AI and Trade Secret Law: “AI Phone Home” (Company Discovers Former Employee’s Use of AI Platform When it Attempts to Join a Conference Call in his Name)

A recent suit filed in the United States District Court for the District of Connecticut illustrates the spookier side of employee use of AI platforms. In the case, styled West Technology Group, et al. v. Karl Sundstrom (No. 3:24-cv-00178-KAD, D. Ct. 02/08/2024) one of the Plaintiffs (CX360) terminated the Defendant (who worked remotely) on February 1, 2024. Four days later, Plaintiffs allege that they received an unexpected participant to a company sales manager conference call:

“CX360 became aware of Defendant’s unauthorized and continuing use of AI software, when during a sales managers’ call, an AI utility bot, Otter, attempted to join the call under Defendant’s name. According to Otter’s website, otter.ai, Otter is an automated transcription service which sends transcribed information to its host server—in this case, to Defendant.”

(No. 3:24-cv-00178-KAD, Complaint Paragraph 20) (emphasis added)

According to the Complaint in the case, this led Plaintiffs to discover that the Defendant had allegedly used Otter to record and transcribe company conference calls contrary to company policy and the law of Defendant’s home state of Connecticut. Plaintiffs allege that by doing so (and by forwarding company e-mail messages to a personal account) the Defendant had misappropriated trade secrets concerning the Plaintiff CX360’s Mosaicx AI platform.

The case is still pending, but the allegations provide an interesting hint of things to come. As mentioned in a previous blog post, a company needs to use reasonable protections under the circumstances to safeguard trade secret information from disclosure in order to maintain its status as a legally protected trade secret. Furthermore, given that some AI Platform EULAs claim perpetual license or use rights in user prompts and other information provided by users, disclosure of trade secrets to an AI Platform may compromise trade secret status.  In light of these issues, will your company be prepared when AI “phones home” for your trade secrets?

© 2024 Daniel J. Langin