As the influence of artificial intelligence continues to extend its reach across a diverse range of industries, the question remains: what legal rights can AI users actually claim over the output generated by AI systems?

In a previous post, https://gust.com/blog/rights-ai-generated-trademarks-trade-secrets/, I reported on the recent (March 16, 2023) announcement by the U.S. Copyright Office taking the position that most AI output would be unprotectable by copyright because it is created by a machine rather than a person.

This article explores other legal rights in AI-generated output, principally trademark and trade secret rights, that may be available to AI users.

Trademark

First, let’s consider trademarks. A trademark is anything, usually words or pictures, that serves to identify the source, origin, or sponsorship of goods or services. While trademarks can be registered with governmental trademark agencies, in the United States trademark rights arise from use - use of the trademark in connection with goods or services. An “intent-to-use” applicant in the U.S. can reserve a trademark for a period of time, but if that time period runs out without the applicant’s commencing commercial use, the reservation lapses.

Because ownership of a trademark is acquired by use, anything produced by AI that could function as a trademark is available for adoption and ownership as a mark.

Qualification: Because trademark rights are based on use, a potential trademark produced by AI is not free for use if the same or a confusingly similar trademark is already owned and being used by someone else. There can be no assurance that the AI did not copy the trademark from its training data. Even if the AI originates the trademark independently of the prior use, the prior owner can prevent adoption by the AI user if it is likely to produce confusion in the marketplace. As with all new trademarks, a search should be conducted to see if there are prior users of the trademark before adopting it.

Whether an existing trademark blocks adoption of a new trademark is a complicated question that depends on the similarity of the marks, the relatedness of the goods/ services of the two trademark users and a number of other factors. The blocking issue is the subject of many hundreds or thousands of court decisions and is beyond the scope of this post.

For these reasons, AI output can become a trademark. How far do trademark rights extend? Can they extend to anything other than the very picture (or words) used by the AI user as a trademark?

Yes. Trademark rights are based on a single principle: Avoid confusion of source, origin, or sponsorship of goods or services. Once AI output is established as a trademark through commercial use, it will be protected from use by others of the same or similar trademarks that produce a likelihood of confusion of source, origin, or sponsorship.

Without trying to cover all of the possible ways in which likelihood of confusion is deemed to arise even without use of the exact same trademark (words or pictures), a few basic rules can be stated.

Assume someone else starts using a similar, but not identical trademark. The more similar the trademark, the more likely the other’s use will be prohibited. The more closely related the goods and services of the parties are, either in the nature of the goods or services or the geographic proximity of the uses, the more likely the other’s use will be prohibited. The closer the AI user’s trademark is to a pure description of the AI user’s goods and services (e.g., “Best Appliances” or “Superior Plumbing”) the less likely the other’s use will be prohibited. There are other factors that can come into play, but the point is that a trademark’s power normally extends to a range of words or pictures that are not identical to the trademark.

Example: Disney owns a trademark in Mickey Mouse. What does that mean? Disney can prohibit use of pictures having some resemblance to Mickey Mouse that will lead consumers to believe that the goods or services associated with the other picture are made, sold, or endorsed by Disney. (Copyright can become involved where, like Mickey Mouse, the trademark is copyrightable, but we are not commenting on copyright here. For copyright considerations, please see our March 16 post.)

Trade Secret

A trade secret is virtually any kind of information that provides a business advantage over other businesses that are not aware of the secret. It can be as high tech as AI or as mundane as customer information.

The catch is that the information must be kept secret. For this reason, pictures or words generated by AI cannot both be publicly displayed and still owned as a trade secret.

What if an AI is asked, “what is the best way to solicit customers for my [fill in the blank] business?” If the output is useful, can the AI user own trade secret rights in the output?

Very likely. First, an AI user is not prevented from owning trade secret rights in an AI-generated idea even if the idea is previously known to someone else or even claimed by someone else as a trade secret. Trade secrets need not be original to the trade secret owner or unknown to the rest of the world. Trade secret law originates in the realm of fiduciary duty. Although trade secrets resemble patent protection, the heart of trade secret law is the fiduciary duty of, for example, employees to keep secret the employer’s confidential business practices. Trade secrets can only be violated by disclosure in violation of a duty of confidentiality, such as under a non-disclosure agreement, or by spying.

If the AI merely delivers to the user an idea that the AI obtained from its training data, can the trade secret can be deemed confidential to the AI user? If the idea is just a copy of something in the training data, presumably someone else already has the idea. Still, the answer is a conditional “yes” – the AI user can own a trade secret in the idea unless the training data was obtained in violation of a duty of confidentiality or by spying.

By the same token, the trade secret owner does not own the idea in the way that a patentee owns a patented invention. Anyone else can use the idea if they do not obtain it through someone violating a duty to keep the idea secret or through spying. The key again, is that the trade secret owner must keep the idea secret.

In addition to secrecy, information is not a trade secret unless it gives the owner an advantage over competitors. The fact that competitors may know the very same secret does not destroy trade secret protection. As long as the trade secret gives an advantage over at least some competitors, it can be protected. However, if the “trade secret” is generally known in the business, trade secret protection fails because the information gives no advantage over competitors.

Does the owner of the AI, as opposed to the user, have any rights in an idea generated by the AI? Not unless the AI Terms and Conditions say so. If the AI owner happens to be privy to the idea due to its control of the AI, that may make it impossible to protect the idea as a trade secret against the AI owner because the AI owner knows the idea without a breach of duty, but it would not make the AI owner the owner of the idea.

Qualifications: Patents and User Terms and Conditions

The foregoing discussion concerning trade secret protection is subject to patent law. Patents can prevent the use of inventions. If the trade secret generated by the AI is covered by a patent, its use would constitute infringement. Even if the trade secret were not copied from the patentee’s information, that would make no difference.

The foregoing discussion is also subject to any Terms and Conditions governing the use of the AI. For example, if by analogy to open source software the owner of the AI prohibits users from claiming ownership in the products of the AI, such a condition should preclude legal ownership of the output. If the output is useful information, like a trade secret, the AI user presumably wouldn’t need to tell the world about it unless the Terms and Conditions said so. But its protection via trade secret law would be questionable.

Summary

Trademark and trade secret protection are available for output from AI, with the qualifications stated above. Potential trademarks or trade secrets need not be created by the trademark or trade secret owner, unlike copyrightable works. AI-generated trademarks and trade secrets are subject to the same rules as other trademarks and trade secrets – at least until the United States Patent and Trademark Office says otherwise.