[The IPKat] Fordham 33 (Report 5): Trade secrets

[Annsley Merelle Ward]

The Fordham trade secrets panel discussing
the rise of trade secrets protection The IPKat is back in Fordham, with the Spring skies and the chirping birds gracing the streets of the Upper West Side. As a proud and long-standing partner with the Fordham IP Conference, now in its 33rd year, the IPKat is thrilled to partner with the students of Fordham for reports from this years’ conference. The fifth report comes from Ilze Ambrasa (LLM Student at the Penn State Dickinson Law School).  

Over to Ilze:

"How can you keep a secret?

On Friday morning, the discussion on Trade Secrets provided an excellent roadmap on relative importance of the Trade Secret vs. Patent protection. Although the rise of AI creates a lot of challenges, trade secrets law remains incredibly resilient to technological changes.

The discussion was moderated by Associate Clinical Professor of Law and Intellectual Property Clinic Director of the Penn State Dickinson Law Jonathan D’Silva. He was joined by panelists Ken Corsello (IBM, New York), Gustavo de Freitas (Morais Dannemann, Siemsen, São Paulo), Camilla Hrdy (Rutgers Law School, Camden, New Jersey), Melanie Müller (Boehmert & Boehmert, Bremen), Omar Khan (Wilmer Cutler Pickering Hale and Dorr LLP, New York) and Joshua Sarnoff (De Paul University College of Law, Chicago). All views expressed on the panel were their personal views.

Here are the top five takeaways from the discussion:

1. Trade Secrets vs. Patent Protection – Trade secrets and patents are interconnected, but they cannot replace each other. Trade secrets provide exclusivity to the invention, while patents ensure monopoly rights. The selected protection mechanism depends on the type of invention and needs of the client. In practice, it is easier to obtain trade secret protection, rather than patent protection, although sometimes it is necessary to obtain both.

2.  The rise of AI – All panelists agreed that the current trade secret regime is well-suited to AI developments, nevertheless there are other issues that need to be addressed. Three main challenges are related to: (1) AI creating new trade secrets (2) risks that AI creates as regards existing trade secrets and (3) protecting AI as a trade secret. Generative AI gathers data from a lot of sources, and the main concern is how to adopt reasonable measures to protect trade secrets when AI is used in reverse engineering. Even though AI is causing new issues in different layers of the trade secret management, enforcement and misappropriation, the law is well equipped and flexible - and attorneys, judges, and academics need to also be flexible.

3. Confidentiality of trade secrets and human factors – Panelists stressed the importance of training the employees who work with sensitive information and keeping their training up-to-date. Employees need clear instructions from their employers on how to interact with AI technologies in order not to reveal confidential information. Legal practitioners and academics should educate businesses about these risks. Furthermore, it is important to keep the confidentiality agreements up-to-date and review overly broad confidentiality rules for employees of the company. The panelists also discussed the differences between employee's disclosure of trade secrets and whistleblowing mechanisms.

4. Public interest and compulsory licensing of medical inventions - The Covid-19 pandemic raised a question of compulsory licensing requirements in a global health crisis. Especially when a patent as such is not enough to produce a vaccine in an emergency. The EU introduced the Compulsory Licensing Regulation for health crisis management. This regulation covers patents and other related IP rights but not trade secrets. The panelists' opinions differed when it comes to need to introduce mandatory licensing requirements in the US. Although it would be of public interest to scale up compulsory licensed trade secrets, it would also be complicated to ensure fair competition.

5. Federalization of Trade Secrets under the Defend Trade Secrets Act of 2016 (DTSA) – This year we mark the 10th Anniversary of the DTSA. Panelists noted that the DTSA is very impactful, and the regulation keeps up with the changing circumstances. The number of cases has significantly increased, evidencing the attractiveness of companies bringing legal action under the DTSA.  DTSA also creates immunity for whistleblower protection."