AI Intellectual Property: Trade Secrets May Top Patent Protection

A recent Risk Management Magazine article written by three Husch Blackwell lawyers highlights the challenges businesses face in obtaining patent protection for AI innovations, and says that trade secret law may provide a better path toward protecting proprietary AI-related technology:

Unlike patents, trade secrets do not require public disclosure. If you can keep valuable information confidential—and take reasonable steps to do so—you can protect it indefinitely. For fast-moving and opaque technologies like AI, that flexibility can be invaluable.

From a legal standpoint, the definition of a trade secret is broad. Things that may qualify include: training data, model architecture, source code, tuning methods, the “system prompt” in large language models or other foundational instructions embedded into an AI system, user interaction data, and even knowledge of what does not work (so-called “negative know-how”).

There are three conditions for trade secret protection: the information is not generally known; it derives independent economic value from being secret; and the business takes reasonable measures to maintain its secrecy. When these three conditions arise, trade secret protection is automatically extended. The reasonable measures prong is where many businesses struggle and, in the context of AI, the bar for reasonableness is rapidly evolving.

The article points out that there are risks associated with relying on trade secrets to protect AI innovations, including the fact that trade secret protection will be lost if the information becomes public, even inadvertently or through reverse engineering, the absence of any federal registry to stake a claim to protection, and the need to demonstrate proof of reasonable efforts to protect the information in order to enforce a trade secrets claim.