Return of proprietary information: Overview, definition, and example
What is return of proprietary information?
The return of proprietary information refers to the process by which one party, typically a former employee, contractor, or business partner, returns confidential or proprietary information to the owner after the conclusion of an agreement, employment, or business relationship. Proprietary information includes any sensitive data, trade secrets, or intellectual property that is valuable and owned by the company, such as business plans, customer lists, product designs, or software code. The return of this information ensures that the party no longer retains access to or control over the proprietary materials, thus safeguarding the owner’s business interests.
For example, when an employee leaves a company, they may be required to return all proprietary documents, passwords, and files related to their work.
Why is return of proprietary information important?
The return of proprietary information is crucial for protecting a company’s intellectual property and trade secrets. It helps prevent unauthorized use or disclosure of sensitive data, which could harm the business by allowing competitors to access valuable information. By requiring the return of proprietary information, businesses ensure that they maintain control over their intellectual assets and minimize the risk of data breaches or misuse.
For employees, contractors, or partners, returning proprietary information after the relationship ends ensures that they are in compliance with confidentiality agreements and avoids legal issues.
Understanding return of proprietary information through an example
Imagine a software company hires a developer to work on a new product. As part of the employment agreement, the developer is given access to the company’s proprietary source code, project plans, and marketing strategies. After the developer leaves the company, they are required to return all proprietary information, including any documents or digital files related to their work. This ensures that the developer cannot use the company’s proprietary information for personal gain or share it with competitors.
In another example, a business consultant signs a non-disclosure agreement (NDA) and gains access to sensitive financial data to help improve a company’s operations. Once the consulting contract ends, the consultant is required to return all proprietary financial reports and any other confidential materials they used during the engagement.
An example of a return of proprietary information clause
Here’s how a return of proprietary information clause might look in an agreement:
"Upon termination of this Agreement, the Contractor agrees to return all proprietary information, documents, and materials belonging to the Company. This includes any written, electronic, or physical copies of confidential information, trade secrets, and intellectual property. The Contractor shall not retain any copies, summaries, or notes containing such proprietary information."
Conclusion
The return of proprietary information is a critical practice for businesses to protect their intellectual property and sensitive data. Whether at the end of an employment contract, partnership, or business arrangement, ensuring the return of proprietary information helps to prevent misuse or unauthorized access. Clear agreements and clauses regarding the return of proprietary information help businesses safeguard their assets and maintain confidentiality.
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.