Aug 18, 2026
On August 18, The Capitol Forum held a conference call with Christie Thoene, a policy, legal, and communications consultant at CTG Advisory, and Kirti Gupta, Vice President and Chief Economist of Global Technology at Cornerstone Research, to discuss recent developments in intellectual property and trade secret litigation in the technology sector. The full transcript, which has been modified slightly for accuracy, can be found below.
TEDDY DOWNEY: All right. So, we’re going to get started. Welcome, everyone. I’m Teddy Downey, Executive Editor here at The Capitol Forum.
Today, I’m very pleased to be joined by Christie Thoene, a Policy, Legal, and Communications Consultant at CTG Advisory, and Kirti Gupta, Vice President and Chief Economist of Global Technology at Cornerstone Research. We’re going to be talking about recent developments in intellectual property, trade secret litigation in the technology sector, patent disputes, non-competes, the works here. I’m super excited to do this.
Christie and Kirti, thank you so much for joining us today.
KIRTI GUPTA: Thank you for having us, Teddy.
CHRISTIE THOENE: Thank you.
TEDDY DOWNEY: It would actually be great if you could both give us a little bit of background on your expertise and the types of clients that you have and work with and types of work that you do, and then we can hop into some of these topics.
KIRTI GUPTA: Okay, I’ll start. By the way, Christie and I worked together for many years when we were at Qualcomm. I spent 20 years at Qualcomm, and Christie will speak for herself.
My background is I’m an engineer and I have a Ph.D. in Economics. I built and ran the office of the Chief Economist at Qualcomm as the Chief Economist of the company for a decade. And then right now, I’m a partner, and as you said, Chief Economist of Global Tech at Cornerstone Research. I work a lot on IP, antitrust, and tech issues.
We do litigation and regulatory consulting as a firm. I serve as an expert witness as well in addition to practice cohead. And my clients and my work includes a lot of court and regulatory testimony in the space of IP, antitrust, standard essential patents, AI, semiconductors, the kinds of things that the tech companies are currently in disputes about all over the globe.
TEDDY DOWNEY: Perfect. Christie, yeah.
CHRISTIE THOENE: Hi, Teddy. Thanks so much for having me. As Kirti mentioned, she and I worked together for a couple of decades almost at Qualcomm on a variety of policy and legal-related issues.
My job is primarily communications. I do have a background as a litigator. I litigated cases here in San Diego for about ten years and then transitioned into a communications role at Qualcomm, where I helped lead policy and legal communications until this past April. And so, after almost 20 years, I’m now out on my own and looking to help companies that want to use communications as a tool alongside litigation. And in the case of Qualcomm, oftentimes litigation included a regulatory component. So, those two functions really had to work hand in glove along with communications and other teams at Qualcomm. So, I think that’s a good approach to addressing some of these challenges, and I’m really looking to help other companies or firms do that.
TEDDY DOWNEY: I want to ask before we get started—oh, and if you have questions, listener questions, please enter them in the chat or in the Q&A panel, and we’ll get to them later in the call. I don’t want to talk about anything sensitive about Qualcomm or anything like that. But one thing I have found in the 20 plus years of working in and around these kinds of competition issues is Qualcomm has, I think, a very holistic worldview. They see a lot of different things as intertwined, right?
Politics, communications, regulatory, litigation, competition, they sort of have this, I think, in line with how The Capitol Forum works, trying to get holistic context around how different laws shape markets and different players can use the laws to defend them against anti-competitive conduct or any other thing that is causing competition to not basically be fair from their perspective. And obviously, Qualcomm has stakes in this. So, I’m not saying they are not without their biases or anything like that. But just to have that holistic context when a lot of other companies can feel very ideological, very siloed, when it comes to how all these different things interact. How did you two—when you were there and then now—what do you think kind of allows you to have that more holistic context? Or am I just completely misreading the room here?
CHRISTIE THOENE: Kirti, do you want to start with that? I think we both have ideas on that.
KIRTI GUPTA: Yeah, you’re totally smart on that, Teddy. And now that I’ve been out as a partner at Cornerstone Research and expert for a little over three years now, and I’ve had multiple clients—and Christie’s seeing a broader view and has been as well in the past as a litigator—it is true that what we faced in that period over a decade as a company was kind of unique, and it really forced the function of creating a holistic approach. Because there are a few—it’s a rare time for a tech company of that size to go through something like a real existential crisis, where you built a technology from the ground up and you may not actually survive.
And that’s the kind of existential crisis that we lived through and worked very closely together—and that’s putting it mildly. And that’s a testament to the holistic approach. Because on the one hand, there’s a regulatory pressure. On the one hand, there’s a court pressure. There’s the court of public opinion. There’s a policy world and the government affairs team. And all the pieces need to fit together because the battleground is not a single facing battleground. It’s a full war strategy. And I think that’s a blueprint. And in our world, we bring that sort of unique viewpoint to help our clients in facing the challenges that they’re facing today.
Christine, please, over to you.
CHRISTIE THOENE: Yeah, I think Kirti described it really well. I do think that Qualcomm takes a holistic approach. I think, I agree with Kirti that Teddy really nailed that. And I think that’s by design. And while we can’t really talk about some of the things that are more sensitive, and I would never give away all of Qualcomm’s secrets in terms of their formula for success, but I will say that I think a big part of it is leadership having the vision to give teams the freedom to innovate and think about all of the different things that you might do to try to solve a problem. And I think it really boils down to that.
And I think that Qualcomm is an extremely innovative company. I mean, that’s why the engineers at the company get out of bed every day. It’s to solve problems and try to think about new ways to do things. And so, I think Qualcomm’s always embraced that approach. And it’s always been eyes wide open. What else can we be doing? Who else can we be talking to? How can we make sure that people really understand what’s at stake? And what are all of the different channels that we can use to try and help people gain that understanding? Because at the end of the day, you really do have to win hearts and minds in one way or another, whether that’s with a policy audience, whether that’s with the media, whether that’s with your investors. And then, of course, there’s the courtroom. So, you’ve got to step back and think about ways to be persuasive and compelling for a lot of different groups. And I think if you’re not approaching big global disputes with that mindset, you might be missing an opportunity.
TEDDY DOWNEY: Yeah, you mentioned being focused on problem solving, I mean, just the number of lawyers that I’ve dealt with who are more pointing out problems as opposed to helping you solve them, I think just like bringing it just to that legal realm is interesting in and of itself. But we could spend all day on this. Let’s get to some of these hot topics that you both are focused on.
First, we’ve written a little bit about these patent battles in the video streaming market. What are you seeing there? Where are the big fights? How do you see that playing out? Or what do you think is interesting about that right now?
KIRTI GUPTA: I’ll take the cue and start, Christie. And please jump in. So, we’ve lived the world of the smartphone wars in the trenches, in the last decade when we were in the industry, in the mobile industry. And I think that’s what I was talking about, the existential crisis and so on. And I think the frontier of the streaming wars is really the next frontier at the intersection of IP and antitrust.
Now, just zooming out and taking a step back, I’m an economist. I like to look at numbers. We all recognize that during the years, like the 2000s, like right after the launch of the Apple iPhone in particular, but even before that, for around 15 odd years or 20, the smartphone industry was growing at an exponential rate. It was doubling, tripling every few years. And now it’s kind of matured. And that growth has plateaued.
But there’s another industry where this growth is happening at a rapid pace. And there’s a multi-billion dollar market that’s growing with an average growth rate of over 8, 10 percent, expected to be 16 plus percent through the end of this decade. And that’s the streaming industry. People have access to high bandwidth. They use that high bandwidth to stream a whole bunch of video content. And how do you do that?
One part of the technology is being able to take a whole bunch of that content bits and encode them into a more efficient, smaller set of bits, smaller packets, send them through the wireless channel, and then decode them on the receiving end. So, this allows for a whole bunch of efficiency. So, instead of sending millions and billions of bits per second, you’re able to reduce the size of the packets because you’re encoding them and then decoding them on the other side. It’s a complex mathematical technology. And that is what sort of the wars are about.
There are standards related to these video coding technology. And standards technologies, by definition, are those that the world has agreed on, that these are the technology standards we use. It’s a common language. It’s a common technology. And therefore, by definition, there is no design around.
So, when people implement this technology, they must then take a license to these standards essential patents from the owners of these SEPs. And now the question is, what’s the right rate? What’s the correct frame rate? Is there a potential for anti-competitive harm because of the unique nature of these technologies that there is no design around? These are the questions we grapple with in the smartphone world, and now we have to grapple with in the streaming wars. There are some significant differences that I think it’s worth talking about, but that’s sort of the big picture. Christie?
CHRISTIE THOENE: I think from a communications and perception standpoint, these are really interesting cases to follow. As Kirti mentioned, I was hired at Qualcomm back in the mid-2000s because the company was involved in global disputes over smartphone technology, and who was using it? How much is it worth? Should people have to pay for it?
It was often referred to—Qualcomm’s technology would be referred from time-to-time as a tax on innovation, which I think for the engineers at Qualcomm who developed 3G technology, 2G, CDMA, 3G technologies, 4G, 5G, now 6G, they would probably take issue with that. But again, these are big companies with lots of money at stake. So, they’re going to fight tooth and nail on both sides to protect their position.
So, I think on the innovator side, it was always important, as I mentioned, that we educate people who are paying attention to these cases about what the technology was, what it does for people, and why it’s important. And the other side was doing the same thing. They were making arguments about fairness and so on.
So, I think it was a really interesting time in the midst of a period of massive technology disruption. I mean, I think today, I know, for example, my kids take this for granted. But when you think about cellular technology, just as an example, and the proliferation of this technology around the globe, I mean, most people have more than one device. There are more than 11 billion cellular connections around the world.
I mean, it is the largest technology platform in history. So, it was an incredibly interesting opportunity to be inside that technology disruption and be a part of all of the disputes that were happening around it in terms of, like I said, paying for the technology. But at the end of the day, it was our job to make sure that people understood the story behind it. And I think that the companies that are involved in the streaming wars now are having to do the same thing.
I mean, I think, Teddy, I would imagine that when your average dinner party, people are not sitting around talking about video codec technologies and which version is better and which streaming company is using which one and how much that technology should cost.
So, these are super technical issues inside of super technical issues. And so, I think the challenge for the companies from a marketing and communications and perception standpoint is to help people understand what this is, why it’s important, where it’s developed. From an American technology leadership perspective, that’s definitely one angle. There’s a European technology leadership angle as well.
So, I think there’s a lot to all this. And to be successful, you want to make sure that all of those various channels really understand what this is about and why you’ve taken the position that you have.
TEDDY DOWNEY: Yeah, you mentioned a couple of different lenses there. There’s the company versus company lens. There’s the nationality, country versus country lens. But, I think, Kirti, you mentioned the world has agreed on specific technology being the standard. And I do want to focus on that for a second, because that doesn’t just happen in a vacuum.
There are boards and experts and technical panels and everyone. It’s like, do you think it’s important to pay very close attention to how those standard setting organizations are built, who’s funding them, who’s on those committees, how the power both at the corporate and at the country level jostles to get on those technical panels and to steer the technology in different ways? I mean, at some point, yes, it’s like the world agrees that that’s the standard.
But to me, that process is so opaque. And that’s something I’m interested in spending more time on and putting more resources into, making it more transparent, the way that we have made the antitrust process a little bit more transparent by holding the FTC and DOJ and state AGs a little bit more accountable and providing citizens a little bit more information on what they’re doing, why they’re doing it. Do you think that type of transparency is needed at the standard essential organizations that make the standards?
KIRTI GUPTA: Yeah, that’s really hitting the nail on the head, Teddy. That’s a great question. I am a former standards engineer. I used to go to 3G, 4G standards meetings, global meetings, and have patents in the technology myself. So, I’m generally familiar with that and have written a lot about the standard setting process. Because I do think you’re right that it’s not very well understood. And there are certain tenets and it’s a world which lives under a very technical jargon. So, if I say like OMB 119, like certain kind of parameters.
So, I won’t talk about jargon. But I will say that there are certain well-agreed-upon principles for how these voluntary standards organizations should work and operate. And they include the concepts of it has to be voluntary participation. There needs to be fairness. There needs to be transparency. There needs to be either consensus or majority voting in order to bring in a technology and incorporate as part of the standard.
Now, does that process break? Sometimes, yes, it absolutely does. Are there other kinds of standards? There are. There are proprietary standards. There are standards that are dictated by governments. There are de facto standards that just become a proprietary technology if a company gets adopted enough for it to become like the de facto standard. Back in the day, the Microsoft operating system comes to mind, those kinds of things.
So, there are other kinds of mechanisms through which the world can agree that this is a common technology. And it does get scrutiny from time-to-time. Bringing that back to the current developments, the world of video coding, indeed, some of the streaming companies have recently joined hands to create a consortium for developing their own video coding standards, Netflix and Amazon and many others. And they’re developing this technology called AV1 for video coding.
And now, DOJ, and to some extent, the European Commission, have asked the question whether this is something that the regulatory authorities need to look into and investigate? Is this a proprietary technology? Does this allow others to incorporate or contribute their technologies into the standard? How does it operate?
So, it’s exactly the right questions. And then even in the world of the technology standards already exist. So, let’s say just like 3G, 4G, 5G were different generations of the cellular technology, video coding technologies have generations as well. It’s jargon, again, my apologies. But back in the day, H264 standards, the next version was H265. Now the newest one is H266.
So, what happens is when the world adopts a standard, like a coding technology standard, and then they need to upgrade, the question then that the implementers are asking, and the courts are asking as well, are those rates still fair and reasonable? Or is there a potential of holdup? And I think these are all reasonable questions that need to be asked and answered. And that’s what’s happening in this global landscape.
TEDDY DOWNEY: What do you think about the courts setting these rates? I mean, there’s just so much ideology out there about, well, we can’t have rates setting. That’s socialism. That’s communism or whatever. That’s not capitalism. There’s so much of that out there if the government ever wants to step in.
But what if the court gets it wrong? Or what if the standard setting gets it wrong? Is there a role for government? Or is litigation really the right way to have all this play out? I mean, it just seems like having things play out through litigation gives you a seven to ten year timeframe sometimes on resolution. As opposed to, okay, you have some government established process to vet the standards and then have some kind of more accelerated way to resolve disputes around what is fair, what the standards should be. It always struck me as kind of an imperfect process around you sort of have these amorphous standard setting bodies, and then you have this lengthy court process to determine what is fair in the end. Anyway, just curious to get your thoughts.
KIRTI GUPTA: It’s like anything else in the world, right? Like it’s centralized decision making versus distributed decision making with its own pros and cons. If you centralize the decision making process, it has its own pitfalls. And if you get it wrong, then you’re stuck with that error and the ramifications of those errors are higher. And nobody in the end, likes that. Because you have several steps to move central planner deciding the price of an asset.
So, let me ask you this question. Like you have a house. How do you value the real estate, the price of that house in the real estate market? And you do that based on the market conditions. I mean, you’re talking to an economist. So, I think it’s an expected answer. But you’re letting the market decide. And the market is going through these bilateral, multilateral, or whatever kinds of negotiations. It has a bunch of information. It’s a decentralized process, and it’s coming up with a price in which the market’s clear. There’s an equilibrium. That’s just how we decide prices of any asset in the market.
The reason this is different is because, like I said, it’s a standard that everybody agreed to, and there is no design around by definition. So, what should be the frame rate? That said, there are certain comparables that exist, and courts like to look at those comparables. They first like to look at what has the market done? And then make a determination on the dispute at hand based on what—because for 90 percent of the things that are naturally transacting in the marketplace, there are a handful of disputes that ultimately go to the courts because the two parties couldn’t agree. But behind that is a whole bunch of agreements that are clearing out in the marketplace of their own accord.
So, yeah, the courts can get it wrong too. Absolutely. I mean, we’re all—judges are humans. Experts who support the judges and coming up with what’s the right valuation are human and we have only that much information. But then at least the error is confined to that particular issue and to those particular parties, and there is a method to self-correct and to fix.
So, I think that we’ve all lived in a society where we kind of prefer a decentralized decision making process over a centralized one. So, it’s hard for me to take a position that it would be helpful or optimal from a social standpoint for a regulatory body or a central planner to decide this is what the rate should be and impose that rate across everybody.
TEDDY DOWNEY: Interesting, yeah. Christie, any thoughts there?
CHRISTIE THOENE: I’ll just caveat this by saying I’m not a licensing expert. We had those people at Qualcomm, obviously. And Kirti can probably add to this too. But I hung out with a lot of them. And obviously, a lot of our very public disputes were around licensing.
But actually, for Qualcomm litigation, big litigation was pretty rare. And we had some high-profile disputes, but there’s an enormous amount of licensing that happens that you never hear about. I mean, Kirti, you probably know the statistics, but it’s got to be the majority. So, I know that was definitely the case for Qualcomm and continues to be.
So, I think there’s a lot that you don’t hear about that works quite nicely. But we’re obviously, as Kirti described, in the midst of another wave of disputes in a new tech, new-ish. I mean, this technology has been around for a long time. But these disputes are new and it’ll be interesting to see how it all starts to play out. But at least looking back to the cellular space, I think there’s a lot of peace there, so to speak.
TEDDY DOWNEY: Well, it just strikes me that look at some point, if someone is willing to weaponize a standard patent in a way that’s not like copacetic with everyone, else you’ll need regulators, Congress, to get involved. Because seven years in fast developing tech would just be too long. And so, yeah, it’s centralized planning, whether it’s the court or the government or a big company in that sense, if they want to weaponize it to their satisfaction. So, let’s keep going.
KIRTI GUPTA: That’s a good point. That’s a good point. Because I think it’s worth pausing on the real issue, that when disputes come to the courts, the process takes several years while the technology itself is racing at totally different speeds. And the two speeds have become incongruent with each other. And that’s a real problem. And it’s a bigger problem today. Because, not only specifically in this world, these disputes just tend to be global in nature. So, they’re being fought in multiple jurisdictions at the same time.
TEDDY DOWNEY: Yeah. I mean, we’re doing a conference in Washington at the end of September about. And one of the questions I think that will come up will be do we need more specialized courts for different things and sort of create more pathways to a jury trial or a trial or justice? However, you would see it.
Let’s talk about some other important developments you’re seeing in trade secret litigation in the tech sector. We have a big recent lawsuit from Apple against OpenAI. What do you think companies should be watching out for in terms of trade secret litigation?
KIRTI GUPTA: Yeah, that’s a good one. My job as an economist is to look for trends. And one of the trends that I see is from smartphone to streaming. That’s naturally happening. And obviously. that’s happening for a number of reasons. Streaming is important. The licensing landscape has changed. There are many more licensors, many more pools and so on.
And then there’s the other trend, which is the patent world is difficult. We just touched very, very briefly on it, that in this world, people have to often bring these disputes in global jurisdictions and fight multiple battles at the same time. In some jurisdictions, it’s easier to get injunctions granted for your patents, and some it’s harder.
So, for both patent assertors and the alleged infringers, it’s difficult to go through this. And there’s a growing trend where there’s no other data to see this other than the litigation and trade secrets, because people don’t file trade secrets like the file patents. So, you can’t look at the data. I can tell you that the patent filing is increasing, but it’s become sort of plateaued in the United States.
But the thing that is very clear from the data is that trade secrets disputes have grown rapidly in the last several years. That’s just an area where you’re seeing an increased amount of litigation. And currently, the economic literature, we’re at a point where you can only conjecture what the reasons are. And I can name three reasons that are all probably contributing to this. We just have to establish the right causality and we’ll do research over the number of years and so on and figure it out.
But really the three reasons that are contributing to this are, number one, people are materially shifting their strategy of protecting the value of their intellectual assets from patents to trade secrets more and more, wherever they can.
Second, I think you just mentioned the world of AI. Since the sort of AI revolution has taken off in 2022, there are many more trade secret litigation and many more are tied to AI. And that makes sense because when you think about the AI technology, it’s kind of a lot of trade secret heavy there. Like the training models, the weights, the kinds of training data, the kinds of things that you’re using in the algorithms are potentially trade secrets more than patents. So, you’re seeing that play out.
And then the third thing we can touch upon is the idea of non-competes. So, in the United States, there is a push towards trying to reduce the enforcement of non-competes for the companies. So, in California, that was already the case where there are really no non-competes available to employers. But recently, the FTC had issued a new proposed rulemaking on basically making non-competes defunct for all employers, for all kinds of employees. They lost in the courts, that battle in the courts, and that new proposed rule didn’t go anywhere.
But they kind of set the tone and said that, okay. We’ll use other ways like Section 5 Unfair Competitions Act to try to assert this unfriendliness towards non-competes. And that could be a real contributor here. Because when you think about these super high-end technologies like AI and the kind of competition that is currently unfolding about human capital, really high-end engineers, and they often pick up and move to a direct competitor, they’re taking the know-how and potentially intangible assets with them. And therefore, you see this increased rise in trade secret litigation, especially in the world of AI.
TEDDY DOWNEY: I remember when we were covering a lot of the non-compete fight at the FTC and then in the courts, there were a lot of complaints that, well, how can I protect my trade secrets if I can’t ban non-competes? And then it dawned on a lot of people, well, there’s a law for that too. We saw a lot of memos from HR lawyers and things like that, hey, shift from non-compete, which is vulnerable already, to protecting your trade secrets.
That’s a pretty powerful law, if that’s what you’re trying to protect. And it turned out, lo and behold, people were actually trying to protect their trade secrets with this non-compete, very sort of vast and unnecessary non-compete language in their documents. So, we’ve definitely seen that at least anecdotally through these memos, and I’m sure that translates into conduct.
I want to stay on one point that you made around tech companies drifting away from patent and towards trade secrets. I’m curious if you see the same thing around copyright. Because with AI, obviously, if you’re a tech company, you want weak copyright law. Because if you were doing the model, you don’t want to have to end up paying all these newspapers and whatnot for expensive licensing. If you don’t have to pay for that, if you get broad fair use exemptions, that is very valuable to you.
On the flip side, historically, though, copyright has been very much a way to—maybe if you take out Google—copyright has been something that big companies tend to want a lot of power in. Your Disneys, your Fox News’s of the world, they’re trying to keep copyright law powerful.
I think patent is a close cousin of copyright law in many ways. But do you see that as an issue where copyright law already was something that the Googles of the world pressed down and devalued at some level when they were fighting in the courts? But that the shift to AI makes that imbalance even more dramatic where you’re like, hey, there’s this one area of law we’re just kind of inoculate ourselves. We’re going to move into this other area because that one is getting kind of decimated in the courts or has the potential to be.
KIRTI GUPTA: I view that as orthogonal, Teddy, to be honest with you. Because the copyright issue is kind of orthogonal to the patents versus trade secrets. So, on the one hand—taking a step back—we’re living in the world where intangible assets are incredibly valuable to all companies, including tech companies, because most of their assets don’t reside in human or in capital. Over 90 percent of the value of S&P 500 firms is in intangible assets. What is that? Well, that could be patents. That could be copyright. But it is also know-how. It’s trade secrets. It’s skill. It’s all of those things that their employees have.
So, it makes sense to me that the tech companies are thinking about, well, I need to compete with my most serious competitors in the world of AI and how do I protect my know-how? Like in the past, there are—even now, right? Like they have multiple ways of doing this. It isn’t just patents and copyrights and trade secrets. It’s also things like, well, I vertically integrate. I take my technology. I make it proprietary and I build my product around it and I don’t offer it to anybody else. That’s basically like a trade secret, right? And sometimes a trade secret.
It’s also other things like I’m going to monetize it in adjacent markets or create network or conglomerate events or have a first mover advantage. There are so many ways companies do—should and do—think about how to protect their intangible assets.
Okay. So, that’s sort of the premise. Now, the world of patents has probably not been particularly useful to some of the largest companies because that’s—I think you said it yourself—there are many limitations there. First and foremost, the timing of these disputes, if you want to assert your patent. And second remember that patents are still the kind of intellectual property where you have to disclose your idea to the public.
And you get a 20 year monopoly over it or right to exclude over it. And you need to be able to assert that right in the court if somebody is infringing on that right over that period of 20 years. But it is still something you have to publish and put out there and make available to everybody else.
A trade secret is known to nobody but you. The formula for Coca-Cola sits in a vault in Atlanta and nobody has seen it. So, it’s an easier way for many companies to be able to protect their assets in today’s world where the race to this technology is so high.
So, I think I do expect trade secret litigation to rise, regardless of what is happening in the patent and in particular in the copyright world. And the reason I see the copyright stuff as completely adjacent and orthogonal to this is because, I mean, really that is the question of the creative community. Yes, to some extent, software, copyright.
But really most of the AI war is about the creators have a bunch of content. The AI companies are now using that content and training their models. And then there is a question of fair use. Is this covered under fair use? To what extent is it covered under fair use? Is the use transformative enough? Is the use of this material to training AI models creating some kind of a market substitution or market dilution for the creators?
These are questions we haven’t yet answered as a society authoritatively. There are, I think, over 100 lawsuits that are currently unfolding in the courts in the United States right now. We are tracking all of those and working on some big ones. But I don’t think that we have a complete answer yet. And it’ll probably take a few years to work through this as a community.
TEDDY DOWNEY: That makes sense. Christie, any thoughts just on how you see this unfolding, maybe from the communications angle or how you think about this trade secret copyright patent stuff strategically?
CHRISTIE THOENE: Well, at least in the Apple versus OpenAI case, there are lots of different facets of that case that are interesting from my perspective. Just from a communications perspective alone, it’s been interesting to watch how OpenAI has handled responding to the case. They’ve been extremely aggressive. They’ve posted a pretty detailed blog about it. They’ve oftentimes, with more established companies that have been around for a longer time, you’ll see them take a little more conservative approach to responding to something like this. You think OpenAI, consistent with company culture and what you would expect from a company like it, has come out swinging. And I think they’ve identified what they view as some challenges with Apple’s complaints.
But one of the arguments that they’ve made is that Apple’s—I’ll just call them exit process or processes when employees leave the company—that their efforts to protect those trade secrets and confidential information were maybe not where they should have been. And this is just an argument that OpenAI made. I’ve no idea whether that’s true or not.
So, I think OpenAI has tried to turn the tables a little bit and say, hey. Listen, your employees are free to go to new companies if they want to. But if you’re upset about safeguards on the way out the door, maybe you need to improve those safeguards. You can’t necessarily pin that on us.
So, these of course are all issues that will get hashed out over the course of the litigation. But yeah, I think it’s things like non-disclosure agreements, confidentiality agreements. I mean, I think from my experience, especially over the last five years, I mean, we saw a huge effort to really step up protection of confidential corporate information. And in my experience, companies take that very seriously.
So, I think that’s something to consider too. But the OpenAI Apple case will lay bare, in a public forum, what Apple was doing to safeguard those trade secrets to the extent that they’re involved and what they were doing to safeguard confidential information as employees were leaving and what did OpenAI have access to, if anything. So, I think this will be a good case study going forward on how all of that is being dealt with in the age of AI. But there’s a lot to watch there.
TEDDY DOWNEY: Yeah. One thing I always think of the flip side of all this is if you really want to keep your employees, if you pay them more and keep them happy, they’re less likely to leave with your secrets. But I digress.
CHRISTIE THOENE: It’s interesting though., I’m curious to talk about this. Because I think engineers, you can’t necessarily predict how they’re going to behave. A lot of this is just about innovation and wanting to be part of something.
TEDDY DOWNEY: Well, yeah. But that gets down to your management philosophy, your philosophy, of how you let them—do they have autonomy? Are they getting expertise? Are they enjoying their colleagues? Do they have the right atmosphere?
So, keeping your employees happy. Obviously, there’s a market for this talent, an incredibly lucrative market for this talent right now, particularly at the top. And there’s a trade-off here, right? If you call that, oh, it’s a trade secret. That’s my trade secret. That person is my trade secret. I mean, that limits their mobility. It limits the potential money they can get.
So, I mean, I’m not saying that you should be able to run off with anyone’s trade secrets. It’s just like that line, as you point out, will be played out in the courts. But one way to avoid the courts is you have a place that people want to work and you’re paying them really well and they don’t want to leave.
So, you see the difficulty and cost, for example, for Meta to acquire talent. I think that’s because they have to overcome the reputation that it’s not a good place for all that stuff that you were saying in terms of innovation and sort of the kind of freedom that you would want if you’re a leader there. But I digress.
CHRISTIE THOENE: I think, Teddy, just to close on that, another interesting facet to it is ultimately do actions like this have a chilling effect? Do employees feel like—is this an effort to send a message to employees that there will be consequences for leaving? I mean, that’s kind of an extreme view to take on all of it. But yeah, like I said, there are lots and lots of facets to that case that I think are fascinating and you could probably do a bunch more episodes on each one.
TEDDY DOWNEY: Yeah. We’ve got a couple of listener questions. I’d love to get to them before we go. This is related to what we were just talking about. How prominent will trade secrets be in the AI space, particularly for hard to pin down algorithms embedded in agentic rules? So, we talked about this a little bit. Do you think it’s going to be particularly acute here around trade secrets when you’re talking about algorithms and agentic rules?
KIRTI GUPTA: You see why, right? Like the patent system isn’t designed for a lot of kinds of intellectual assets that are critical for these kinds of AI technologies. And that is why trade secrets is playing a larger role. And just, if you look at the trade secret litigation in AI, it’s up by 92 percent in the last couple of years. So, that tells you that’s a trend.
TEDDY DOWNEY: Here’s another listener question. I’d be interested to hear about Amazon versus Perplexity and how platforms can and will adapt to agentic AI if it’s in scope. So, Amazon Perplexity, that’s the lawsuit where Amazon’s suing Perplexity, I think, for accessing their platform, right? I don’t know how familiar you are with that, but how important is that case? And how do you see platforms like Amazon dealing with agentic AI going forward?
KIRTI GUPTA: Okay. I mean, if I were to interpret this question more broadly, I think I’m thinking about there are large AI companies, the hyperscalers, who have access to a number of things: cloud compute, chips, et cetera. And then the question is if they build partnerships or have some kind of control over access for other smaller companies, including smaller agentic AI companies, are there legal issues that can arise?
And yeah, I mean, absolutely, right. That’s what the DMA is trying to solve in Europe. And that’s something that the regulators in America have flagged, that questions around controlling access or self-preferencing would be under scrutiny on both sides of the Atlantic.
TEDDY DOWNEY: Yeah, I think that’s particularly interesting as well. A lot of these tech companies have really benefited from, well, I’m just a platform and just two people are coming—the users are coming together and I shouldn’t have any liability here.
But then if an agent comes on and is using it, they’re like, oh no, no, no. You can’t take the place of the user. That’s naughty and illegal. So, to me, it’s a difficult needle to thread there for these companies that have sort of used that tactic for so long to then try to enforce it on the other end. So, particularly interesting there.
Well, we don’t have any other listener questions. I am super excited to keep following all of these issues. This was an extremely interesting conversation. You both have tremendous expertise. And like I said, I have always found myself really interested in sort of the Qualcomm way when it comes to holistically thinking about strategy and the government and law and competition. So, I appreciate you both sharing your expertise today.
KIRTI GUPTA: Thank you, Teddy.
CHRISTIE THOENE: Thank you, Teddy.
TEDDY DOWNEY: And before I wrap up, we do have an op-ed section now at The Capitol Forum. It’s called The Forum. You can visit thecapitolforum.com to learn more about it. If you have an opinion about anything related to political economy or competition, we would love a submission there. We take any and all submissions on political economy and competition issues for that newsletter.
Thank you for joining us today. This concludes the call. Bye-bye, everyone.
