The rapid development of artificial intelligence (AI) presents both unprecedented opportunities and complex challenges for businesses and intellectual property (IP) owners. Among critical concerns, the potential exposure of trade secrets—those invaluable proprietary processes, formulas, tools, and strategies that give companies a competitive edge—is near the top. As experts in IP and data privacy matters, the impact of AI on trade secrets is important to Ludwig APC and our ability to deliver tailored, timely guidance to clients.

What’s the Big Deal?

While AI technologies help businesses and IP owners innovate and thrive, they also introduce vulnerabilities. Some examples include the inadvertent exposure of trade secret data during AI system training, the rise of sophisticated AI-driven cyber threats, and the inherent challenges of safeguarding information within increasingly complex AI-driven environments and supply chains.

AI truly acts as a double-edged sword for businesses and IP owners—it enables advanced data analytics, streamlines operations through automation, can aid in the creative process, and more. Yet, AI also poses risks, including those mentioned above, as well as creates challenges in detecting and tracing the misuse or theft of trade secrets. Such challenges underscore the importance of stakeholders striking a balance to leverage AI’s benefits while also acting to safeguard trade secrets through robust security and oversight.

How AI Threatens Trade Secrets

The very things that make AI powerful—its ability to process, analyze, and generate data at scale—also make it a potential threat to trade secrets. Here are several scenarios where businesses could be vulnerable:

1. Unintentional Data Exposure: AI models require vast amounts of data for training. If proprietary information is included in these datasets, it can be exposed (inadvertently or not) to external parties.
2. Insider Threats: Employees or contractors with access to AI systems might misuse their access, intentionally or accidentally leaking confidential information.
3. Advanced Hacking Techniques: Cybercriminals are already leveraging AI to create more sophisticated attacks, including those targeting trade secrets.
4. Third-Party Risks: As businesses increasingly collaborate with external AI vendors, they face the risk of their trade secrets being exposed to others in the supply chain.

AI Can Be a Trade Secret, Too

Businesses and IP owners must also recognize that AI itself—its design, functionality, and training—can hold immense proprietary value. Protecting AI as a trade secret and shielding it from competitors and malicious actors can be as crucial as safeguarding any other trade secret.

For AI to qualify as a trade secret, businesses must ensure that the AI system remains confidential. This includes algorithms, models, and training data that define its functionality and competitive differentiator. This can involve limiting access to essential personnel, requiring employees to sign non-disclosure agreements, and securing systems against unauthorized access. The goal is to ensure the AI system remains out of the public domain, which is a critical component for maintaining its status as a trade secret. Of course, like any trade secret, the AI system must also hold economic value due to its secrecy.

Fundamental Steps for Protecting Trade Secrets

Protecting trade secrets in the age of AI is a daunting challenge that requires expertise, vigilance, and adaptability. AI-related threats are constantly evolving, and attempting to tackle these risks without expert knowledge can lead to costly mistakes.

Here are the elements of a comprehensive, multi-layered strategy:

1. Implement Security Measures: Utilize end-to-end encryption, secure storage, and AI-powered cybersecurity solutions to defend against potential breaches.
2. Educate Employees: Train staff to recognize the value of trade secrets and enforce strict confidentiality practices across the organization.
3. Review Vendor Agreements: Partner exclusively with trusted AI vendors, ensuring that contracts include strong data protection clauses and liability terms.
4. Adopt AI Governance Policies: Develop clear, ethical guidelines for AI use, defining the types of data that systems can access and share.
5. Conduct Regular Audits: Perform periodic assessments of systems to identify vulnerabilities and confirm adherence to trade secret laws and best practices.

By employing these measures and seeking guidance from expert advisors, like Ludwig APC, businesses are better able to navigate the complexities of AI while ensuring their trade secrets remain protected.

How Ludwig APC Can Help

The Ludwig APC team offers expert support to help clients safeguard their trade secrets.

1. Tailored Legal Strategies: Ludwig APC works with businesses to develop customized legal strategies that address unique challenges posed by AI in protecting trade secrets and other proprietary information.
2. Contract Review and Drafting: We review agreements with employees, contractors, and third-party vendors to ensure they include robust confidentiality and non-disclosure provisions.
3. Litigation Support: In cases of trade secret misappropriation, Ludwig APC provides expert representation to help businesses recover damages and prevent further breaches.
4. AI Governance Consultation: We advise clients on implementing AI governance policies that balance innovation with data security.
5. Proactive Risk Management: Ludwig APC identifies potential vulnerabilities in client trade secret protection strategies and recommends practical solutions.

Let’s Work Together: Global Experience, Personal Focus

Ludwig APC brings decades of global experience in asserting and defending IP rights. This includes working with clients to help protect trade secrets and other proprietary data from traditional as well as AI-driven threats. Contact Ludwig APC today at (619) 929-0873 or consultation@ludwigiplaw.com to arrange a free consultation to discuss your needs.

The D.C. Circuit recently ruled that intellectual property (IP) works created solely by artificial intelligence (AI) are ineligible for copyright protection. This ruling, while affirming the traditional requirement of human authorship, is of particular interest to Ludwig APC as it raises profound questions about the future of creativity, ownership, and the role of AI in artistic and intellectual endeavors.

How We See It

For IP creators and owners, the ruling represents both a safeguard and a challenge. On one hand, it reaffirms the primacy of human creativity, ensuring that the protections afforded by copyright law continue to incentivize individual and collaborative efforts. This clarity is essential for maintaining the value of creative works in industries ranging from publishing to entertainment.

But the decision also signals the need for greater vigilance as AI becomes increasingly a part of the creative process. For creators who use various AI tools, questions about the extent of human contribution required for copyright eligibility now become critical. Absent clear guidelines, the risk of disputes over ownership and authorship are likely to increase, particularly when commercializing creative outputs.

The ruling also underscores the growing need for IP law firms like Ludwig APC to navigate the complexities of AI’s role in creative processes. As advisers, we must be prepared to counsel clients on how AI involvement affects copyright eligibility and explore alternative legal protections for AI-driven innovations. Additionally, this decision positions law firms as key players in shaping policy discussions concerning AI and IP rights as technology continues to evolve, highlighting the importance of staying on top of the latest legal and technological developments.

About The Case

The case at the center of this recent ruling revolves around Dr. Stephen Thaler, a computer scientist and the creator of the “Creativity Machine”—an AI system designed to generate original works of art. One such creation, titled A Recent Entrance to Paradise, became the focal point of a legal battle when Dr. Thaler sought copyright registration for the artwork. In his application, he listed the Creativity Machine as the sole author, with himself as the owner of the copyright.

The U.S. Copyright Office denied the application, citing the necessity of human authorship under the Copyright Act. Dr. Thaler challenged this decision, arguing that the law should evolve to recognize AI-generated works. However, the D.C. Circuit upheld the Copyright Office’s stance, emphasizing that the Copyright Act requires authorship by a human being.

The Court’s Reasoning

The court’s opinion, authored by Judge Patricia A. Millett, delved into the language and intent of the Copyright Act. The Act’s provisions, such as the duration of copyright tied to an author’s lifespan, implicitly assume human authorship. Judge Millett noted that machines lack the attributes—such as lifespans, domiciles, and the ability to own property—that are integral to the concept of authorship under the law.

The court also highlighted the broader purpose of copyright law: to incentivize human creativity. By granting exclusive rights to creators, copyright law encourages individuals to invest time and effort into producing original works. Extending these rights to AI-generated works, the court suggested, could undermine this incentive structure.

Implications for IP Law

While the ruling reaffirms traditional boundaries of copyright law, it also leaves several questions unanswered. For example, what level of human involvement is required for a work to qualify for copyright protection? The court did not address this issue, focusing instead on the specific facts of Dr. Thaler’s case, where the AI system was listed as the sole author.

Such ambiguity is particularly relevant as AI tools become increasingly sophisticated and integrated into creative processes. Many artists, writers, and musicians now use AI to assist in their work, blurring the lines between human and machine contributions. Future cases will likely grapple with these “hybrid” works, where human creators use AI as a tool—as they would a word processor or search engine—rather than an autonomous author.

Also, IP owners who invest in AI-driven innovation must consider the implications of this ruling on their business models. The inability to secure copyright protection for purely AI-generated works could impact strategies for monetizing these creations, prompting a need for alternative approaches, such as trade secrets or contractual agreements.

Looking Ahead

The D.C. Circuit’s ruling is part of a broader global conversation that’s now taking place about the role of AI in IP. Similar debates are unfolding where courts have consistently held that only human inventors can obtain patents. However, some experts argue that denying copyright protection to AI-generated works could discourage innovation, as creators may be less inclined to invest in AI technologies without the assurance of IP rights. Others contend that recognizing AI as an author could dilute the value of human creativity and complicate enforcement mechanisms.

The D.C. Circuit’s decision is unlikely to be the final word on this issue. As stakeholders navigate the complexities of balancing human creativity, AI innovation, and public interest, the idea of granting AI-generated works a distinct form of protection, separate from traditional copyrights, is being explored.

Let’s Work Together: Global Experience, Personal Focus

Ludwig APC brings decades of global experience in asserting and defending IP rights. Our expertise extends to guiding clients through the legal, regulatory, and creative complexities of using AI in the creative process. Contact Ludwig APC today at (619) 929-0873 or consultation@ludwigiplaw.com to arrange a free consultation to discuss your needs.

Although the case is ongoing, Columbia Sportswear North America, Inc. v. Seirus Innovative Accessories, Inc has highlighted for intellectual property owners the importance of strategic title selection in securing broader protection for design patents. The key lesson, as we see it at Ludwig APC, is that title selection for design patents should be a careful and deliberate process involving the development of clear, specific, and descriptive titles that accurately reflect the unique features of a particular design. Such an approach helps to ensure broader protection, reduces ambiguity, and can strengthen the patent against potential infringements.

Understanding the Columbia Sportswear Case

The Columbia Sportswear case centers around the company’s design patent for a heating element in its jackets. Columbia Sportswear filed a design patent that focused on the ornamental design of the heating element. However, the title of the patent was somewhat generic, which led to disputes over the scope of protection. Thus, the case underscores the significance of a well-crafted title in determining the extent of design patent protection.

Key Dates in the Columbia Sportswear Case

• 2016: The district court granted summary judgment of infringement in favor of Columbia Sportswear against Seirus.
• 2019: Columbia Sportswear sued Seirus for infringing U.S. Design Patent No. D657,093.
• September 15, 2023: The United States Court of Appeals for the Federal Circuit issued a precedential decision in the design patent case between Columbia Sportswear and Seirus Innovative Accessories, vacating the non-infringement judgment and remanding the case for further proceedings.

Lessons Learned from the Columbia Sportswear Case

Clarity and Specificity Are Vital—One of the main takeaways from this case is the importance of clarity and specificity in the title of a design patent. A vague or generic title can lead to ambiguity regarding the scope of protection, making it easier for competitors to design “around” the patent. In contrast, a clear and specific title can provide a stronger foundation for enforcing the patent against potential infringers.

Descriptive Titles Enhance Protection—Descriptive titles that accurately reflect the unique features of a design can enhance protection provided by a design patent. In the Columbia Sportswear case, a more descriptive title could have highlighted the specific ornamental aspects of the heating element, making it more difficult for competitors to argue that their designs did not infringe on the patent.

Consider Future Innovations—When selecting a title for a design patent, companies should anticipate how their designs could evolve. A forward-thinking title can provide broader protection and reduce the risk of competitors exploiting gaps in the patent.

Strategies Companies Might Consider

While every situation is unique and IP owners should seek professional guidance to ensure their design patent titles are strategically crafted, the Columbia Sportswear case highlights a number of foundational strategies companies might consider.

Be Descriptive and Specific—When drafting a title for a design patent, clearly articulate the key ornamental features of the design to distinguish it from existing products. Avoid overly generic terms that could weaken the scope of protection.

Incorporate Key Features—Include critical design elements in the title to emphasize unique aspects. For example, if the design involves a specific pattern, shape, or configuration, mention it in the title. Doing so can help establish a stronger case for infringement if competitors attempt to copy the design.

Use Broad Terms if Needed—Specificity is essential, but there may be instances where broader terms are appropriate to provide comprehensive protection for a range of potential design variations.

Seek Professional Guidance

Navigating the complexities of design patent titles can be challenging, and the Columbia Sportswear case serves as a valuable reminder of the importance of strategic title selection in design patents. By learning from this case and implementing best practices, IP owners can better protect their designs and strengthen their position in the marketplace.

One way to do that is to seek the advice of experienced patent attorneys or intellectual property professionals like the team at Ludwig APC. We can work with you to identify potential pitfalls and optimize design patent titles for maximum protection.

Let’s Work Together: Global Experience, Personal Focus

Contact Ludwig APC today at (619) 929-0873 or consultation@ludwigiplaw.com to arrange a free consultation to discuss your needs.

DeepSeek, a relative newcomer to the artificial intelligence space, is making waves in the industry due to its performance, affordability, and growing popularity. Founded less than two years ago by Chinese hedge fund High Flyer and introduced to U.S. markets in late 2024, DeepSeek has quickly challenged established giants such as OpenAI, Meta, Google, and Anthropic. Its rapid rise has raised suspicions that DeepSeek may have improperly used OpenAI’s proprietary technology to develop its product. Ludwig APC is closely monitoring these developments and their potential impact on the intellectual property space so we can keep clients informed and prepared for emerging issues.

Entry into the U.S. Market

DeepSeek entered the U.S. market by partnering with U.S.-based cloud service providers to offer enterprise clients affordable AI solutions for tasks such as data analysis, natural language processing, and predictive modeling. The January 2025 launch of its consumer-facing AI assistant app quickly gained traction, and by January 27, it had overtaken ChatGPT as the top-rated free app on Apple’s App Store. This not only delivered a financial blow to U.S. tech firms, which saw a noticeable dip in their stock prices, but also attracted the attention of U.S. policymakers.

Just how has DeepSeek been able to outperform other leading AI models at a fraction of the development cost, and so quickly?

To illustrate, OpenAI’s models required tens of billions in investment, while DeepSeek reportedly trained its R1 AI product for just $6 million. This extraordinary cost efficiency is at the root of speculation that DeepSeek’s rapid ascent may have involved the misuse of proprietary technology.

DeepSeek defends its rapid development by highlighting innovative techniques, resource optimization, and iterative advancements. However, some industry experts suspect the company may have used distillation techniques—machine learning to create a smaller, more efficient version of a large, complex model—to replicate proprietary technology. They also question the accuracy of DeepSeek’s claims regarding its low development costs, calling them exaggerated.

Stricter IP Enforcement and Regulation

While innovation is welcomed by the AI industry and consumers, if the allegations against DeepSeek are proven true, they could have far-reaching implications for IP protection and regulatory policies related to AI.

• Heightened Security Measures: Companies may need stronger internal controls to safeguard algorithms, models, and training data through enhanced encryption, stricter access protocols, and thorough employee vetting.
• Cross-Border IP Enforcement: Differences in U.S. and Chinese IP laws could intensify international disputes, leading to stricter oversight of cross-border technology sharing and trade.
• Increased Litigation: A precedent for aggressive legal action against companies suspected of IP misuse could deter future violations.
• Unified Global Standards: Growing concerns about unethical practices in AI development could push for global regulations to protect innovations and prevent misuse or theft. For example, regulators may require AI companies to document and audit training processes and data sources to ensure compliance with IP laws.

Implications for the AI/IP Market

Beyond the immediate questions surrounding DeepSeek’s practices, its rise signals both challenge and opportunity in the U.S. and abroad.

• Increased Competition: DeepSeek introduces a formidable competitor, potentially driving innovation and reducing costs for users of AI models.
• IP Concerns: DeepSeek’s open-source approach appeals to developers but raises the risk of replication or reverse engineering.
• Regulatory Scrutiny: U.S. regulators may impose stricter oversight on foreign AI companies, increasing compliance burdens for all market players.
• Collaborative Opportunities: DeepSeek’s presence could open avenues for joint ventures and partnerships, benefiting both U.S. and international firms.
• Investment in R&D: To maintain leadership, U.S. companies must continue prioritizing research and development, ensuring sustained innovation.

How Ludwig APC Can Help

DeepSeek’s rise highlights China’s growing capabilities in AI and its potential to challenge U.S. dominance. While this introduces new challenges for the U.S. AI/IP market, it also presents opportunities for innovation, collaboration, and growth.

If you have questions about how DeepSeek or other AI products might affect your business and/or IP properties, or you need guidance on how to navigate the evolving AI/IP space, Ludwig APC is here to help.

Let’s Work Together: Global Experience, Personal Focus

Contact Ludwig APC today at (619) 929-0873 or consultation@ludwigiplaw.com to arrange a free consultation to discuss your needs.