Non-disclosure of non-public information: Overview, definition, and example
What is non-disclosure of non-public information?
Non-disclosure of non-public information refers to an agreement or clause in a contract that prevents one party from revealing sensitive or confidential information that has not been made publicly available. This type of provision is often included in non-disclosure agreements (NDAs) and other contracts to protect proprietary data, trade secrets, business strategies, or personal information. The non-public information could include anything from financial data, customer lists, and marketing strategies to intellectual property or any other information that could harm a business or individual if disclosed to unauthorized parties.
Why is non-disclosure of non-public information important?
Non-disclosure of non-public information is important because it ensures that sensitive and valuable information remains protected from unauthorized access or exposure. If such information were to be disclosed, it could lead to competitive disadvantage, loss of business opportunities, legal consequences, or damage to an individual’s or company’s reputation. By including non-disclosure provisions, businesses and individuals can maintain control over their confidential information, foster trust in professional relationships, and prevent misuse of sensitive data. It also helps comply with legal requirements, such as data privacy regulations, that demand the protection of certain types of non-public information.
Understanding non-disclosure of non-public information through an example
For example, a software company enters into a partnership with a third-party developer to create a new application. The agreement includes a non-disclosure clause that prevents the third-party developer from disclosing or using any proprietary source code, algorithms, or customer data that the company shares. This non-disclosure of non-public information ensures that the third party does not share the company’s intellectual property or sensitive business information with competitors or the public.
In another example, a company looking to be acquired enters into a confidentiality agreement with the potential buyer. As part of the agreement, the buyer is granted access to sensitive financial information, projections, and future business plans. However, the non-disclosure clause in the agreement ensures that the buyer cannot disclose or misuse this information, protecting the company’s competitive edge and future market position.
An example of a non-disclosure of non-public information clause
Here’s how a non-disclosure of non-public information clause might appear in a contract:
“The Parties agree that all non-public information shared during the course of this Agreement, including but not limited to financial data, business strategies, trade secrets, and customer lists, shall remain confidential and shall not be disclosed to any third party without prior written consent from the disclosing Party. This obligation of non-disclosure shall continue beyond the termination of this Agreement.”
Conclusion
Non-disclosure of non-public information is a vital clause in contracts designed to protect confidential, sensitive, or proprietary information from being disclosed to unauthorized individuals or parties. It helps safeguard intellectual property, business secrets, and personal data, ensuring that sensitive information remains secure. By including such provisions, businesses and individuals can maintain their competitive edge, comply with legal requirements, and build trust in professional relationships.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.