Safeguarding Proprietary Fund Data and Intellectual Property When Using Generative AI (Part One of Two)

Generative artificial intelligence (Gen AI) has exploded over the past year and continues to evolve at a breakneck pace. As Gen AI is implemented in various workflows, particularly with more sophisticated and customized models, private funds must decide whether and how to give Gen AI models access to their confidential information and intellectual property (IP). There is a delicate and evolving balance between protecting proprietary information and leveraging the full capabilities of Gen AI. Importantly, not all uses of Gen AI require putting crown jewel information at risk. The range of necessary inputs depends mainly on the task, purpose and desired output. This first article in a two‑part guest series by Akin attorneys Michael P. Kahn and Ryan Dowell explores the challenges and considerations private funds face when integrating Gen AI into their operations; the delicate balance private funds must strike between harnessing the capabilities of Gen AI and safeguarding their proprietary fund data and IP; and the risks, customization options and strategies to address IP concerns. The second article will provide insights into the different levels of Gen AI deployment and best practices to protect sensitive information, offering a comprehensive guide for private funds navigating this transformative technology. For additional commentary from Akin attorneys, see “What Must a PE Sponsor Consider Before Launching a Private Credit Strategy? (Part One of Two)” (Feb. 4, 2020); and “How Fund Managers May Deploy Opportunity Zone Funds to Defer and Partially Eliminate Capital Gains” (Apr. 30, 2019).

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