The purpose of this contract, of which there are a great many variations and can take the form of an agreement or letter, is to permit very limited disclosure and use of confidential information for a particular purpose. In this contract, the disclosure is required by a licensee to a third party outsourcing company of confidential information relating to a software program for which the licensee has already entered into a software licence with the licensor. The licensee wants to appoint the outsourcing company to assist it for a particular purpose and for such purpose the outsourcer must use the program and understand its functionality in depth. Examples of typical purposes include, assisting a licensee better understand the use and application of new software or to integrate it with existing software used by the licensee or to test out the new software functionality.
As the outsourcing company is not a party to the software licence and therefore is not bound by the confidentiality provisions of that license, the licensor must ensure that the outsourcer enters into this type of agreement to ensure confidentiality of the proprietary information in the software which it will be required to know in order to perform the purpose of its appointment. As it is most likely that the outsourcer is another software company with the necessary skills to perform the purpose, the licensor may deem it a competitor and would therefore not want the outsourcer to use any of its proprietary information to gain a market advantage or indeed, improve its own software to be equally competitive to the licensor’s software.
The licensor must ensure therefore that the outsourcer is bound by very strict confidentiality provisions as contained in this contract.
For more general non-disclosure provisions, see Contracts 47 (both parties disclosing) and 48 (one party disclosing).