{"id":6460,"date":"2025-03-21T15:47:45","date_gmt":"2025-03-21T15:47:45","guid":{"rendered":"https:\/\/blogs.luc.edu\/compliance\/?p=6460"},"modified":"2025-03-24T15:37:59","modified_gmt":"2025-03-24T15:37:59","slug":"will-ai-make-trade-secrets-no-longer-secret","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/compliance\/?p=6460","title":{"rendered":"Will AI Make Trade Secrets No Longer Secret?"},"content":{"rendered":"

Zoe Smith<\/em><\/p>\n

Associate Editor<\/em><\/p>\n

Loyola University Chicago School of Law, JD 2026<\/em><\/p>\n

Most companies own valuable trade secrets, such as the recipe for Coca-Cola or Google\u2019s algorithm<\/a>. But can a company that develops AI have trade secrets? The Uniform Trade Secrets Act<\/a> defines a trade secret as \u201cinformation, including a formula, pattern, compilation, program, device, method, technique, or process,\u201d that derives economic value and is the subject of efforts to maintain its secrecy. The protection of trade secrets<\/a> is essential for companies to maintain their competitive edge and drive economic growth. As such, they are instrumental in both corporate governance and compliance<\/a>. Companies already deal with the risks of employees using generative artificial intelligence<\/a> (AI) and exposing trade secrets; however, recent AI regulations<\/a> in Europe and the United States have further increased risks relating to trade secrets.<\/p>\n

AI regulations in Europe<\/strong><\/p>\n

Regulation (EU) 2024\/1698<\/a> (The AI Act) provides \u201charmonized rules on AI\u201d for the European Union. The Act requires companies keep records and technical documentation<\/a> of information necessary to assess compliance of the AI system. According to the Act, such information should include<\/a>: \u201cthe general characteristics, capabilities and limitations of the system, algorithms, data, training, testing and validation processes\u2026\u201d AI developers are pushing back<\/a> on the Act, arguing that much of the information they are now required to disclose for \u201ctransparency\u201d purposes constitutes trade secrets.<\/p>\n

AI regulations in the United States<\/strong><\/p>\n

Unlike Europe, the US lacks comprehensive federal legislation and regulations<\/a> on the use or development of AI. However, there are more than 120 bills<\/a> being considered by Congress that emphasize the need for guidelines relating to AI systems. Furthermore, many states<\/a> have implemented some form of regulation on AI.<\/p>\n

While the US may not have federal legislation regarding AI, it does have legislation for Trade Secrets. Many who advocate restricting AI argue that AI may not be the creator of a work; however, the Defend Trade Secret Act does not require a human creator<\/a>. Furthermore, as aforementioned, the definition of a trade secret includes all forms of information. Thus, trade secret protection could extend<\/a> to the platform itself, underlying algorithms and models, training data, input parameters and model outputs. The Trade Secrets Act criminalizes the \u201cunauthorized disclosure<\/a>\u201d of trade secrets by the federal government, but it applies only to disclosures \u201cnot authorized by law.\u201d<\/p>\n

Risks these regulations pose to trade secrets<\/strong><\/p>\n

A \u201cfundamental pillar<\/a>\u201d found in AI and data protection laws is the mandate to enhance data access and sharing. In regard to the EU Data Act, that includes granting access to data<\/a> to users designated by the users of the products. As of December, 2024, the EU\u2019s AI act has provided the most significant opportunity to advance transparency<\/a> around data to date. The Computer & Communications Industry Association<\/a> argues that the release of the information required by the AI Act would require companies to disclose their trade secrets, stating that \u201cpublicly sharing the exact content used to train a APAI model is sensitive information\u201d requiring strict protection.<\/p>\n

Patent and copyright laws remain ambiguous as to their application to AI, leading many businesses to turn to trade secrets as their shield<\/a> for AI. After all, nothing in the definition of a trade secret prevents the protection of information<\/a> generated by AI or the system itself. Even though the information may fall under the definition of a trade secret, it must still meet the requirements<\/a> to be an actual trade secret, which may be difficult for many AI systems to do. This is due to the fact that companies must take reasonable measures to keep the information secret, such as including the use non-disclosure and confidentiality<\/a> agreements. Because data collection practices are constantly evolving, maintaining effective confidentiality agreements may become increasingly challenging.<\/p>\n

Conclusion<\/strong><\/p>\n

It is important to keep in mind the major exception<\/a> to trade secret disclosure \u2013 they apply only to disclosures not authorized by law. If federal regulation requires transparency of AI systems, protecting the systems as a trade secret may no longer be possible. One thing is certain, the use of AI is rapidly rising<\/a>, and there is likely to be increasing regulation around it. These companies may want to (or be forced to) consider alternative ways of protecting their systems.<\/p>\n","protected":false},"excerpt":{"rendered":"

Most companies own valuable trade secrets, such as the recipe for Coca-Cola or Google\u2019s algorithm. But can a company that develops AI have trade secrets? The Uniform Trade Secrets Act defines a trade secret as \u201cinformation, including a formula, pattern, compilation, program, device, method, technique, or process,\u201d that derives economic value and is the subject of efforts to maintain its secrecy. The protection of trade secrets is essential for companies to maintain their competitive edge and drive economic growth. As such, they are instrumental in both corporate governance and compliance. Companies already deal with the risks of employees using generative artificial intelligence (AI) and exposing trade secrets; however, recent AI regulations in Europe and the United States have further increased risks relating to trade secrets.<\/p>\n","protected":false},"author":155,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[212,517,2368],"class_list":["post-6460","post","type-post","status-publish","format-standard","hentry","category-artificial-intelligence","tag-artificial-intelligence","tag-corporate-compliance","tag-trade-secrets"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/6460","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/users\/155"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6460"}],"version-history":[{"count":2,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/6460\/revisions"}],"predecessor-version":[{"id":6463,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/6460\/revisions\/6463"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}