Non-use of confidential information: Overview, definition, and example
What is non-use of confidential information?
Non-use of confidential information is a clause in a confidentiality or commercial agreement that prevents a party from using the other party’s confidential information for any purpose other than what's explicitly allowed under the contract. It works alongside non-disclosure provisions, but while those restrict sharing, this clause focuses on how the information can or cannot be used.
Why is non-use of confidential information important?
It helps protect trade secrets, business strategies, customer data, or technical information from being exploited—especially in partnerships, licensing deals, or negotiations. Without a non-use clause, a party might avoid disclosing the information but still use it internally to gain a competitive advantage. This clause closes that gap and ensures that confidential information is only used as agreed.
Understanding non-use of confidential information through an example
A startup shares its proprietary machine learning model with a potential strategic partner during investment talks. The non-use clause in their NDA states that the partner can review the model only for due diligence—not to build competing technology. Six months later, if the partner launches a similar product using ideas from that model, the startup can point to the non-use clause to assert a breach, even if nothing was disclosed externally.
Example of a non-use of confidential information clause
Here’s how a non-use of confidential information clause may look like in a contract:
"The receiving party agrees not to use the disclosing party’s Confidential Information for any purpose other than evaluating or performing its obligations under this agreement. The receiving party shall not use such information for its own benefit or for the benefit of any third party without the prior written consent of the disclosing party."
Conclusion
The non-use of confidential information clause protects sensitive business information from being misused, even if it's never shared publicly. It ensures that information is used only for its intended purpose, creating stronger safeguards around trade secrets, negotiations, and innovation. If you're sharing anything valuable, this clause is essential to include.
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.