(a) Between merchants, if If an agreement between merchants obligates a party to handle or process confidential commercial, scientific, or technical information of the other party and does not authorize republication of that information, and the receiving party has reason to know that the information is confidential, and not intended for republication, the following rules apply:

(1) As between the parties, the information and any summaries or tabulations based on it remain the property of the delivering party or, in the case of commercial data, the party to which the information relates, and may be used by the other party only in a manner and for the purposes expressly authorized by the agreement or necessary for its performance.

(2) The party receiving, summarizing or tabulating the information and its agents shall:

(b) In a case not governed by subsection (a), if technical or scientific information is developed during performance of an agreement, as between the parties, the following rules apply:

(1) If information is developed jointly, rights in the information are held jointly subject to the obligation of each party to handle the information in a manner consistent with protection of the reasonable expectations of the other respecting confidentiality.

(2) If the information is developed by one and is not within paragraph (1), the information is the property of that party, but the other party may use the information as provided in the agreement.

(b) This section does not apply to transactional data or information intended by the parties to be published by the licensee. "Transactional data" includes or to information collected to initiate or maintain or perform a contractual relationship, maintained to effect or make a record of a transaction, or used to describe the subject matter of the transaction, or similar transactional information.

Uniform Law Source: None.

"Agreement": Section 1-201. "Contract": Section 2B-102. "Information": Section 2B-102. "Licensee": Section 2B-102. "Party": Section 1-201. "Record": Section 2B-102. "Rights": Section 1-201.

1. Approved the section in principle.

1. General Principle. Subsection (a) states the principle that, unless agreed to the contrary, the delivering party or the person about whose business the commercial data relates maintains control of the data. This deals with an important issue relating to cases in which one party transfers data to another in the course of the transaction and for enabling that other party's performance of the contract. The rule applies to cases involving information that has not been released to the public and that the recipient knows is unlikely to be released. The presumption is that the information is received in a confidential manner and remains the property of the party who delivers it to the transferee. In effect, the circumstances themselves establish a presumption of retained ownership.

Illustration 1: Staten Hospital contracts for Computer Company to provide a computer program and data processing for Staten's records on treatment and billing. Staten data are transferred electronically to Computer and processed in Computer's system. Staten remains the owner of its data. There is an obligation to return the data at the end of the contract. See Hospital Computer Sys., Inc. v. Staten Island Hosp., 788 F. Supp. 1351 (D.N.J. 1992).

2. Remedies. The remedies for breach of the obligations described in this section are for breach of contract. Ordinary contract remedies apply as do ordinary contract remedy limitations.

3. Exceptions. Subsection (b) states two general situations under which the presumptions and obligations o subsection (a) are not appropriate under current law or practice.