USA – CALIFORNIA Trends and Developments Contributed by: Aaron Nathan, Samantha Jameson and Azra Hadzimehmodovic, Tensegrity Law Group LLP
Another intersection between trade secret law and AI was highlighted in a recent decision denying xAI’s request for a preliminary injunction against the California Attorney General to prevent enforcement of Assembly Bill 2013 (“A.B. 2013”, titled “Artificial Intelligence Training Data Transparency”, now Cal. Civ Code § 3111), signed in September 2024. The court explained that A.B. 2013 requires “developers of ‘a generative artificial intelligence system or service’ that is ‘publicly available to Californians for use’ to ‘post on the developer’s internet website documentation regarding the data used by the developer to train the generative artificial intelligence system or service’”, including a “‘high-level summary of the datasets used in the development of the generative artificial intel - ligence system or service’ addressing, but not lim - ited to, twelve enumerated topics”. X.AI LLC v Bonta , No. CV 25-12295 JGB (SSCx), 2026 LX 151126, at *2-3 (C.D. Cal. Mar. 4, 2026). xAI challenged the law on the basis that it violates the takings clause of the Fifth Amendment because the information about the datasets is trade secret; that it violates the First Amendment; and is unconstitutionally vague. Id., at
*5, *9-10. The court found xAI “not likely to succeed on the merits of its Takings Clause claim based on the Complaint as pled”. Id. at *13. While the court noted the “important role of datasets in AI training and devel - opment[] and that, hypothetically, datasets and details about them could be trade secrets”, xAI plaintiffs had impermissibly adopted a “generalized, abstract plead - ing” approach that “inhibited a determination in their favor at this stage”. Id. at *12-13 (C.D. Cal. Mar. 4, 2026). The court likewise found a “distinct possibility” of prevailing on the First Amendment challenge but not “a likelihood of success on the merits”. Id., at *25 (emphasis original). Finally, the court also held that “the record at this stage is insufficiently developed for the Court to determine that Plaintiff is likely to succeed on the merits of its vagueness challenge”. Id., at *28. Because X.AI was decided at the preliminary injunc - tion stage, it remains to be seen whether and to what extent any of these challenges may ultimately suc - ceed. In the meantime, the disclosure requirements of AB 2013 are in tension with efforts to protect AI trade secrets.
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