As generative AI is increasingly used to draft code, design products, create formulas, etc., how to determine the appropriate type of legal protection? The typical methods have always been trade secret protection and patent protection, which work very differently. For now we will exclude copyright protection for AI-generated works unless a human created at least part of the work in a meaningful way.
Patents v. Trade Secrets: SCOPE, COST & DURATION:
- In general, trade secrets protect manufacturing processes, source code, formulas, customer lists, pricing strategies, and other information that offers a significant competitive advantage. Patents cover inventions, machines, manufactured products, certain ornamental designs, and plant varieties.
- Trade secrets remain protected indefinitely if kept confidential. Patents are disclosed to the public and provide exclusive rights to commercialize the invention for 20 years.
- Patents take years to register and significant fees. Trade secrets require internal security protocols, contracts and training, coupled with well drafted NDAs and non-compete provisions.
- If technology advances rapidly, a patent filing may lose its effectiveness before registration is completed. For material that changes quickly, trade secret protection may be a better fit.
Federal or state law?
Federal law governs patents. A single registration covers all 50 states and can support expanded protection internationally. Trade secrets, by contrast, are governed by state-specific laws, though the Defend Trade Secrets Act (2016) permits lawsuits in federal court.
Therefore, to decide how to protected your IP, ask yourself whether it be reverse engineered once sold? How soon will it be obsolete? Is it patentable? Does the “secret” really give you a competitive advantage?
Schedule a call with us and we will assess your case.