Confidential Information, "return or Destroy" Clauses and the Pernicious Persistence of Electronic Records

• Jurisdiction: United States,Federal
• Citation: Vol. 46 No. 4
• Publication year: 2021
• Author: Jay Parkhill
• topic: Business of Law,Contracts

CONFIDENTIAL INFORMATION, "RETURN OR DESTROY" CLAUSES AND THE PERNICIOUS PERSISTENCE OF ELECTRONIC RECORDS

Jay Parkhill
Parkhill Venture Counsel, P.C.

As lawyers we strive to say what we mean in contracts, and mean what we say. Sometimes though, tradition, force of habit or seemingly competing priorities lead us to write things one way, but act completely differently.

This happens regularly with confidentiality provisions in business agreements. It is common to see language in NDAs and commercial agreements similar to the following:

The receiving party shall (i) return to the disclosing party all Confidential Information or shall destroy such Confidential Information and all copies/reproductions as directed by the disclosing party; (ii) expunge it from computer systems, magnetic, digital or other storage media on which it was stored; and (iii) furnish proof of its destruction by issuing a certificate signed by a senior officer of the receiving party confirming that the provisions of this clause have been complied with[....]
Sometimes there's a carveout that says except that receiving party may retain one copy of Confidential Information for recordkeeping purposes And these provisions often go on to say each party's confidentiality obligations in this Agreement will survive for a period of [three] years after termination of this Agreement.

Indubitably companies doing business together want to know that if they exchange confidential information the other party will protect that information against disclosure. I will posit, however, that the "industry standard" language we use to describe those obligations is a relic of paper-document times, is...