(123rf.com image)<\/p>\n
Employee theft of trade secrets is not only on the rise
\nbut is now easier than ever before due to widespread access to rapidly evolving
\nand affordable technology.\u00a0Employees continue to use personal email
\naccounts, thumb drives, phone cameras, personal cloud-based accounts (such as
\nOneDrive, Google Drive, and iCloud), and external hard drives to mass-transfer,
\nstore, and retain their employer\u2019s trade secret information post-separation.
\nBut are these types of technological advances the biggest threat to trade
\nsecret protection?<\/p>\n
With the rise in popularity and availability of
\ngenerative artificial intelligence (\u201cgen AI\u201d), many employers fear that
\nsafeguarding their trade secret information in the future may become even more
\ndifficult.<\/p>\n
How employees are using gen AI in the
\nworkplace<\/b><\/p>\n
Employers may be surprised to hear that, according to one
\nsurvey recently conducted by McKinsey & Company, 61 percent of workers are
\neither using or plan to use Gen AI in conjunction with their work.\u00a0 In
\nsome instances, employee use of AI is employer-driven, such as where employers
\nautomate information\/knowledge management or customer service
\nfunctions.\u00a0But in many instances, employee use of AI is employee-driven,
\nand the employer may even be unaware of its use.\u00a0Also according to McKinsey
\n& Company, at least three times more employees are using gen AI for a third
\nor more of their work than their leaders imagine, with millennials 1.4 times
\nmore likely to report extensive familiarity with AI tools than peers in other
\nage groups.<\/p>\n
For example, employees are using chatbots such as ChatGPT
\nto draft documents and other content for work purposes, with some even
\ninputting their employer\u2019s confidential code and asking the chatbot to fix
\nerrors. Otter AI Chat is another popular chatbot used by employees to
\nobtain real-time automated transcription and summarization of workplace
\nmeetings. Not only do these chatbots retain and store the information
\ninput, in many instances they use the information to \u201clearn\u201d and generate
\nfuture output that they provide to other unrelated users.\u00a0\u00a0<\/p>\n
As of early April 2025, ChatGPT reported having more than
\n800 million users, with more ChatGPT users (upwards of 67 million) located in
\nthe United States than in any other country. At present Otter AI reports
\nhaving upwards of 25 million users worldwide, with the tool having transcribed
\nmore than 1 billion meetings.\u00a0\u00a0\u00a0<\/p>\n
How Gen AI could threaten trade secret
\nprotection<\/b><\/p>\n
An employee\u2019s public disclosure of a trade secret \u2014
\nincluding via gen AI \u2014 could, potentially, destroy the \u201csecret\u201d nature of the
\nitem, stripping it of protection under the federal Defend Trade Secrets Act
\n(\u201cDTSA\u201d) and other very similar and widely-adopted state laws.\u00a0This is
\nbecause, for information to receive protection under these laws, a trade
\nsecret\u2019s owner must take reasonable measures to keep the information secret,
\nand must prove that the information derives independent economic value from not
\nbeing generally known or readily ascertainable through proper means by someone
\nwho can obtain economic value from the disclosure or use of the
\ninformation.\u00a0\u00a0<\/p>\n
Widespread or even inadvertent publication on gen AI
\nplatforms will likely prevent a company from meeting this bar.\u00a0Indeed,
\nsome courts have observed that, once a trade secret is publicly disclosed via
\npublication on a publicly accessible platform, its owner will be unable to
\navail themselves of the DTSA\u2019s protections.<\/p>\n
How employers can protect against theft of
\ntrade secrets via gen AI<\/b><\/p>\n
Standing in stark contrast to the rapid development and
\npopularity in employee use of gen AI in the workplace is how slowly companies
\nare recognizing their associated risk, let alone developing a risk mitigation
\nplan.\u00a0As noted above, employers are obligated to take reasonable measures
\nto protect their trade secrets from public disclosure, else the information can
\nlose its trade secret status.\u00a0This means that employers must stay abreast
\nof the rapidly changing gen AI tools that their employees may potentially use
\nto publicly disclose their trade secrets.\u00a0Further, because many employers
\nare unaware that their employees are even using gen AI tools in conjunction
\nwith their work, employers often miss that a departing employee could retain
\nconfidential information in various personal chatbot and other gen AI accounts
\npost-separation.\u00a0\u00a0<\/p>\n
Failure to demand and ensure the return and\/or
\ndestruction of any such information may also undermine its trade secret status
\nand expose its owner to an argument that it failed to take required reasonable
\nmeasures.<\/p>\n
Employers should regularly and openly communicate their
\nexpectations to employees regarding the permissible and impermissible use of
\ngen AI in conjunction with their work, and explain the risks presented to the
\ncompany and to the employee individually if they fail to comply.\u00a0Many
\nemployers elect to include these provisions in employment or confidentiality
\nagreements. Employers should also carefully draft and implement internal
\npolicies governing the permissible use of AI.\u00a0These policies should
\nspecify what gen AI services employees may and may not use in conjunction with
\nwork, with greater \u2014 if not outright \u2014 restrictions on employee use of publicly
\navailable systems that cannot or do not distinguish between confidential and
\nnon-confidential input.\u00a0\u00a0<\/p>\n
Employers may also elect to implement automated IT
\nfeatures that prohibit employees from uploading more than a certain volume of
\ninformation to a gen AI platform using company-owned devices or servers, or
\nthat notify IT when an employee is frequently accessing or uploading data to
\nsuch a platform.\u00a0Employers must also regularly train employees on what
\nconstitutes confidential and trade secret information and, where possible,
\ninclude clear labeling of the information as such, so that employees understand
\nwhat they may and may not share with gen AI. Of course, some companies also
\nelect to build and input information into their own gen AI app, and grant
\nlimited access to such applications on a need-to-know basis within the
\ncompany.\u00a0\u00a0\u00a0<\/p>\n
In sum, employers must continue to monitor changing
\ntechnology and, accordingly, adapt the measures they take to protect their
\ntrade secrets from disclosure and preserve their secret nature. Provided
\nemployers do so, they will retain strong arguments that they took reasonable
\nmeasures to protect their trade secret information, despite the rise in
\nemployee use \u2014 and potential abuse \u2014 of gen AI.<\/p>\n
Jennifer S. Cluverius is a shareholder with Maynard Nexsen.<\/p>\n","protected":false},"excerpt":{"rendered":"(123rf.com image) Employee theft of trade secrets is not only on the rise but is now easier than…\n","protected":false},"author":2,"featured_media":72198,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3092],"tags":[51,35996,897,7900,35997,35995,16,15,35994],"class_list":{"0":"post-72197","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-jobs","8":"tag-business","9":"tag-jennifer-s-cluverius","10":"tag-jobs","11":"tag-legal","12":"tag-maynard-nexsen","13":"tag-trade-secrets","14":"tag-uk","15":"tag-united-kingdom","16":"tag-viewpoints"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114446118807060595","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/72197","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=72197"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/72197\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/72198"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=72197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=72197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=72197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}