARTY
RELATING TO OR RESULTING FROM THE RECEIVING PARTY’S USE OF ANY OF THE
CONFIDENTIAL INFORMATION OR ANY ERRORS THEREIN OR OMISSIONS
THEREFROM.*35
14. [Roadmap Disclaimer. To the extent the Confidential Information disclosed hereunder
relates to plans regarding products, services or features not then commercially released, the
Receiving Party acknowledges and agrees that it may not rely on the future availability of any such
product, service or feature in making decisions to purchase or otherwise engage in transactions.]*36
15. Export Compliance. The Parties acknowledge that any materials and any technical
information provided under this Agreement are subject to the export regulations of the United
States, and any use of such materials and technical information must be authorized under those
regulations. The Receiving Party agrees that it shall not use or transmit the materials or technical
information except in compliance with the export regulations of the United States. If requested by
the Disclosing Party, the Receiving Party shall sign written assurances and other export-related
documents as may be required under the U.S. export regulations. The Receiving Party agrees to
indemnify and hold the Disclosing Party harmless from and against all claim, loss, liability or
damage suffered or incurred by the Disclosing Party resulting from or related to the Receiving
Party’s failure to comply with all export or import regulations.*37
16. [Remedies. The Receiving Party acknowledges and agrees that due to the unique nature of
the Disclosing Party’s Confidential Information, there can be no adequate remedy at law for any
breach of its obligations hereunder, which breach will result in irreparable harm to the Disclosing
Party, and therefore, that upon any such breach or any threat thereof, the Disclosing Party is
entitled to temporary, preliminary and permanent injunctive relief against the Receiving Party, its
officers or employees, without the requirement of posting a bond or proving actual damages, in
addition to whatever remedies it might have at law. [The prevailing Party shall be entitled to the

7. award of its costs and expenses, including reasonable attorney’s fees, in any action to enforce this
Agreement.]]*38
17. Governing Law, Jurisdiction and Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of [insert state] without giving effect to
any choice or conflict of law provision or rule (whether of the State of [insert state] or any other
jurisdiction) that would cause the application of laws of any jurisdiction other than those of the
State of [insert state]. Any legal claim, suit, action or proceeding arising out of this Agreement or
the matters contemplated hereunder or the breach thereof, whether sounding in contract, tort or
otherwise, shall likewise be governed by the internal laws of the State of [insert state] without
giving effect to any choice or conflict of law provision or rule and shall be instituted exclusively in
the federal courts of the United States or the courts of the State of [insert state] in each case
located in the city of [insert city] and County of [insert county], and each party irrevocably
submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding and
waives any objection based on improper venue or forum non conveniens. Service of process,
summons, notice or other document by mail to such Party's address set forth herein shall be
effective service of process for any suit, action or other proceeding brought in any such court.*39
18. Assignment; No Third Party Beneficiaries. Neither Party may assign any of its rights or
delegate any of its obligations hereunder without the prior written consent of the other Party. Any
purported assignment or delegation in violation of this Section shall be null and void. No
assignment or delegation shall relieve the assigning or delegating Party of any of its obligations
hereunder. This Agreement is for the sole benefit of the Parties hereto and their respective
successors and permitted assigns and nothing herein, express or implied, is intended to or shall
confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.*40
19. Miscellaneous. All notices, requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been given: (a) when
delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent
by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile
[or e-mail of a PDF document] (with confirmation of transmission) if sent during normal business
hours of the Receiving Party, and on the next business day if sent after normal business hours of
the Receiving Party; or (d) on the [third] day after the date mailed, by certified or registered mail,
return receipt requested, postage prepaid. Such communications must be sent to the respective
Parties at the addresses set forth on the first page of this Agreement (or to such other address that
may be designated by a Party from time to time in accordance with this Section). This Agreement
constitutes the sole and entire agreement of the Parties with respect to the subject matter contained
herein, and supersedes all prior and contemporaneous understandings, agreements, representations
and warranties, both written and oral, with respect to such subject matter. This Agreement may
only be amended, modified or supplemented by an agreement in writing signed by each Party
hereto. In the event that any of the provisions of this Agreement shall be held by a court or other
tribunal of competent jurisdiction to be illegal, invalid or unenforceable, such provisions shall be
limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise
remain in full force and effect and such invalidity, illegality or unenforceability shall not invalidate
or render unenforceable such term or provision in any other jurisdiction. This Agreement may be

8. executed in counterparts, each of which shall be deemed an original, but all of which together shall
be deemed to be one and the same agreement. A signed copy of this Agreement delivered by
facsimile[, e-mail or other means of electronic transmission] shall be deemed to have the same
legal effect as delivery of an original signed copy of this Agreement. No waiver by any Party of
any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by
the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect
of any failure, breach or default not expressly identified by such written waiver, whether of a
similar or different character, and whether occurring before or after that waiver. No failure to
exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement
shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives
to execute this Agreement on the respective dates entered below.
[PARTY A]: [PARTY B]:
By: By:
Name: Name:
Title: Title:
Date: Date:

9. 1 The parties should include their full name, business address and applicable state of
incorporation or organization, so that they can properly provide any required notices in
accordance with applicable state law. Although only the parties themselves are bound by
the agreement, consider whether the parties’ affiliates (parent, subsidiaries and sibling
entities) will be providing any of the confidential information to be shared under the
agreement. BACK
2 Many confidentiality agreements limit the disclosure and use of confidential
information to a specified business purpose. The purpose frames the parties’ engagement
and defines the scope of acceptable use of the confidential information that they
exchange. The purpose may refer directly to the proposed engagement under
consideration by the parties (complete the first bracketed option). Alternatively, the
parties may include general purpose language that broadly covers preliminary discussions
or negotiations undertaken in anticipation of executing a definitive agreement (use the
second bracketed option). However, if the parties have an ongoing business relationship,
or intend for their obligations under the confidentiality agreement to remain in effect after
a principal agreement has been executed, the purpose should be expanded by adding the
following: “or discussions of present or future matters under existing or future business
arrangements.” BACK
3 The definition of “Confidential Information” is an essential component of
confidentiality agreements. In general, a disclosing party will want to protect its
confidential information with as broad a definition as possible (see note 4), while a
receiving party will prefer a narrower definition to minimize its burden under the
agreement, and may want to further limit its obligations by requiring the disclosing party
to mark confidential information (see note 5). However, an overly broad definition might
be unenforceable, while a narrowly tailored provision may compromise a receiving
party’s ability to protect its own confidential information that it discloses. Because
mutual confidentiality agreements typically have a single definition that applies to both
parties, and assuming that each party intends to both disclose and receive confidential
information under the agreement, it is in both parties’ best interest to tailor the definition
to reflect:
 The nature of the contemplated engagement.
 The type and extent of information to be shared.
 Each party’s willingness to assume administrative and operational obligations in
connection with the information it discloses and receives.
The parties should sign a confidentiality agreement as early as possible in their
relationship or at the outset of substantive negotiations in a larger transaction, preferably
before any confidential information is disclosed. In practice, however, parties often
disclose information before signing the confidentiality agreement. Therefore, the parties
should specifically cover prior disclosures. However, if the parties are confident that no
confidential information was disclosed before the effective date of the agreement, or if
the parties agree that the agreement will not apply to any previous disclosures, the

10. optional word “before” can be removed. The definition of confidential information may
also include materials that are created by or for the receiving party using the disclosing
party’s confidential information as stated in the optional last sentence. For example, if the
receiving party creates a financial report using the disclosing party’s raw accounting data,
that report should be treated as the disclosing party’s confidential information under the
agreement (even though it may also include the receiving party’s own confidential
information). BACK
4 In addition to a general description of confidential information (such as “all non-public,
confidential or proprietary information”), the parties may want to list specific types and
categories of information to be covered (preceded by the words “including, without
limitation” to indicate that the list is not exhaustive). Optionally, the parties may want to
include the clarification that this information may be disclosed in any form and that
marking information as confidential is not required. BACK
5 While a receiving party may act with the best of intentions to comply with its
obligations, it can be difficult to track and maintain every item of information (and every
copy made internally) that a party receives under every confidentiality agreement it enters
into. Therefore, a party that anticipates being more often the receiving party in the
arrangement may seek to draft in some limitations on the forms of information that will
be considered confidential and subject to the terms of the agreement. For example, a
party may restrict the definition, depending on the degree to which one side or the other
is primarily the receiving party, to include only information that is:
 Disclosed in writing.
 Conspicuously marked as “confidential.”
 If disclosed orally, then confirmed to be confidential in writing by the disclosing
party within a fixed period of time from the date of initial disclosure (typically
between ten and 30 days).
To the extent that a party expects to be more often a discloser of information under the
agreement, it will likely object to any procedural requirements, such as marking, if it does
not believe that it will be able to consistently comply with them or does not label
confidential documents as part of its normal practice. From this party’s perspective,
avoiding the effort in reducing each item of information to writing and marking as
confidential minimizes the risk of human error in so doing and reduces the possibility of
its confidential information not being protected otherwise. A convincing response to this
objection is that the disclosing party is not taking adequate steps to protect its confidential
information if it does not label confidential documents as part of its normal practice.
BACK
6 A compromise is a reasonable person standard, which still puts responsibility on the
receiving party to determine what is reasonably confidential. The reasonable person
standard can be used on its own or combined with the marking requirement by using the
bracketed “provided” language. BACK

11. 7 Along with the definition of confidential information, the receiving party’s obligations
are the core provisions of a confidentiality agreement. Receiving parties are typically
subject to broad affirmative duties to protect and keep the disclosing party’s information
confidential, except as expressly permitted by the agreement. BACK
8 The receiving party’s duty to safeguard the confidentiality of the disclosing party’s
information is often tied to a certain standard of care; in this case, not less than a
reasonable degree of care. BACK
9 This sentence prohibits disclosure of the confidential information to third parties.
BACK
10 This provision strictly limits the ways in which the receiving party may use a
disclosing party’s confidential information. If an agreement only restricts the disclosure
of confidential information, the receiving party may be able to use the disclosing party’s
confidential information internally (without any disclosure to third parties) to gain a
competitive advantage against the disclosing party or in other ways that may diminish the
proprietary value of the information or otherwise negatively affect the disclosing party’s
business. BACK
11 In addition to these standard obligations, certain types of personal information that are
commonly held by businesses (such as employee records and customers’ financial
accounts) may be subject to special requirements under various federal and state privacy
and data protection laws and regulations. If either or both of the parties anticipate sharing
any of this personally identifiable information under a mutual confidentiality agreement,
the parties should insert a provision requiring that the receiving party comply with all
applicable laws and regulations in protecting the confidentiality of this information and
refrain from using this information for any unlawful purpose. The receiving party may
want to have the applicable laws and regulations that govern the disclosing party’s
information specifically listed, as it may not be familiar with them.
The parties should consider a restriction on transferring this information to another
jurisdiction if that transfer would raise data protection issues. This type of restriction
would be especially relevant for agreements with service providers that use employees
and contractors in other jurisdictions to reduce costs. If the party that anticipates being
the receiving party does not believe that it will need access to any personal information in
the other party’s possession, it should add a provision to the agreement expressly
prohibiting the disclosure of this information and requiring the disclosing party to redact
all such information from any materials that it anticipates sharing with the receiving party.
For more information on privacy and data security law, please contact Cameron Sellers at
650-269-3366 or cameron@ascendalaw.com.

12. The parties should also consider inserting a requirement for the receiving party to
immediately notify the disclosing party of any unauthorized disclosures or other breaches
of the agreement by the receiving party or its representatives. BACK
12 The parties may wish to keep the existence and terms of the agreement itself
confidential, not just the information disclosed under it. However, some parties may
object to this provision for legal or practical reasons. For example, a regulated entity may
be legally required to disclose the existence of certain discussions or a prospective buyer
of goods or services may want the flexibility to disclose that it is engaged in negotiations
to leverage its bargaining power with other potential sellers. For these reasons, this
language is bracketed as optional. BACK
13 A receiving party usually must share confidential information with its representatives,
but this should be permitted only on a need-to-know basis. Optionally, the disclosing
party may want to approve these representatives, but also see following note. BACK
14 A party can manage the risk of allowing its confidential information to be shared
among the receiving party’s representatives by requiring (in order of increasing burden
on the receiving party and its representatives):
 Each party to ensure that its representatives are subject to confidentiality duties or
obligations to that party on no less restrictive terms than the confidentiality
agreement. Confidentiality provisions in employee policies, employment
agreements or independent contractor agreements are often considered sufficient,
although the parties may wish to draft in a mutual representation and warranty
that these provisions have been or will be included in each party’s respective
agreements with its representatives. Similarly, confidentiality duties owed by the
parties’ financial advisors and legal counsel are generally thought to be adequate,
without the need for separate written agreements between a party and these
representatives.
 That the parties execute confidentiality agreements with each of their
representatives on terms that mirror the provisions in this agreement. Larger
entities often object to this requirement due to the potentially overwhelming
administrative burden of having its representatives execute separate
confidentiality agreements specific to certain entities and opportunities. However,
one or both of the parties may be obligated to include this measure, whether under
applicable law or by way of an upstream agreement with a third party.
 That the representatives of each party execute an individual acknowledgement or
confidentiality agreement directly with the disclosing party, as a precondition for
access to confidential information. This is an onerous requirement in practical
terms but may be necessary if the disclosing party is under a legal, regulatory or
contractual obligation to document who is in possession of its confidential
information, and to otherwise closely control the disclosure and use of that

13. information. In that case, a possible compromise from the receiving party’s
perspective would be to require the receiving party to maintain a record of
everyone who has access to the disclosing party’s confidential information.
 The receiving party to obtain the disclosing party’s consent before any disclosure
by the receiving party to its representatives. As this requirement inevitably
complicates and delays the exchange of information, parties should only insert
this provision if the information to be shared is classified or subject to national
security restrictions, or if otherwise required by law, regulation or an upstream
contract. BACK
15 The receiving party should be obligated to inform its representatives that the disclosing
party’s information is confidential, as this will help support a case for the disclosing party
to hold the representatives themselves responsible under a non-contractual duty of
confidentiality. BACK
16 Parties often clarify that the receiving party will be liable for any failure by its
representatives to comply with the agreement. Alternately, the party that anticipates being
the disclosing party will sometimes include language allowing it to seek recourse directly
against the other party’s representatives (including its directors, officers and employees)
if they breach the confidentiality agreement. It is questionable whether these types of
provisions are enforceable, due to lack of privity with the representatives. In addition,
many companies find these provisions objectionable because they undermine the veil of
protection from personal liability that entities are intended to provide. Therefore, these
options are not included in this sample template. BACK
17 Be aware of language that obligates the receiving party to “cause” or “prevent” its
representatives from taking or refraining from taking certain actions. This obligation
presumes that a receiving party has the ability to control the activities of its
representatives. Because this is rarely the case, parties to mutual confidentiality
agreements generally prefer to obligate the receiving party to “inform,” “direct” or
“instruct” its representatives. BACK
18 These carve-outs are standard, but they can be drafted more or less broadly by either
excluding or including the optional bracketed language. The party that anticipates being
the receiving party prefers broader exclusions to minimize its operational and
administrative burden under the agreement. The party that anticipates being the
disclosing party wants narrower exclusions to maintain the most protection of its
confidential information. For example, a receiving party would argue that the carve-out in
subsection (c) for information obtained from third-party sources should not include the
optional phrase “legal, fiduciary or” so that the exclusion will apply unless the third party
breaches a binding contractual obligation, regardless of whether the third party violates a
non-contractual duty to the disclosing party. BACK
19 This section provides conditions under which a party may disclose the other party’s
confidential information if required by law, regulation or valid court order from a

14. competent government authority. Only disclosures that are specifically required (as
opposed to “requested”) should be permitted. In addition, the parties should ensure that
this provision only applies to disclosures that are compelled by applicable regulation or a
valid court order, not just those “required by law,” which is why the bracketed language
is optional. BACK
20 The receiving party’s obligations to provide sufficient notice and cooperation are
intended to allow the disclosing party to make a timely objection to a compelled
disclosure. In most agreements, these provisions require only “prompt” notice (as
opposed to a defined period) and cooperation, often including the phrase “commercially
reasonable efforts” as a hedge in the event the receiving party is prevented from
providing sufficient notice or cooperation for reasons beyond its reasonable control.
BACK
21 The disclosing party should bear the cost of any action that it takes to prevent the
disclosure of its confidential information. To eliminate any ambiguity as to which party
would bear the cost in these circumstances, the parties should insert the words “at the
Disclosing Party’s sole cost and expense” where the action is referenced. BACK
22 The parties should avoid any obligation to obtain a legal opinion from counsel before
making disclosures. The process for securing an opinion letter from outside counsel is
expensive and time consuming. Instead, include an obligation for the receiving party to
obtain the “advice” of its counsel before making any required disclosure. BACK
23 The parties may wish to limit their potential responsibilities as the receiving party
under this provision to merely providing notice and cooperation to the disclosing party,
omitting any further obligation to seek confidential treatment by the court or agency
compelling disclosure, which is why this language is bracketed as optional. BACK
24 If the parties operate in the same commercial space or industry, a party that expects to
more often be the receiving party should consider inserting this optional section to state
that neither the execution of the agreement nor the sharing of confidential information
will prevent the parties from developing similar products or providing similar services
that might compete with the other party’s products or services, provided that the parties
do not violate the agreement in so doing. BACK
25 It is not often clear whether the non-use restriction of a confidentiality agreement
applies solely to the actual information disclosed. Because of this lack of clarity, some
receiving parties fear that their employees may be considered “tainted” by the general
knowledge they retain from their exposure to a disclosing party’s confidential
information and, as a result, be prevented from working on certain projects and initiatives.
In addition, receiving parties could also suffer competitively by not being able to leverage
the “know-how” that their employees naturally develop through information obtained in
the course of their employment, including third-party information that is governed by a
confidentiality agreement.

15. For these reasons, receiving parties sometimes insert residual information clauses as a
carve-out to restrictions on using confidential information. This provision allows the
receiving party to use residual information derived from the disclosing party’s
confidential information in the receiving party’s business. Residual information is often
defined as information (including any ideas, concepts, techniques or know-how) retained
in the unaided memory of the receiving party or its representatives who have been
provided access to the disclosing party’s confidential information.
Disclosing parties often reject residual information clauses. From the disclosing party’s
perspective, this provision limits the effectiveness of an important contractual protection
by making it more difficult to ascertain whether the receiving party is inappropriately
using the disclosing party’s confidential information. If the disclosing party does accept
some form of a residual information clause, a proviso reaffirming the disclosing party’s
right, title and interest in and to any intellectual property rights tied to the disclosed
information is standard. If the residual information clause is silent on this issue, one could
argue that the provision implicitly grants to the receiving party a license to use any
intellectual property embodied in the confidential information. Also, a disclosing party
will likely object to any attempt to apply this type of clause to its financial information,
customer information and/or trade secrets. From the disclosing party’s point of view,
some information may just be too valuable to allow the receiving party to even indirectly
use.
While we have tried to address the most common reasons for and objections to a
residuals clause, this is a complex issue with many solutions to consider, such as limiting
the definition of Confidential Information or restricting access to the Confidential
Information to specific employees of the receiving party. For more an in-depth discussion
of how to draft an appropriate residuals clause, please contact Cameron Sellers at 650-
269-3366 or cameron.sellers@fseip.com. BACK
26 In the course of ongoing discussions between the parties, the receiving party may
provide suggestions, comments or other feedback, such as new features or functionality,
on the Confidential Information of the disclosing party. Without this optional clause, the
receiving party may claim IP rights in any improvements, features or actions taken by the
disclosing party based on such feedback and may even seek royalties from the disclosing
party for the sale or license of such improvements or features. Since this is not intended
as a commercial agreement, this clause makes it clear that, unless agreed to in a separate
agreement between the parties, feedback is not confidential to the receiving party, that no
license is required to use the feedback, and that the disclosing party is free to use the
feedback in any way it chooses. BACK
27 Mutual confidentiality agreements often provide that each party retains any and all of
its intellectual property and other rights in the confidential information that it discloses,
and disclaim any transfer of ownership or grant of license to the receiving party. This
provision prevents either party from asserting that it was implicitly granted a license or

16. other right to use the other party’s information outside the scope of the agreement.
BACK
28 While confidentiality agreements can be structured to run indefinitely, mutual
confidentiality agreements often terminate on a fixed expiration date or on the occurrence
of certain events or conditions, such as the conclusion of the defined business purpose or
the signing of a principal agreement.
A term of one to three years is typical, with either party having the right to terminate
earlier by providing written notice to the other. The parties may also structure a
confidentiality agreement to remain in effect even after the parties have entered into a
principal agreement. To do so, this provision should be structured so that the
confidentiality agreement becomes coterminous with the principal agreement, once it is
executed. If the parties contemplate entering into multiple principal agreements, then the
confidentiality agreement should be structured to become coterminous with the last
agreement in effect between the parties. BACK
29 The parties’ rights and obligations concerning any information disclosed during the
term are often set to survive any termination or expiration of the agreement, typically for
a defined period of time either from the end of the term (preferred) or from the date on
which each item of information is actually disclosed (may be administratively difficult to
track). A party may prefer a longer or shorter survival period, depending on whether it
expects to be more often the discloser or receiving party of information under the
agreement.
In the past, survival periods have typically lasted three to five years depending on the
type of information involved. However, recent case law suggest that including a short
time period (even 5 years) is an indication that the disclosing party does not consider the
information a true trade secret. For confidential information that will not remain relevant
and valuable for a long period, a shorter survival period is acceptable.
In addition, if a party is disclosing highly sensitive trade secrets, it is common to carve
out a perpetual survival period for this specific information or specify that the survival
period for this information will last as long as it qualifies as a trade secret under
applicable law. The parties should also consider a carve-out for personal information and
any other information protected by rule, regulation or law, so the receiving party’s
obligations concerning this information will continue for any mandatory period. BACK
30 This automatic trigger to return information is preferred by parties that tend to disclose
information, but managing this obligation may be difficult for parties that enter into a
large number of confidentiality agreements in the normal course. BACK
31 At a minimum, the receiving party should be obligated to “promptly” return or destroy
the confidential information in its possession. It is usually unrealistic to expect a
receiving party to “immediately” return or destroy this information, so parties may insert

17. specific deadlines (such as five business days) for the receiving party to comply. In a
mutual agreement, however, creating a deadline may actually work against the disclosing
party, as it may not have the internal resources to meet the deadline itself, as a receiving
party. BACK
32 Ideally, from the disclosing party’s perspective, the receiving party should be obligated
to return all confidential information. However, it is burdensome and often impractical
for a receiving party to track and compile all the information to be returned. Therefore, as
an alternative, many parties allow a receiving party to destroy the information (and any
internal notes and other materials generated from it). If a receiving party has the option to
destroy rather than return material, it should be required to certify to the destruction in
writing. BACK
33 Parties commonly include the right to retain confidential information for legal
compliance purposes or because the materials will have become embedded in electronic
and offsite files as part of systematic back-up and archiving procedures. A party may also
be legally required to retain certain internal records containing others’ confidential
information, such as board minutes. BACK
34 Strategically, the parties will want to state that engaging in discussions and exchanging
information under the confidentiality agreement do not obligate either party to entertain
or enter into any follow-on arrangement or transaction. This section ensures there is no
ambiguity in the parties’ mutual understanding of their relationship at this stage and their
expectations on any further dealings. BACK
35 It is common for the parties to disclaim all warranties on the accuracy and
completeness of the confidential information that each party respectively discloses under
the agreement. This is intended to prevent a receiving party from claiming that it suffered
damages in reliance on the disclosing party’s confidential information. A party that
expects to primarily be the receiving party should look to include a qualifier stating that
these disclaimers apply only to the confidentiality agreement and not to any other
agreements between the parties (including any principal agreement), because those
agreements will often have separately negotiated warranties. BACK
36 This optional section should be included if the disclosing party intends to share future
product plans and such disclosure would impact revenue recognition. BACK
37 Transferring certain software and technical data outside the US is subject to the Export
Administration Regulations issued by the US Department of Commerce under the Export
Administration Act of 1979. For example, an item may be deemed exported if it is made
available to anyone other than a US citizen or resident alien, or if access is granted to a
US-located asset from an offshore location. Companies commonly include this provision
in a non-disclosure agreement to restrict the receiving party’s ability to use or export the
Confidential Information outside of the US, and obligate the receiving party to comply
with any applicable US export controls, including obtaining necessary export licenses.

18. The indemnity clause at the end of this section gives the disclosing party additional
protection in the event that the receiving party does not comply. BACK
38 Due to the potentially serious consequences of an unauthorized disclosure by a
receiving party and the difficulty of ascertaining monetary damages in that event,
confidentiality agreements often provide for the possibility of a disclosing party obtaining
injunctive relief (in addition to any other available remedies). This optional section
should be used when you are more often the disclosing party. From the disclosing party’s
perspective, you want the receiving party to agree that breach “will” cause irreparable
harm, that you are entitled to an injunction, and to waive any requirement of posting a
bond when taking such action. As the receiving party, you can either leave this provision
out of the agreement or soften the language to “may” cause irreparable harm and “seek”
an injunction, as a party claiming a breach must still prove in court that a breach did in
fact occur (or in the case of a motion for an injunction, that there is a substantial
likelihood of success of proving on the merits that a breach occurred) and persuade the
court that injunctive relief is otherwise warranted under the circumstances. Also, the
receiving party usually does not waive any requirement that the non-breaching party
posts a bond or prove damages when taking such action.
Also consider specifying that the prevailing party in litigation will be reimbursed for its
costs and expenses, including attorneys’ fees and court costs (contrary to the general rule
under US common law). If a party anticipates that it is more likely than the other party to
bring a suit for breach (in this case, if the party expects that it will more often be the
disclosing party), it should try to include a provision entitling the prevailing party to
reimbursement of its attorneys’ fees. Conversely, a party that anticipates having to defend
against a suit (that is, expects to more often be the receiving party) should resist or try to
limit this right to a fixed amount, to discourage the other party from litigating. BACK
39 Parties typically try to maintain consistency regarding governing law, jurisdiction and
venue across all transactions they undertake together. Because the confidentiality
agreement is often the first document that the parties execute, extra care should be taken
in considering this provision. BACK
40 Typically parties are not permitted to assign their obligations under a mutual
confidentiality agreement to any third party or affiliate without the other party’s consent,
with the common exception being an assignment in connection with a change of control
(merger or acquisition). Parties should avoid inserting provisos stating that consent to
assignment may not be “unreasonably withheld, conditioned or delayed” in mutual
confidentiality agreements because this language loosens the disclosing party’s control
over who can access the information and, more importantly, may impact whom it can
hold accountable in the event of a breach. BACK