Proprietary information
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NDA Anatomy™
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For a rumination our habit to wilfully confuse a dull public utility with proprietary information see secret sauce.
Proprietary information
/prəˈpraɪətəriˌɪnfəˈmeɪʃən/ (n.)
Information that is capable of ownership and that is owned. Intellectual property.
Careful, trooper. It is fun to throw around big words, but be aware of what they mean. “Proprietary”, so our good friends on the world wide web tell us, means “of or relating to an owner or ownership”.
Ownership implies a property right of some sort.[1] When it comes to information, “ownership” is a slippery concept. Only certain kinds of information may be “owned” at all— those that qualify as intellectual property: copyrighted material; patents and trade marks. But permissions to use, or transfer, proprietary rights in information are not a fit subject for a confidentiality agreement. For those you need a licence agreement. An NDA is about what you may not do with information to which you already have an implied licence. This is a contractual restriction: its breach sounds in damages, for loss caused to the discloser. The use, for profit, of information owned by someone else is not, of itself, a breach of contract but an infringement of proprietary rights for which the remedy is an account for profits.
You can’t “own” raw data, or facts, or simple lists of things. Client lists, trading data, a credit history, the economic data from your business — these things may be commercially sensitive, and they may be secret — but they are not proprietary information.
Thus the scope of a confidentiality agreement is wider than an intellectual property licence, but the measure of compensation is different.
Much of the information you might want to protect in a confidentiality agreement is not intellectual property: Indeed, often that is exactly why you need a confi — the secret is not otherwise protected. If it is not intellectual property then it cannot be “proprietary information”.