How to State the Duration of the Obligation to Keep Information Confidential

A few days ago I uploaded a revised version of Koncision’s confidentiality-agreement template. Apart from glitches lurking in a few branches of the template’s copious decision tree, I changed how the template refers to duration of the obligation to keep information confidential.

Anyone completing the previous version of the questionnaire was offered the following answers to the question regarding duration of that obligation:

  • Perpetually
  • Perpetually with respect to trade secrets and for a stated period with respect to all other confidential information
  • For a stated period

And the text in the output document reflected whichever answer you selected. In particular, it used the word “perpetually” if the user chose the first or second answer.

But I received an email from a Koncision customer, Rich Vicenzi, an attorney in Westport, Connecticut, that caused me to rethink that approach. Rich said, “In my experience people often overreact to words like ‘perpetual.'” He proposed that instead of a perpetual obligation, it should last as long as the trade secret is a trade secret or as long as the confidential information constitutes confidential information, as applicable.

I think that makes sense—saying that the recipient is under an obligation for ever and ever doesn’t make sense if an obvious cutoff point presents itself.

[Updated January 3, 2012: So I revised the template to address that issue. But commenters to the original version of this post pointed out a further problem with the original version, namely that the recipient isn’t in a position to distinguish a trade secret of the disclosing party from other confidential information. So here’s my latest take on answers to the question regarding duration of the obligation to keep information confidential:

  • For as long as it remains Confidential Information
  • In the case of specified Confidential Information, for as long as it remains Confidential Information; in the case of any other Confidential Information, for a stated period
  • For a stated period

If the user selects answer number two, a subsequent question would ask the user either to state what the “specified Confidential Information” is (“the formula for Widget Elixir”) or to specify that the output document should include an attachment that would state what the specified information is. The latter option would make sense if it would take more than a few words to describe the specified information or if the specified information is unknown at the time the questionnaire is completed.

I agree with Michael Fleming that for purposes of answer number two, nothing is gained by referring to “the specified Confidential Information” as a trade secret. All that matters is that it’s sufficiently important to the disclosing party that the disclosing party doesn’t want the recipient to be able to disclose it after a stated period, along with the other Confidential Information.

I didn’t include an option suggested by Michael, that the disclosing party be allowed to mark Confidential Information when it’s disclosed as constituting “specified Confidential Information.” That would give the disclosing party unfettered discretion to designate Confidential Information as “specified Confidential Information” regardless of how sensitive it actually is.

The second answer is more complex than the other two, but it offers a compromise if the disclosing party is eager to protect some information and the recipient is eager to limit any open-ended obligation to keep information confidential.

My thanks to Pieter, Chris, and Michael for helping me make progress on this issue. I’m open to the possibility of further refinements! ]

[Here’s how the original version of this post ended: So the revised version of the template offers the following answers to the question regarding duration of the obligation:

  • In the case of Confidential Information that constitutes a trade secret, for as long as it remains a trade secret; in the case of any other Confidential Information, for as long as it remains Confidential Information
  • In the case of Confidential Information that constitutes a trade secret, for as long as it remains a trade secret; in the case of any other Confidential Information, for a stated period
  • For a stated period

What do you think?]

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.