NDA Definition of Confidential Information: Why It's the Most Important Clause

What This Clause Does

The definition of confidential information is the most important clause in any NDA — it determines exactly what you're legally required to protect. A narrow, well-crafted definition covers specific categories (trade secrets, financial data, customer lists) and often requires the disclosing party to mark information as confidential or confirm it in writing.

A dangerously broad definition can cover everything you ever learn in the relationship, including information that's publicly available or that you already knew. Overly broad definitions are also harder to comply with in practice because you can't easily keep track of what's covered.

What This Looks Like in a Contract

"'Confidential Information' means any information or data that has or could have commercial value or other utility in the business in which Disclosing Party is engaged, whether in tangible or intangible form, and regardless of whether it is marked 'confidential.'"

Red Flags to Watch For

• Definition covers any information regardless of how it was disclosed or whether it was marked confidential
• No exclusion for publicly available information
• No exclusion for information independently developed by the receiving party
• "Could have commercial value" language is almost unlimited in scope

Need a Contract Template?

Understanding the clause is the first step. If you need a lawyer-reviewed contract to start from, these services offer templates for this type of agreement.

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Found in These Contracts

This clause commonly appears in the following contract types:

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