Billionaire investor Mark Cuban believes that companies will increasingly rely on trade secrets rather than patents as artificial intelligence transforms the economics of intellectual property.
Musk’s Open-Source Patents Spark Cuban’s Warning
Elon Musk‘s approach to patents has sparked a warning from Cuban. In a recent interview, Musk stated that none of his companies, including Tesla Inc., have tried to stifle competition by filing patents. In fact, Tesla has open-sourced its patents, while SpaceX largely avoids using them. Cuban shared a clip of this interview and commented on the implications of this approach in the age of AI.
Not filing patents and using trade secrets will become more common. Why? Because the second you file your patent, every large language model (LLM) is going to be able to train on it. Then everyone on the planet can ask for a work around to file a competitive patent. Your IP is no longer yours…
The Shift Away from Patents
Cuban argues that AI has flipped the patent bargain on its head. By filing a patent, companies are essentially providing free training data for their competitors’ AI models. This means that the traditional approach of publishing research and filing patents is no longer effective in protecting intellectual property.
Publish or Perish: A New Risk in the AI Era
Cuban has been warning founders that posting proprietary work online, including through patents and academic papers, now doubles as free training data for competitors’ AI models. This has significant implications for companies looking to protect their intellectual property in the age of AI. As Cuban noted, “data or information is more valuable than gold, more valuable than oil.” Companies must prioritize protecting key datasets and building their own models rather than relying on third-party tools.
A Long-Running Critique of Patent Protections
Cuban’s skepticism of the patent system is not new. He has long advocated for reform, funding the Electronic Frontier Foundation’s “Mark Cuban Chair to Eliminate Stupid Patents” in 2012. He has also urged Washington to scrap software patents outright, arguing that they “crush small businesses.” Recently, he blasted a Commerce Department proposal to charge new fees based on a patent’s value, warning that it would push inventors away from filing just as they are trying to shield their work from large language models.
As the AI landscape continues to evolve, companies must re-evaluate their approach to intellectual property and consider the potential risks and benefits of filing patents versus relying on trade secrets. With the rise of AI, the traditional rules of intellectual property are being rewritten, and companies must adapt to stay ahead.