With the rapid improvement and deployment of generative artificial intelligence (AI) technology, many companies are grappling with balancing AI's benefits against its risks. Much of the discussion surrounding generative AI has focused on copyright and privacy concerns. For some companies, generative AI may pose another danger that deserves attention: losing potential trade secret protections over valuable business information, such as proprietary code.
Concerns over possible AI-related data leaks raise the spectre of damaging public disclosure of valuable business secrets. Perhaps less appreciated is that even without any public "leaks," the mere disclosure of a business secret to a generative AI program may, absent proper protections, undermine or even cancel out efforts to safeguard that information legally as a trade secret.
Trade Secret Law
Trade secret protections are among the most powerful ways to protect information providing a business advantage, such as proprietary code. Originally a common law doctrine, trade secret law is also now codified by the Defend Trade Secrets Act at the federal level and by most U.S. states' adoption of the Uniform Trade Secrets Act or a variation thereof. In cases where the trade secret is misappropriated, its owner can often go to court to obtain an injunction preventing further misuse of the trade secret as well as monetary remedies, which can be severe.
To avail itself of such protections, however, the owner must employ measures to maintain the secrecy of the trade secret. Several practices are common. These include (without limitation) contractual confidentiality obligations for those given access to the...
