This contract tip explains the confidential information exclusions based on the receiving party's possession.
The exclusion applies to receiving parties that have the information from another source other than the disclosing party.
In those cases, the information is excluded from the confidential information definition.
This concept is usually written as two different exceptions - one that relates to what happened before disclosing party shared the information with the receiving party and one that relates to what happened after.
The first exception looks back – "receiving party already had the information before disclosure." Typically, these exclusions also require that the possession was free from confidentiality restrictions.
The second exception looks forward – "receiving party received from a third party after disclosure." This exclusion often includes a requirement that the third party had the right to disclose to the receiving party.
Both these exclusions sometimes have other requirements too.
Some contracts require the receiving party to show written proof. I also sometimes see provisions sometimes extend that possession to the receiving party's affiliates and representatives.
What's your approach to drafting and negotiating these exclusions?
