Are Trade Secrets the Future of AI IP Protection?

We’ve previously written about the challenges that AI systems and AI outputs face in Intellectual property law. Patent and trademark protections aren’t always robust when protecting AI. The US Patent and Trademark Office (USPTO) is working to make patenting AI systems easier. However, the US Copyright Office and various courts take the position that AI outputs are not protected by copyright as there is no human author. Last year, John wrote about the benefits of using trade secret law to protect AI. A new Sheppard memo echoes this sentiment and discusses how trade secret law may provide better protection in some circumstances:

“In contrast to patents and copyrights, trade secrets provide a more flexible form of IP protection. A trade secret is defined as information that derives independent economic value from its secrecy and is subject to reasonable efforts to maintain that secrecy. Trade secret protection does not necessitate formal registration. Unlike patents, which require public disclosure and have limited duration, trade secrets can protect information indefinitely, provided that reasonable measures are taken to maintain confidentiality. With commercially deployed systems, anything exposed to the user through use is typically not a trade secret. Anything “under the hood” (i.e., not exposed to the user) may be.”

The memo makes it clear that using trade secret protections comes with tradeoffs. It is often mutually exclusive to patent and trademark protection. Filing a patent application or registering a trademark can make something ineligible for protection as a trade secret due to the public nature of the filings. Trade secret protection also requires active management, as trade secret owners must make reasonable steps to maintain confidentiality. Ultimately, trade secret law is another arrow in your IP defense quiver, helping fill gaps that patents and copyrights cannot.