Artificial intelligence is rapidly transforming the life sciences fueling everything from molecule prediction to biomarker discovery. The opportunities are enormous, but so are the legal and strategic risks. For biotech and pharma companies, the question isn't whether to embrace AI, but how to do so safely without compromising intellectual property, data integrity, or long-term value.
Here's what forward-thinking companies are doing to scale safely and protect what matters most.
1. Data Confidentiality Starts at the Source
As companies share proprietary data such as compound libraries, assay results, clinical datasets with AI partners to train powerful models, it is essential to put guardrails in place. To mitigate risk, start by thoroughly vetting your AI partners. Review their model training policies, insist on robust data-sharing agreements, and make sure the contract is enforceable-not just in theory, but in practice. Limit how your data can be used. Most importantly, include clear clauses that prevent the reuse or redistribution of your data or the AI outputs derived from it once training is complete. These are critical to keeping your proprietary data safe.
2. Clarifying ownership of AI outputs and derivatives
One of the trickiest issues in AI partnerships is IP ownership. When your data trains a model, it is important to spell out who owns the model, outputs, insights, molecule predictions, compound suggestions or other improvements. This should never be left vague. Your contracts should clearly delineate ownership and use rights for the trained AI model, any derivatives, and any improvements that arise from its use. This clarity prevents disputes down the line, protects your ability to patent key innovations, and gives investors confidence. It is important to make sure to file patents early, identify trade secrets from the start, and ensure all contributors assign their rights.
3. Balance Regulatory Disclosure with IP Protection
In life sciences, explainability isn't optional. Regulators want to know how AI-derived conclusions are made. But disclosing too much about your model can erode your competitive advantage. The solution lies in selective disclosure. It is important to work with legal and regulatory teams to provide just enough transparency to meet requirements—while protecting the "secret sauce" of your innovation. For example, one can use redacted documentation, strategic patent filings, and clear trade secret protection to walk that fine line between compliance and confidentiality.
4. Investors Expect a Clean IP Story
Investors are savvy about AI and wary of uncertainty. They are aware of the legal pitfalls of AI partnership in life science innovations. Before they fund a company, they dig deep into patent filings, data rights, and who really owns the models and insights behind the product. If anything's unclear, it can raise red flags. To avoid that, companies should proactively secure assignments of all IP from employees, collaborators, and vendors. They should also build and maintain a strong IP portfolio. This protects the company's innovation, enhances valuation and positions your company for growth.
5. Train Your Team to Be a First Line of Defense
AI development often involves interdisciplinary teams such as data scientists, clinicians and biologists. That diversity brings innovation but also increases the risk of unintentional leaks. Whether it is publishing code to GitHub, submitting a manuscript to bioRxiv, or presenting in a conference, sensitive information may be revealed.
Thess unintentional leaks can be prevented through strong internal protocols. Thus, it is important for companies to offer regular employee training in confidentiality. Set clear rules around who can access sensitive models and datasets. And finally, make sure everyone involved in AI work understands the legal stakes as well as the science.
A Call to Action: Innovate safely with AI
AI is redefining drug discovery and diagnostics. But to truly harness its potential, companies need more than algorithms. They need a legal and operational framework that supports safe and scalable innovation. With the right legal strategies in place, biotech and pharma companies can unlock the full potential of AI without compromising their valuable assets.
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.
