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Only a blanket ban of generative AI can protect trade secrets

On Behalf of | Dec 15, 2023 | Intellectual Property |

Successful business owners in California and throughout the country understand the importance of confidentiality when it comes to protecting a company’s interests. Gaining an edge over competitors often requires knowledge, systems or private information to produce a product or service that is “better than the rest.” The business industry refers to protected information as “trade secrets.” If you’re a business owner, you’ll want to learn more about generative AI, and how it places trade secrets at risk.

The key factor regarding Artificial Intelligence (AI) is that it is a system that does not possess critical thinking or reasoning skills. It generates text or information that stems from a base of information supplied to the system. Any received “input” becomes available for output.

You cannot ask AI to keep trade secrets confidential

Because AI is not human, it cannot “keep secrets.” Therefore, if you input a request for a specific formula, code or series of facts, your request becomes available for output. It is conceivable, then, that a third party could acquire the information associated with your initial request. It is easy to see how this could place trade secrets at risk.

If any information included in your input is meant to be confidential, you must understand that it is no longer confidential once you input it to a generative AI system. All inputs become outputs that are available to anyone using the system. There is currently no way to input instructions to AI so that it keeps information private or refuses to output something that has been input.

Trade secrets have no protection when receiving party is a generative AI system

If you hire a new employee at your company, you can require the individual to sign a non-disclosure agreement. You can also provide verbal instructions not to disclose to others the operations they might witness or information they might acquire. If you were to discover that someone has divulged protected information, you would have grounds for filing a lawsuit for trade secret theft. This area of law is known as “intellectual property.”

The good news is that a court can order compensation for damages regarding trade secret theft. The bad news is that, once a person has divulged a trade secret to a third party, there is no way to “get it back.” The information is now outside the desired parameters of confidentiality. Such disclosures can place a business at risk and may cause a substantial decrease in profits or ruin a company altogether. Many analysts believe that the only way to protect trade secrets is to ban the use of generative AI as a business tool.



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