What do tattletale clauses do?
These clauses require the receiving party to notify and assist the disclosing party if there’s a breach of confidentiality obligations. It is sometimes called the "tattletale clause.” because it requires a party to report breaches by their own employees, representatives, or third parties. These clauses favor disclosing parties and are resisted by receiving parties.
Sample clause
“Recipient will immediately notify Discloser if Recipient learns of any loss or any actual or attempted unauthorized access to, or use or disclosure of, any Confidential Information in the custody or control of Recipient or its Authorized Recipient. Recipient will cooperate with Discloser to investigate and mitigate any adverse effects.”
Big issues
By when does the receiving party have to tell the disclosing party of the breach?
What kind of breaches are covered? All or only material ones?
How does this requirement overlap with data breach disclosure obligations under privacy laws?
Whose breach has to be disclosed? Is it their employees, authorized parties, or any third party?
Disclosing party’s issues and responses
Disclosing parties want immediate notice. They may need to act fast to pursue an injunction or take other action to prevent further harm.
Script: “You have to tell us immediately. We need to know so we can take proactive steps to ensure our information qualifies as trade secrets. If we fail to take steps after disclosure, we could lose that status.”
Receiving party’s issues and responses
Receiving parties have to take care not to violate their other agreements or obligations to their employees.
Whose knowledge triggers the requirement?
Script: “If there is a legal requirement to disclose a breach, we'll notify you. Otherwise, we can't be in breach because some information was inadvertently disclosed. There's no other obligation to tell you every time we fail to meet a requirement. It also doesn't work in the real world. There’s rarely a smoking gun and we don’t want you coming after us.”
- From the How to Contract NDA Playbook
What other things would you add to this list?