The pace at which AI-integrated products and services are entering the market is rapid and continues to grow exponentially. To remain competitive, companies must develop strong intellectual property (IP) strategies and protections to safeguard their investments and research and development (R&D).
Trade secrets can be an effective way for a company to maintain a unique competitive advantage. As IP lawyers, we regularly advise our clients on how they can protect and maintain their trade secrets which includes:
- Ensuring that clients establish comprehensive confidentiality agreements binding those who have access to trade secrets
- Educating clients on the importance of trade secrets and ensuring that this knowledge is shared throughout the client’s business to create and bolster a culture which values and protects this valuable asset
- Advising on security and access protocols in relation to trade secrets.
However, it’s important to consider the nature, use and availability of AI products which can complicate the protection of trade secrets. Trade secrets rely on confidentiality to protect them, as soon as the trade secret becomes publicly available whether through a leak or reverse engineering the trade secret loses its power.
Although trade secrets offer numerous benefits, including indefinite protection, no disclosure requirements, and cost-effectiveness, they also involve significant risks. For instance, competitors can legally reverse-engineer a product to recreate the technology and circumstantially bypass the trade secret. Additionally, employees who leave or feel dissatisfied may inadvertently or deliberately disclose trade secrets. Once a trade secret is disclosed, proving it has been misappropriated can be challenging.
Some AI platforms (like ChatGPT) utilise information that has been provided by users. This information is used to further train and improve the platform and there are valid concerns that once you have shared a trade secret with one of these platforms, it has compromised the secret’s confidentiality. If an organisation plans on integrating their trade secrets with an AI product, then it is essential that they only utilise one which does not share any information outside of their organisations. Products such as Microsoft CoPilot are marketed as having this level of security.
For organisations whose core offerings are not open source, it is essential for companies like OpenAI and DeepSeek to closely guard and keep secret the source code underpinning these products. There are two broad categories organisations can focus on to protect their trade secrets:
- Implementation of digital and physical security measures preventing access to their systems, infrastructure and premises.
- Implementing internal policies and procedures which focus on and support a culture of confidentiality (such as educating employees, utilisation of appropriate contractual restrictions when dealing with third parties and taking action against infringers or third parties that obtain unauthorised access to your IP).
It's important to understand that there are various methods to protect core innovations, and these strategies can vary significantly depending on the nature of the innovation and the jurisdiction in which protection is sought. These methods include registering designs, obtaining copyrights, and filing for patents. Each of these forms of IP protection serves a unique purpose and can offer different advantages.
If you would like to know more about protecting your intellectual property, please reach out to one of our experts.
