Note: This is the third in a six-part series that explores the legality, methodology, and application of reverse engineering as it pertains to the IP life cycle. The goal is to help companies moving into the market for consumer-grade medical devices understand how and why they must protect their intellectual property rights.

In the eyes of the law, the act of reverse engineering to obtain know-how about another’s products bears a noteworthy distinction from how said know-how is applied. Under most circumstances, one is not condemned for engaging in a process to acquire knowledge, but for what purpose said knowledge is applied.

Reverse engineering (RE) should be regarded in the same vein as reading respected peer-reviewed journals, attending technical conferences, and engaging in pure R&D to stretch and break the boundaries of current knowledge and technology. All of these activities are part of the process of learning and discovery that is essential to innovation.

The notable exception to this is with software/firmware, where copyright laws come into play that place restrictions on some RE activity, depending on its purpose. In the landmark case of Sega Enterprises vs. Accolade, the court did not rule in favor of software RE, but it did determine that it was acceptable if undertaken for a legitimate purpose, such as to access the functional specification necessary to make a compatible program.

How does one develop and bring to market a new product without an in-depth understanding of the capabilities and limitations of the technology already available to consumers? How can it ensure that its products, when working with off-shore manufacturers and third-party component suppliers to reduce costs, is not inadvertently infringing on another’s patents? These are all questions pertinent to the IP life cycle discussed in the previous article and for which RE is a crucial investigative tool.

A paper published in the April 2002 edition of the Yale Law Journal, “The Law and Economics of Reverse Engineering,” summed it up this way:

“Of necessity, reverse engineering is a form of dependent creation, but this does not taint it, for in truth, all innovators stand on the shoulders of both giants and midgets.”

The advancement of electronics and digital media over the past 40 years has led to extensive legal debate and the creation of new legislation to clarify and justify the legality of RE. While the legal subtleties of RE vary with the medium in question—be it traditional manufactured goods, semiconductors, software, or digital media—there’s a common framework that states the circumstances in which RE is an accepted practice. In general terms, RE is only a prohibited practice where there is convincing evidence of market-destructive consequences for the company whose product is being torn down.

As the Yale paper concluded, RE is a fair means to promote healthy competition to develop new products, control costs for the consumer, constrain the ability of one company to obtain a market monopoly, and induce license agreements that allow innovators to recoup R&D costs. Courts have treated RE as an important factor in maintaining balance in intellectual property law and preventing monopolies that stifle innovation and fair competition.

In fact, the act of purchasing a product on the open market does confer personal property rights to the buyer, including the right to take the product apart and study its makeup. The exception to this, again, is found with the application of copyright law to software/firmware.

RE is a legal and laudable practice if:

• The cost and length of the process affords the innovator of the product or technology the time to recoup R&D costs before a competing product is brought to market. This is particularly relevant to hardware and manufactured products.
• The second-comer is investing in forward-engineering that advances the state of the art and not simply looking to “rip off” the previous innovation by making exact copies. This condition underpins the first three stages of the IP life cycle—Technology & Market Assessment, Formulating an IP Strategy, and Establishing an IP Position. In practice, this is particularly relevant to the semiconductor industry, where it’s often quick and easy to duplicate another’s design. Here, regulation has imposed conditions that the process of RE must be used to develop a chip that is in some way original, as opposed to being a clone of the chip that was reverse engineered. Again, this doesn’t apply to software/firmware where, due to copyright law, it is illegal to RE for purposes of making a competitive product.
• The purpose is to achieve interoperability and compatibility between software/firmware or with an operating system, work out bugs, and to customize for specific applications.
• The results of RE help to assert, or defend against, allegations of patent infringement. This is fundamental to stages four and five of the IP life cycle—Leveraging IP to Defend the Business, and Monetizing IP.

Protecting one’s intellectual property rights is important to any technology company. Products otherwise risk being devalued, commoditized, or even directly copied without on-going technical innovation and the strategic protection with patent, trade secret, and other forms of legal protection. However, an effective and proactive IP strategy that protects a company’s interests fosters healthy market competition and drives innovation demands that only RE’s “under the hood” intelligence can provide.

In the next three articles, we will explore the benefits of RE relevant to consumer medical devices with physical product teardown and analysis of semiconductors and software/firmware.

Mike McLean is the vice president of intellectual property rights and professional services at UBM TechInsights. He holds a Bachelor of Science, Engineering with First Class Honours, from Queens University and is a licensed member of the Association of Professional Engineers of Ontario.