How to Define Confidential Information

Why Defining Confidential Information Matters

There is no one right way to define confidential information (CI). How you broaden or narrow the definition depends on your client’s situation.

If your client expects to share a lot of CI and wants protection, they may benefit from a broader definition. They just need to make sure that they can protect the received CI from disclosure.

Other clients may want a narrower definition, usually because they receive a lot of valuable trade secrets from others. The clients may be concerned about later claims that they used the received CI in their products.

Broad vs. Narrow Definitions of Confidential Information

A narrow definition might look like this: “labeled as confidential or, if disclosed orally, identified as confidential in writing within 48 hours.” This approach is narrow because most companies do not reliably label all their CI, and almost no one sends those confirming emails.

A broad CI definition would be: “any information received from a party or its representatives that is not excluded in [the exclusion section].”This approach is so broad that you risk it not being precise enough to create a binding obligation.

I prefer the middle ground: “any information that a reasonable person would understand to be confidential because it is identified as confidential or the circumstances of disclosure.”