proprietary information

Intellectual Property/Business AssetsLegal glossary term

Legal Definition

Proprietary information refers to the confidential, valuable assets of a company that are deemed essential for its competitive advantage or operational success. Legally, it includes trade secrets, intellectual property, or specific data that provides a unique economic benefit to the owning entity.

Plain-English Translation

Imagine something super special and secret that only your company knows. It's like a secret recipe or a special invention that makes your business better than everyone else. This information is so valuable that if others get it, they might steal your advantage.

Context in Contracts

It matters because it forms the basis for intellectual property protection, defining the scope of ownership, and dictating which parties have the right to use or exploit certain assets within legal agreements.

Visual model

Understand proprietary information fast

ELI10 illustration for proprietary information
01

Source code for a unique algorithm used in a software product.

02

A confidential client list detailing specific pricing structures.

Document context

How proprietary information shows up in legal documents

What is it?

Proprietary information is the set of assets—including trade secrets, patents, copyrights, or confidential data—that are unique to a specific entity and provide a competitive edge in the marketplace.

Why does it matter?

It matters because it forms the basis for intellectual property protection, defining the scope of ownership, and dictating which parties have the right to use or exploit certain assets within legal agreements.

When does it matter?

It usually appears when discussing the core assets of a business, such as source code, unique algorithms, confidential client lists, or specialized manufacturing techniques.

Where is it usually seen?

It is typically seen in contracts governing licensing agreements, intellectual property assignments, confidentiality clauses within employment agreements, and in litigation where one party claims infringement over proprietary assets.

Who is affected?

The entity that holds the proprietary information (e.g., a corporation or individual) and the parties who are obligated to protect it under legal duty.

How does it work?

It works by establishing clear boundaries around valuable assets, requiring formal documentation (like Non-Disclosure Agreements) to ensure that the disclosed information is protected from unauthorized use or disclosure.

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External reference for proprietary information

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Disclaimer: We do not provide legal advice. We translate legal language into plain English and help you prepare for a conversation with a lawyer.