Trade Secrets And Generative AI: Protective Measures In An Evolving Technological Landscape

• Published date: 14 June 2023
• Law Firm: Jones Day
• Author: Mr Anthony Insogna, Jennifer Bennett, John Froemming, Carl Kukkonen III, Randy Kay, Jonathan M. Linas, Michael A. Oblon, Emily J. Tait, Steven Zadravecz and John O'Donnell

In Short

The Background: In recent months, artificial intelligence ("AI") platforms have taken the world by storm, introducing new, powerful tools for generating original and useful content based on training data and user prompts.

The Situation: These tools pose a potential threat to a company's trade secrets, as an employee may inadvertently disclose sensitive information by using generative AI applications. This has led some companies to ban the use of these applications for work-related tasks.

Looking Ahead: Although prohibiting the use of generative AI is one solution, there are several possible solutions to reasonably protect one's trade secrets while still taking advantage of generative AI's many benefits.

Generative AI applications such as large language models have emerged as groundbreaking tools for analyzing data and generating work product in all industries. As recent news has shown, however, those tools pose a unique threat to a company's trade secrets. These applications capture and store their inputs to train their models. Once captured, the information input into those applications sometimes cannot be deleted by the user, may be used by the application, and may be reviewed by the company behind the AI application. If an employee inputs a company's trade secret into an AI prompt, that trade secret could be at risk of losing its trade secret protection.

To avoid the consequences of any disclosure arising from the use of an AI system, it is important that companies ensure that they take reasonable measures to protect their trade secrets. This Commentary analyzes potential measures to protect company trade secrets from employees' uses of generative AI applications.

The Reasonable Measures of Protection Requirement for Trade Secrets

Trade secrets are invaluable assets for businesses, encompassing proprietary information, formulas, processes, techniques, or customer data that provide a competitive advantage. Unlike patents or copyrights, trade secrets rely on confidentiality and are not formally registered. Maintaining the secrecy of trade secrets is essential for preserving a company's distinctiveness and competitive advantage in the market.

Under the Defend Trade Secrets Act ("DTSA"), the owner of a trade secret must take "reasonable measures to keep such information secret." 18 U.S.C. ' 1839 (3)(A). The Uniform Trade Secret Act and related state trade secret statutes have similar requirements. See, e.g., Uniform Trade Secrets Act, ' 1(4)(ii) (requiring the trade secret to be "the subject of efforts that are reasonable under the circumstances to maintain its secrecy"); Cal. Civ. Code '...