Judicial Support for Reverse Engineering

Reverse engineering brings to mind one main question for the intellectual property practitioner: Is it legal? By looking at a few cases dealing with reverse engineering and intellectual property regimes, it is discovered that not only is reverse engineering legal, but it is a means of maintaining competition that is fair and healthy for the marketplace.

In Bonito Boats, Inc. v. Thunder Craft Boats, 489 U.S. 141, 146 (1989), Justice Sandra Day O'Connor stated:

From their inception, the federal patent laws have embodied a careful balance between the need to promote innovation and the recognition that imitation and refinement through imitation are both necessary to invention itself and the very lifeblood of a competitive economy. The novelty and nonobviousness requirements of patentability embody a congressional understanding, implicit in the patent clause itself, that free exploitation of ideas will be the rule, to which the federal protection of a patent is the exception.

The public at large remains free to discover and exploit the trade secrets through reverse engineering of products in the public domain or by independent development ' Reverse engineering of chemical and mechanical articles in the public domain often leads to significant advances in technology.

The competitive reality of reverse engineering may act as a spur to the inventor creating an incentive to develop inventions which meet the rigorous requirements of patentability.

Reverse engineering is widely accepted in industry as a means for companies to obtain competitive intelligence. Nearly every large, successful corporation in the world uses reverse engineering in these two important ways: as a tool for competitive analysis and as a means to uncover possible patent infringements. What companies do with the information gathered from reverse engineering is the determining legal factor.

Since the advent of the semiconductor, legislation has modernized the nature of copyright and intellectual property protection, clarified the meaning of 'fair use' in a digital age, and provided support for legitimate reverse engineering activities.

Reverse engineering was integrated into The Semiconductor Chip Protection Act of 1984 ('SCPA'), acknowledging that copying is a part of the accepted mode of competition in the semiconductor industry. Title 17, Chapter 9 of the Act reads:

'906. Limitations on exclusive rights: reverse engineering; first sale

Notwithstanding the provisions of section 905, it is not an infringement of the exclusive rights of the owner of a mask work for '

(1) a person to reproduce the mask work solely for the purpose of teaching, analyzing, or evaluating the concepts or techniques embodied in the mask work or the circuitry, logic flow, or organization of components used in the mask work; or

(2) a person who performs the analysis or evaluation described in paragraph (1) to incorporate the results of such conduct in an original mask work which is made to be distributed.

(b) Notwithstanding the provisions of section 905 (2), the owner of a particular semiconductor chip product made by the owner of the mask work, or by any person authorized by the owner of the mask work, may import, distribute, or otherwise dispose of or use, but not reproduce, that particular semiconductor chip product without the authority of the owner of the mask work.

This exclusion reaffirms the right to reverse engineer a competitor's chip to understand its operation and structure, learn from what is revealed, and to create new chips based on the legitimate reverse engineering of a protected work.

During House of Representative hearings on the SCPA, industry spokespeople testified in favor of reverse engineering: 'the twin goals of certainty and encouragement of innovation can be achieved only if legitimate reverse engineering is permitted. We feel that existing 'fair use' provisions of Section 107 of the Copyright Law may not be sufficient, however, as they tend to emphasize non-commercial purposes.' The House concluded:

It is an established industry practice to ' make photo-reproductions of the mask work in order to analyze the existing chip so as to design a second chip with the same electrical and physical performance characteristics as the existing chip (so called 'form, fit, and function' compatibility), and that this practice fosters fair competition and provides a frequently needed 'second source' for chip products, it is the intent of the Committee to permit such reproduction by competitors ' [and to bar] mere wholesale appropriation of the work and investment in the creation of the first chip.

The most recent updating of the Copyright Act is The Digital Millennium Copyright Act ('DMCA'), which offers protection to copyright holders against the circumvention of technological measures used to protect their works. The technological measures referenced include measures that prevent unauthorized access to and unauthorized copying of a copyrighted work.

The DCMA prohibits making or selling devices used to circumvent either category of technological measure, with these reverse engineering exceptions:

1) de-encrypting, if it is required for research and if the copyright owner's permission has been requested; and

2) reverse engineering for the limited purpose of achieving interoperability amongst computer programs.

These exceptions are for specific types of reverse engineering, as described in Section 1201 (f) of the DMCA:

(f) Reverse Engineering.

(1) Notwithstanding the provisions of subsection (a)(1)(A), a person who has lawfully ob-tained the right to use a copy of a computer program may circumvent a technological measure that effectively controls access to a particular portion of that program for the sole purpose of identifying and analyzing those elements of the program that are necessary to achieve interoperability of an independently created computer program with other programs, and that have not previously been readily available to the person engaging in the circumventions, to the extent any such acts of identification and analysis do not constitute infringement under this title.

The DMCA clearly states that, 'Nothing in this section shall affect rights, remedies, limitations, or defenses to copyright infringement, including fair use, under this title.' 17 U.S.C. '1201(c)(1). The conclusion that the courts have reached generally is that the DMCA does not eliminate fair use.

One of the leading cases on fair use in the context of the reverse engineering is Sega Enterprises Ltd. v. Accolade Inc., 977 F.2d 1510 (9th Cir. 1992). The defendant, Accolade, had analyzed Sega's video game programs in order to determine the Genesis console compatibility requirements. Sega challenged Accolade's reverse-engineering process on the grounds that the intermediate copying during disassembly constituted a violation of Sega's copyright in the game cartridge object code.

The Ninth Circuit held that Accolade's intermediate copying of the Sega object code was protected by the 'fair use' exception to copyright violation. The appellate court considered four factors relevant to determining whether reverse engineering of software constituted a fair use of the copyrighted work:

1) The purpose and character of the use

Even though Accolade eventually used the information to produce a competing product, the purpose was to study the functional requirements only, and therefore this use was legitimate.

2) The nature of the work

The court noted that not all copyrighted works are entitled to the same level of protection, in particular to the ideas underlying the work. The fact that computer programs cannot be examined without a certain amount of literal copying proved to be a significant factor in this case.

3) The amount of the work copied

The court noted that even though Accolade copied the entire work, this would still not, by definition, preclude a finding of fair use.

4) The effect of the use upon the potential market for the copyrighted work

The court conceded that Accolade's entry into the game market undoubtedly affected the market for Genesis-compatible games indirectly, but further indicated that allowing Sega to try to monopolize the market by making it impossible for others to compete ran counter to the statutory purpose of the Copyright Act to promote creative expression. The court therefore found the fourth factor favored Accolade.

The court further found that where disassembly is the only means to gain access to the ideas and functional elements embedded in a copyrighted computer program and where the reason for seeking such access is to achieve interoperability, disassembly is a fair use of the copyrighted work.

The Ninth Circuit reaffirmed its Sega ruling in Sony Computer v. Connectix, 203 F.3d 596 (9th Cir. 2000) In this case, Connectix disassembled Sony programs in order to develop emulation software to allow owners of Apple iMac computers to play Sony PlayStation games. That is, Connectix reverse-engineered in order to make a competing platform, not to make compatible games as in Sega. The Ninth Circuit perceived no legal difference between the decompilation-for-interoperability considerations pertinent to development of competing platforms and those pertinent to games.

In Lexmark v. Static Control Components, 253 F. Supp. 2d 943 (E.D. Ky. 2003), Static Control had allegedly reverse-engineered Lexmark's 'authentication' procedure in order to make its aftermarket laser printer cartridges work with Lexmark printers. Lexmark claimed that Static Control had manufactured, distributed, and sold microchips for use with several of Lexmark's printers and toner cartridges, violating anti-circumvention provisions of the DCMA. A preliminary injunction prevented Static Control from selling the microchips in question. The Sixth Circuit ruled that the injunction should not have been granted and that Static Control had not violated the provisions of the DMCA. Circuit Judge Gilbert S. Merritt, Jr., in his concurrence, stated:

We should make clear that in the future companies like Lexmark cannot use the DMCA in conjunction with copyright law to create monopolies of manufactured goods for themselves just by tweaking the facts of this case ' Lexmark v. Static Control Components, 387 F.3d 522 (6th Cir. 2004).

As the Sixth Circuit explained, the fair use exception in copyright law explicitly looks to the purpose of the one making the copy in determining whether or not such copying violates the statute, and the DMCA itself contains a reverse engineering exception that demonstrates Congress' aim merely to prevent piracy.

This reading of the DMCA is supported by Article I, '8, of the Constitution, which gives Congress the power to regulate copyright in order to 'promote the Progress of Science and useful Arts.' U.S. Const. art. I, '8, cl. 8. Congress gives authors and programmers exclusive rights to their expressive works (for a limited time) so that they will have an incentive to create works that promote progress. Lexmark's reading of the extent of these rights, however, would clearly stifle rather than promote progress. It would allow authors exclusive control over not only their own expression, but also over whatever functional use they can make of that expression in manufactured goods.

In Chamberlain Group v. Skylink, 292 F.Supp.2d 1040 (N.D. Ill. 2003), Chamberlain alleged that Skylink reverse-engineered the protocol used to activate the controller for garage door openers manufactured by Chamberlain in order to sell their own compatible remote openers. Chamberlain sued under the DMCA, but the district court denied its claim.

On appeal, the Federal Circuit stated: 'Chamberlain's proposed construction would allow copyright owners to prohibit exclusively fair uses even in the absence of any feared foul use. It would therefore allow any copyright owner, through a combination of contractual terms and technological measures, to repeal the fair use doctrine with respect to an individual copyrighted work ' or even selected copies of that copyrighted work. Again, this implication contradicts '1201(c)(1) (of the DMCA) directly. Copyright law itself authorizes the public to make certain uses of copyrighted materials. Con-sumers who purchase a product containing a copy of embedded software have the inherent legal right to use that copy of the software. What the law authorizes, Chamberlain cannot revoke.' Chamberlain Group v. Skylink, 381 F.3d 1178 (Fed. Cir. 2004).

In sum, U.S. law favors a relatively wide scope for reverse engineering. Reverse engineering for legitimate competitive research and the development of new innovations is a long-standing and respected method of gaining competitive information and developing new products.

Terry Ludlow is the founder and CEO of Chipworks, a reverse-engineering company. He may be reached at [email protected].

Reverse engineering brings to mind one main question for the intellectual property practitioner: Is it legal? By looking at a few cases dealing with reverse engineering and intellectual property regimes, it is discovered that not only is reverse engineering legal, but it is a means of maintaining competition that is fair and healthy for the marketplace.

In Bonito Boats, Inc. v. Thunder Craft Boats , 489 U.S. 141, 146 (1989), Justice Sandra Day O'Connor stated:

From their inception, the federal patent laws have embodied a careful balance between the need to promote innovation and the recognition that imitation and refinement through imitation are both necessary to invention itself and the very lifeblood of a competitive economy. The novelty and nonobviousness requirements of patentability embody a congressional understanding, implicit in the patent clause itself, that free exploitation of ideas will be the rule, to which the federal protection of a patent is the exception.

The public at large remains free to discover and exploit the trade secrets through reverse engineering of products in the public domain or by independent development ' Reverse engineering of chemical and mechanical articles in the public domain often leads to significant advances in technology.

The competitive reality of reverse engineering may act as a spur to the inventor creating an incentive to develop inventions which meet the rigorous requirements of patentability.

Reverse engineering is widely accepted in industry as a means for companies to obtain competitive intelligence. Nearly every large, successful corporation in the world uses reverse engineering in these two important ways: as a tool for competitive analysis and as a means to uncover possible patent infringements. What companies do with the information gathered from reverse engineering is the determining legal factor.

Since the advent of the semiconductor, legislation has modernized the nature of copyright and intellectual property protection, clarified the meaning of 'fair use' in a digital age, and provided support for legitimate reverse engineering activities.

Reverse engineering was integrated into The Semiconductor Chip Protection Act of 1984 ('SCPA'), acknowledging that copying is a part of the accepted mode of competition in the semiconductor industry. Title 17, Chapter 9 of the Act reads:

'906. Limitations on exclusive rights: reverse engineering; first sale

Notwithstanding the provisions of section 905, it is not an infringement of the exclusive rights of the owner of a mask work for '

(1) a person to reproduce the mask work solely for the purpose of teaching, analyzing, or evaluating the concepts or techniques embodied in the mask work or the circuitry, logic flow, or organization of components used in the mask work; or

(2) a person who performs the analysis or evaluation described in paragraph (1) to incorporate the results of such conduct in an original mask work which is made to be distributed.

(b) Notwithstanding the provisions of section 905 (2), the owner of a particular semiconductor chip product made by the owner of the mask work, or by any person authorized by the owner of the mask work, may import, distribute, or otherwise dispose of or use, but not reproduce, that particular semiconductor chip product without the authority of the owner of the mask work.

This exclusion reaffirms the right to reverse engineer a competitor's chip to understand its operation and structure, learn from what is revealed, and to create new chips based on the legitimate reverse engineering of a protected work.

During House of Representative hearings on the SCPA, industry spokespeople testified in favor of reverse engineering: 'the twin goals of certainty and encouragement of innovation can be achieved only if legitimate reverse engineering is permitted. We feel that existing 'fair use' provisions of Section 107 of the Copyright Law may not be sufficient, however, as they tend to emphasize non-commercial purposes.' The House concluded:

It is an established industry practice to ' make photo-reproductions of the mask work in order to analyze the existing chip so as to design a second chip with the same electrical and physical performance characteristics as the existing chip (so called 'form, fit, and function' compatibility), and that this practice fosters fair competition and provides a frequently needed 'second source' for chip products, it is the intent of the Committee to permit such reproduction by competitors ' [and to bar] mere wholesale appropriation of the work and investment in the creation of the first chip.

The most recent updating of the Copyright Act is The Digital Millennium Copyright Act ('DMCA'), which offers protection to copyright holders against the circumvention of technological measures used to protect their works. The technological measures referenced include measures that prevent unauthorized access to and unauthorized copying of a copyrighted work.

The DCMA prohibits making or selling devices used to circumvent either category of technological measure, with these reverse engineering exceptions:

1) de-encrypting, if it is required for research and if the copyright owner's permission has been requested; and

2) reverse engineering for the limited purpose of achieving interoperability amongst computer programs.

These exceptions are for specific types of reverse engineering, as described in Section 1201 (f) of the DMCA:

(f) Reverse Engineering.

(1) Notwithstanding the provisions of subsection (a)(1)(A), a person who has lawfully ob-tained the right to use a copy of a computer program may circumvent a technological measure that effectively controls access to a particular portion of that program for the sole purpose of identifying and analyzing those elements of the program that are necessary to achieve interoperability of an independently created computer program with other programs, and that have not previously been readily available to the person engaging in the circumventions, to the extent any such acts of identification and analysis do not constitute infringement under this title.

The DMCA clearly states that, 'Nothing in this section shall affect rights, remedies, limitations, or defenses to copyright infringement, including fair use, under this title.' 17 U.S.C. '1201(c)(1). The conclusion that the courts have reached generally is that the DMCA does not eliminate fair use.

One of the leading cases on fair use in the context of the reverse engineering is Sega Enterprises Ltd. v. Accolade Inc., 977 F.2d 1510 (9th Cir. 1992). The defendant, Accolade, had analyzed Sega's video game programs in order to determine the Genesis console compatibility requirements. Sega challenged Accolade's reverse-engineering process on the grounds that the intermediate copying during disassembly constituted a violation of Sega's copyright in the game cartridge object code.

The Ninth Circuit held that Accolade's intermediate copying of the Sega object code was protected by the 'fair use' exception to copyright violation. The appellate court considered four factors relevant to determining whether reverse engineering of software constituted a fair use of the copyrighted work:

1) The purpose and character of the use

Even though Accolade eventually used the information to produce a competing product, the purpose was to study the functional requirements only, and therefore this use was legitimate.

2) The nature of the work

The court noted that not all copyrighted works are entitled to the same level of protection, in particular to the ideas underlying the work. The fact that computer programs cannot be examined without a certain amount of literal copying proved to be a significant factor in this case.

3) The amount of the work copied

The court noted that even though Accolade copied the entire work, this would still not, by definition, preclude a finding of fair use.

4) The effect of the use upon the potential market for the copyrighted work

The court conceded that Accolade's entry into the game market undoubtedly affected the market for Genesis-compatible games indirectly, but further indicated that allowing Sega to try to monopolize the market by making it impossible for others to compete ran counter to the statutory purpose of the Copyright Act to promote creative expression. The court therefore found the fourth factor favored Accolade.

The court further found that where disassembly is the only means to gain access to the ideas and functional elements embedded in a copyrighted computer program and where the reason for seeking such access is to achieve interoperability, disassembly is a fair use of the copyrighted work.

The Ninth Circuit reaffirmed its Sega ruling in Sony Computer v. Connectix , 203 F.3d 596 (9th Cir. 2000) In this case, Connectix disassembled Sony programs in order to develop emulation software to allow owners of Apple iMac computers to play Sony PlayStation games. That is, Connectix reverse-engineered in order to make a competing platform, not to make compatible games as in Sega. The Ninth Circuit perceived no legal difference between the decompilation-for-interoperability considerations pertinent to development of competing platforms and those pertinent to games.

In Lexmark v. Static Control Components , 253 F. Supp. 2d 943 (E.D. Ky. 2003), Static Control had allegedly reverse-engineered Lexmark's 'authentication' procedure in order to make its aftermarket laser printer cartridges work with Lexmark printers. Lexmark claimed that Static Control had manufactured, distributed, and sold microchips for use with several of Lexmark's printers and toner cartridges, violating anti-circumvention provisions of the DCMA. A preliminary injunction prevented Static Control from selling the microchips in question. The Sixth Circuit ruled that the injunction should not have been granted and that Static Control had not violated the provisions of the DMCA. Circuit Judge Gilbert S. Merritt, Jr., in his concurrence, stated:

We should make clear that in the future companies like Lexmark cannot use the DMCA in conjunction with copyright law to create monopolies of manufactured goods for themselves just by tweaking the facts of this case ' Lexmark v. Static Control Components , 387 F.3d 522 (6th Cir. 2004).

As the Sixth Circuit explained, the fair use exception in copyright law explicitly looks to the purpose of the one making the copy in determining whether or not such copying violates the statute, and the DMCA itself contains a reverse engineering exception that demonstrates Congress' aim merely to prevent piracy.

This reading of the DMCA is supported by Article I, '8, of the Constitution, which gives Congress the power to regulate copyright in order to 'promote the Progress of Science and useful Arts.' U.S. Const. art. I, '8, cl. 8. Congress gives authors and programmers exclusive rights to their expressive works (for a limited time) so that they will have an incentive to create works that promote progress. Lexmark's reading of the extent of these rights, however, would clearly stifle rather than promote progress. It would allow authors exclusive control over not only their own expression, but also over whatever functional use they can make of that expression in manufactured goods.

In Chamberlain Group v. Skylink , 292 F.Supp.2d 1040 (N.D. Ill. 2003), Chamberlain alleged that Skylink reverse-engineered the protocol used to activate the controller for garage door openers manufactured by Chamberlain in order to sell their own compatible remote openers. Chamberlain sued under the DMCA, but the district court denied its claim.

On appeal, the Federal Circuit stated: 'Chamberlain's proposed construction would allow copyright owners to prohibit exclusively fair uses even in the absence of any feared foul use. It would therefore allow any copyright owner, through a combination of contractual terms and technological measures, to repeal the fair use doctrine with respect to an individual copyrighted work ' or even selected copies of that copyrighted work. Again, this implication contradicts '1201(c)(1) (of the DMCA) directly. Copyright law itself authorizes the public to make certain uses of copyrighted materials. Con-sumers who purchase a product containing a copy of embedded software have the inherent legal right to use that copy of the software. What the law authorizes, Chamberlain cannot revoke.' Chamberlain Group v. Skylink , 381 F.3d 1178 (Fed. Cir. 2004).

In sum, U.S. law favors a relatively wide scope for reverse engineering. Reverse engineering for legitimate competitive research and the development of new innovations is a long-standing and respected method of gaining competitive information and developing new products.

Terry Ludlow is the founder and CEO of Chipworks, a reverse-engineering company. He may be reached at [email protected].