As businesses increasingly use artificial intelligence (“AI”) in their internal operations and product offerings, they are relying more on carefully engineered instructions or “prompts” to improve the AI’s performance and output. These prompts can constitute valuable intellectual property (“IP”) and are protectable as trade secrets or works of copyright. Businesses should treat them as such. This means ensuring that all IP rights in AI prompts created for the business vest with the business. It also means ensuring that the business is able to enforce those rights if and when necessary.
What are AI prompts?
Anyone who has dabbled with AI has created prompts. A ChatGPT prompt can be as simple as: “Write a song about baseball in the style of Bob Dylan”. It is unlikely that intellectual property rights could be asserted in a prompt like that. But the more sophisticated the desired output becomes, the more sophisticated the prompts need to be to produce the desired output. Developing good prompts can require significant intellectual effort and trial and error. For example:
- a marketing team may develop unique prompts to generate brand-specific content;
- a software developer might design prompts that produce optimized code snippets; or
- a designer could use prompts to create distinctive visual styles.
Prompts like these can be valuable intellectual property assets.
Prompts as trade secrets
The law of trade secrets and confidential information offers the most practical protection for AI prompts. Generally speaking, a trade secret is information that derives economic value from not being generally known and that has been subject to reasonable measures to keep it secret. This could easily include a sophisticated AI prompt or set of AI prompts that a business has developed internally and that it uses to improve internal processes or services for its customers.
Provided that the prompts are treated as, and acknowledged to be confidential, the business could enforce rights in them against departing employees or independent contractors who misappropriate them for their own use or to compete with the business in which they were developed. Unlike copyright law that protects only the exact text of the prompt or a “substantial part thereof”, trade secret law can protect the ideas incorporated into the prompt to the extent that the ideas are not generally known.
Prompts and copyright
AI prompts will constitute copyright protectable literary “works” so long as they are original and have required a minimal degree of skill and judgment to create. The originality requirement means that their content cannot be dictated entirely by the desired output just like software source code will not be protected by copyright if it is the only way to achieve a desired function.
The copyright in a work created by an employee in the course of his or her employment vests automatically with the employer. There is nothing in particular that a business needs to do to ensure it owns copyright in the AI prompts that its employees are paid to create among their other responsibilities. Independent contractors, on the other hand, will be deemed to own the copyright in the AI prompts they create unless they are contractually obliged to assign that copyright to their client.
Unlike trade secret law, the copyright in AI prompts protects only the expression of the underlying idea. It cannot protect the idea itself. This means that a person could avoid infringing the copyright in a sophisticated AI prompt by simply expressing the basic idea in different words. If the basic idea is what is most valuable, then copyright will not be of much help. But it may be the only form of protection available if the prompts have not been maintained as confidential.
Best practices
Businesses that develop and rely upon sophisticated AI prompts should adopt internal processes and policies and should review their contracts with others to ensure that those AI prompts are treated like any other valuable IP and do not fall into the hands of competitors. In particular, they should:
- take steps to keep valuable AI prompts confidential;
- implement access controls and non-disclosure agreements (NDAs);
- document the economic value of proprietary prompts;
- define ownership of prompts in independent contractor and vendor agreements;
- include IP clauses in terms of service for AI tools; and
- register copyright in AI prompts.
How Shift Law Helps
Businesses that use AI-based processes should consider how their prompts and related materials fit into their broader intellectual property strategy.
Here at Shift Law, we have experience and expertise in protecting and enforcing rights in all forms of trade secrets and copyright, including in sophisticated AI prompts. Please contact us if you are looking for legal assistance in this area.
Frequently Asked Questions
Below are answers to common questions about protecting AI prompts and managing related intellectual property issues.
Can AI prompts be protected as intellectual property?
Yes. Sophisticated AI prompts can qualify for protection under trade secret law or copyright law, depending on how they are created and how they are used within the business. Prompts that are original, confidential, and demonstrate skill and judgment may be protectable IP assets.
When does an AI prompt qualify as a trade secret?
An AI prompt may be treated as a trade secret when it has economic value because it is not generally known, and when the business has taken reasonable steps to keep it confidential. These steps can include access restrictions, confidentiality policies, and NDAs with employees and contractors.
Who owns the copyright in AI prompts created for a business?
For employees, copyright in prompts created in the course of their employment generally vests automatically with the employer.
For independent contractors, copyright does not vest automatically. Ownership must be assigned by contract. Without an assignment, the contractor retains copyright even if the business paid for the work.
What is the difference between copyright protection and trade secret protection for AI prompts?
Trade secret protection can extend to the underlying ideas and methods contained in a prompt, provided those ideas are not publicly known.
Copyright protects only the specific expression of the prompt. Someone who re-phrases the idea in new words may avoid copyright infringement.
If the value lies in the idea itself, trade secret protection is typically more effective.
How can a business prevent employees or contractors from re-using or disclosing its prompts?
Businesses should take proactive steps to treat prompts like any other valuable IP. This includes:
- restricting access to sensitive prompts,
- using NDAs and confidentiality clauses,
- clearly defining IP ownership in contractor and vendor agreements, and
- maintaining internal policies that emphasize confidentiality and proper handling of prompts.
These measures strengthen a business’s ability to enforce its rights if issues arise.
Should businesses register copyright in their AI prompts?
While registration is not required to obtain copyright protection, it can be a practical step to support enforcement. Registration can help establish authorship, ownership, and the date of creation if a dispute later arises.
What should businesses do if they rely heavily on proprietary AI prompts?
Businesses that depend on custom prompts should adopt internal processes, contractual protections, and clear IP policies. Reviewing employment agreements, contractor agreements, and terms of service for AI tools can help ensure that ownership and confidentiality expectations are properly addressed.
