The most trailblazing technological advancement in centuries is artificial intelligence ("AI"). Intellectual property law will be significantly impacted with its presence. This Intellectual property law is facing an unprecedented challenge as machines may for the first time in history equal or even exceed humans in their capacity to generate valuable ideas. Researchers have investigated how AI affects copyright and patent law, but they haven't looked at how it affects trade secret law.
Technology is developing quickly and getting more inventive. One example of this type of technology is artificial intelligence (AI). "Generative AI" is a machine learning technology that integrates text, pictures, and other types of content. Companies must exercise common sense to avoid any unfavourable consequences from the disclosure of trade secrets. One potential solution is to ban the use of generative AI, but there are other ways a company might protect its trade secrets.
This article analyses whether information produced by AI should be protected as a trade secret and, if so, who should be the owner of those secrets.
Trade secrets are confidential company information that isn't frequently used to provide competitors an unfair advantage in the marketplace. Trade secrets are extremely valuable assets that give companies a competitive advantage.
If an employee uses generative AI apps and unintentionally shares important information, AI could endanger a company's trade secrets. People can give information to AI, and AI can record and retain it; people cannot take the information away from AI. The software may analyse the data about the AI program or utilize the data collected. As technology advances, AI's capabilities continue to grow and change. Not even the AI system's designers are aware of its full potential. The receiving party must specifically pledge secrecy prior to the trade secret being revealed in order to protect any knowledge as a trade secret. This is avoided by using generative AI systems because the recipient is not a single person.
When a generative AI system receives a particular piece of information in a scenario where they knew or had a reasonable suspicion that the information was intended to be kept private, the same thing will happen. There is no protection because the recipient is not a person. Instead, the knowledge's status as a trade secret is damaged when it is disclosed to a third party without protection.
Although they are precious, trade secrets are fragile assets. A trade secret is irretrievably lost. Since a person and a computer cannot have a confidential relationship, the deployment of generative AI will destroy trade secrets regarding input and output. The only way to protect trade secrets would be to completely forbid them.
Generative AI has enormous potential to increase creativity and production, but it also poses a risk to a company's trade secrets. Businesses that completely ban generative AI may find themselves at a significant competitive disadvantage in comparison to those that allow or encourage its use because of these potential benefits. Therefore, businesses must carefully weigh the benefits and drawbacks of generative AI for their operations.
Several technologies, in addition to a company's standard trade secret protection procedures, can further prevent the disclosure of trade secrets with generative AI. Businesses must have suitable data protection policies and procedures in place before using generative AI, and they must ensure that their employees and contractors are aware of these policies. Companies must also investigate implementing robust encryption techniques, like zero-knowledge proof technology, to prevent unauthorized access to the data they store in generative AI systems.
In addition to a company's standard policies, generative AI offers a number of solutions that can help further protect trade secrets from disclosure. When using generative AI, employers need to ensure that their employees and contractors understand the proper data protection policies and procedures. In order to prevent unauthorized access to company data in generative AI systems, companies should also look into using robust encryption techniques, like zero-knowledge-proof technology.
Employees must be made aware of the risks associated with generative AI and the importance of protecting trade secrets. Employers must provide training to employees on how to use generative AI apps correctly and the potential risks and consequences of entering sensitive data into these programs.
The development of generative AI has enormous promise, but it also poses some difficulties for protecting confidential company information and trade secrets. Regardless of whether they choose to completely ban, restrict, or allow the use of generative AI, businesses should implement robust security measures, establish clear regulations, and foster an awareness-based culture to lower the risks involved. By proactively addressing these issues, businesses can preserve their valuable intellectual property assets and maintain their competitive edge in the quickly evolving AI market. Businesses must also ensure that all outside parties and subcontractors follow their generative AI policies.
One of the easiest yet often overlooked issue faced by a company is to prevent the public disclosure of confidential information. It is extremely vital to understand how and what information is to be shared internally and externally. Any confidential information such as business strategies, customer lists, etc. are valuable assets for an early-age startup. While there is no statutory protection available to trade secrets in India, companies must protect itself and avoid spilling of such confidential information by signing of Non-Disclosure Agreements, restricting access to sensitive data, training employees etc. They need to strike a balance between disclosing enough information to describe the content without revealing trade secrets.
Patents versus Trade Secrets – The Tradeoff of Public Disclosure Patents confer a legal right to exclude others from making, using, selling, and importing the invention claimed for a number of years. But, in order to take advantage of this government sanctioned monopoly, the inventor must disclose the invention to the public with enough detail such that the invention can be recreated by others in that field. This quid-pro-quo—a disclosure of the invention to the public in return for a limited-in-time monopoly on the invention—is one fundamental underlying policy objective of patent law.
By contrast, trade secrets, as the name suggests, protect information that is "secret." Trade secrets can provide protection for any information where the owner "has taken reasonable efforts to keep such information secret" and the information "derives independent economic value, actual or potential, from not being generally known" to other persons.
Unlike patents, trade secret protection can be obtained without any application or registration-it arises automatically if the trade secret owner takes appropriate steps to ensure the information is secret and so long as it provides a competitive benefit. Trade secret protection can also theoretically last as long as the information is kept a secret. And trade secret law also "protects items which would not be proper subjects for consideration for patent protection.
But in other ways trade secret protection is weaker than patent law. Importantly, independent development is a defense to trade secret misappropriation, but not for patent infringement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
