Applications such as personalized assistance and proprietary document analysis require large language models (LLMs) to generate outputs from private data. Yet powerful LLMs typically cannot be deployed on the resource-constrained devices where private data resides, and uploading private data to cloud-hosted LLMs exposes sensitive information. Recent work addresses this tension with a cloud-edge collaborative decoding paradigm, where private data are kept on the edge with a small language model (SLM) producing next-token distributions, which are fused with predictions from a cloud LLM operating solely on public data. In this paper, we systematically analyze the privacy risks of such a paradigm with a novel evaluation framework using constructed QA datasets, which show that such collaboration can expose substantial private-context information. To address such privacy leakage, we propose CoVeil, a defense mechanism which dynamically optimizes transmitted signals to suppress leakage during decoding time while preserving the collaborative quality. Extensive evaluations demonstrate that CoVeil consistently improves the privacy-utility trade-off over existing baselines by reducing data leakage by up to 87.2%, with minimal accuracy loss.

Data-generation based zero-shot learning, although effective in training Small Task-specific Models (STMs) via synthetic datasets generated by Pre-trained Language Models (PLMs), is often limited by the low quality of such synthetic datasets. Previous solutions have primarily focused on single PLM settings, where synthetic datasets are typically restricted to specific sub-spaces and often deviate from real-world distributions, leading to severe distribution bias. To mitigate such bias, we propose FuseGen, a novel data-generation based zero-shot learning framework that introduces a new criteria for subset selection from synthetic datasets via utilizing multiple PLMs and trained STMs. The chosen subset provides in-context feedback to each PLM, enhancing dataset quality through iterative data generation. Trained STMs are then used for sample re-weighting as well, further improving data quality. Extensive experiments across diverse tasks demonstrate that FuseGen substantially outperforms existing methods, highly effective in boosting STM performance in a PLM-agnostic way. The code is available at https://github.com/LindaLydia/FuseGen.