AI‑driven firms face escalating legal exposure that can erode valuation and stifle innovation; proactive trade‑secret protection is essential to maintain competitive advantage.
The rapid commercialization of artificial‑intelligence technologies has turned proprietary models, datasets, and deployment pipelines into high‑value intellectual property. Courts are now treating these assets as trade secrets, applying the same rigorous standards traditionally reserved for manufacturing formulas or source code. As AI products become integral to sectors ranging from finance to healthcare, the stakes of a breach have risen dramatically, prompting a wave of lawsuits that test the limits of existing confidentiality doctrines.
Recent litigation trends reveal three dominant patterns. First, employee mobility—particularly the poaching of data scientists and engineers—has become a primary vector for alleged misappropriation, with plaintiffs alleging that departing staff carry confidential training data to rivals. Second, inadequate onboarding and off‑boarding procedures leave gaps that adversaries exploit, often resulting in multi‑million‑dollar damage awards, as seen in the latest $12 million verdict against a former AI startup employee. Third, courts are increasingly awarding punitive damages for willful violations, signaling a harsher regulatory environment that demands robust protective measures.
In response, AI firms must adopt a layered risk‑management strategy. Strengthening non‑disclosure agreements, instituting clear data‑access controls, and formalizing exit checklists are foundational steps. Moreover, continuous legal education—such as the Fenwick & West CLE‑eligible webinar—helps counsel and engineers stay ahead of evolving case law. By embedding these practices into corporate governance, companies can safeguard their innovations, reduce litigation exposure, and preserve investor confidence in an increasingly competitive AI marketplace.
February 18, 2026
Authors: Matthew Damm, Jessica Kaempf, Noah Solowiejczyk
Presented by: Fenwick & West LLP
Algorithms, training data, and deployment strategies are among the most valuable assets for AI companies, and they are also increasingly at the center of trade‑secret litigation. Recent cases highlight risks tied to employee movement, onboarding from competitors, and inadequate confidentiality protections.
Webinar details
Date & Time: March 4, 2026 – 9:00 am to 10:00 am PST
Duration: One hour (recorded) – eligible for CLE credit
This webinar will cover:
Practical steps to reduce risk, from stronger agreements to better off‑boarding and on‑boarding procedures
Lessons from recent cases and damages awards
Key trends in trade‑secret litigation affecting AI companies
Join us to learn how AI companies can safeguard their innovations and prepare for potential disputes.
Disclaimer: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.
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