Protecting Language Models Against Unauthorized Distillation through Trace Rewriting

Hugging Face Daily Papers Papers

Summary

Researchers propose trace rewriting methods to prevent unauthorized LLM knowledge distillation while preserving answer correctness and embedding detectable watermarks.

Knowledge distillation is a widely adopted technique for transferring capabilities from LLMs to smaller, more efficient student models. However, unauthorized use of knowledge distillation takes unfair advantage of the considerable effort and cost put into developing frontier models. We investigate methods for modifying teacher-generated reasoning traces to achieve two objectives that deter unauthorized distillation: (1) anti-distillation, or degrading the training usefulness of query responses, and (2) API watermarking, which embeds verifiable signatures in student models. We introduce several approaches for dynamically rewriting a teacher's reasoning outputs while preserving answer correctness and semantic coherence. Two of these leverage the rewriting capabilities of LLMs, while others use gradient-based techniques. Our experiments show that a simple instruction-based rewriting approach achieves a strong anti-distillation effect while maintaining or even improving teacher performance. Furthermore, we show that our rewriting approach also enables embedding watermarks that can be reliably detected with essentially no false alarms. Our code is available at https://github.com/xhOwenMa/trace-rewriting.
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Source: https://huggingface.co/papers/2602.15143

Abstract

Techniques for modifying teacher-generated reasoning traces to prevent unauthorized knowledge distillation while maintaining answer correctness and enabling detectable watermarks are presented.

Knowledge distillationis a widely adopted technique for transferring capabilities from LLMs to smaller, more efficient student models. However, unauthorized use ofknowledge distillationtakes unfair advantage of the considerable effort and cost put into developing frontier models. We investigate methods for modifying teacher-generated reasoning traces to achieve two objectives that deter unauthorized distillation: (1)anti-distillation, or degrading the training usefulness of query responses, and (2)API watermarking, which embeds verifiable signatures in student models. We introduce several approaches for dynamically rewriting a teacher’s reasoning outputs while preserving answer correctness and semantic coherence. Two of these leverage the rewriting capabilities of LLMs, while others usegradient-based techniques. Our experiments show that a simpleinstruction-based rewritingapproach achieves a stronganti-distillationeffect while maintaining or even improving teacher performance. Furthermore, we show that our rewriting approach also enables embedding watermarks that can be reliably detected with essentially no false alarms. Our code is available at https://github.com/xhOwenMa/trace-rewriting.

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Protecting Language Models Against Unauthorized Distillation through Trace Rewriting

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This paper proposes methods for protecting large language models against unauthorized knowledge distillation by rewriting reasoning traces to degrade training usefulness while preserving correctness, and embedding verifiable watermarks in distilled student models. The approach uses instruction-based and gradient-based rewriting techniques to achieve anti-distillation effects without compromising teacher model performance.