While reverse engineering often comes with a negative connotation, particularly when it comes to patent infringement, the process has many benefits for businesses. But it can also force IP owners to choose between patent protection and trade secret protection. Espie Angelica A. de Leon explains.  

Reverse engineering is a process used to analyze the design, structure and operation of a product, object or system obtained from public channels. The process is undertaken to gain an understanding of the underlying technology. Often, it involves dismantling or disassembling the product, object or system to get to the technology that makes it work.  

“To put it simply, one takes a product and works backwards to figure out how it works,” said Charul Yadav, a partner at Obhan & Associates in New Delhi.  

Reverse engineering is commonly undertaken in the semiconductor, software, integrated circuit chips and other high-technology industries involving products with high technical content. 

Why would a business enterprise engage in reverse engineering in the first place? 

The benefits of the process are manifold: academic learning; business analysis; creating improved, duplicate, competitive or compatible products; and testing or repairing a product, among others. 

“Allowing reverse engineering will make it easier for some enterprises to obtain and grasp the innovative technology of others at a lower cost and in a shorter period of time,” added Zunxia Li, a partner at IP March in Beijing. 

Yadav said reverse engineering may result in a brand-new product hugely different or largely improved from the original invention – one that does not fall within the scope of its patent.  

“If the new product is inventive enough, it may also qualify for its own patent protection. Thus, it can be used to design around a patented invention,” she said. 

Reverse engineering and patent infringement 

Setting things straight, there is nothing wrong with reverse engineering a competitor’s product. What could be problematic is when the company engaged in reverse engineering uses the results of the activity to market a competing product. This company could be liable for patent infringement.   

Reverse engineering often figures in patent cases in the United States in several ways. 

“Before going too far down that road, you should always consider whether the manufacturer of the original product may have a patent on the features that you intend to reproduce in your product. Even if you fail to find any patents assigned to the original manufacturer, you also need to consider the possibility that the original manufacturer has licensed—or is itself infringing—a third-party patent,” said John Mulcahy, a partner at Finnegan, Henderson, Farabow, Garrett & Dunner in Reston, Virginia, outside Washington. “There are many pitfalls for those that neglect the due diligence investigation at this stage.” 

On the other side of the fence, it may also be necessary for the company that developed the original product to reverse engineer a competitor’s product to know if the latter is infringing the former’s patent. Mulcahy said this goes beyond satisfying its Rule 11 obligation to conduct an adequate pre-filing investigation or to prove infringement. Rather, such exercise also helps a company to determine whether it makes business sense to file a suit. 

(Rule 11 refers to U.S. Federal Rule of Civil Procedure 11, which provides that a district court may sanction attorneys or parties who submit pleadings for an improper purpose or that contain frivolous arguments or arguments that have no evidentiary support.)  

“In the classic case, the holder of a patent on a semiconductor device may reverse engineer a competitor’s product to ensure that it meets the structural and chemical limitations of the patent claims,” Mulcahy explained. 

In addition, an accused infringer may reverse engineer a prior art product to prove that the prior art product anticipates the patent claims asserted against it.   

In India, reverse engineering is common in the pharmaceutical sector.  

“Reverse engineering and creation of generic drugs is the fulcrum on which pharmaceutical patent enforcement and litigation in India exists,” said Pravin Anand, managing partner at Anand and Anand in Noida. “The fact that we did not have product patent protection for pharmaceutical patents until 2005 is one of the reasons why reverse engineering is prevalent in creating generic drugs. Reverse engineering as a result features almost invariably in every pharmaceutical patent dispute.” 

China, meanwhile, recognizes the legalization of reverse engineering. Yet, it generally requires that the acquisition of corresponding technical information should be legal.  

“Claims based on reverse engineering will not be allowed after knowing the relevant confidential information of others by improper means,” said Li. 

According to Li, even if reverse engineering is a commonly used defense in infringement cases involving technical secrets, computer software and integrated circuit layout design, it is rarely so when it comes to patent infringement suits.  

“In patent infringement cases, due to exclusive nature of the patent, even if the corresponding patented technology is obtained by reverse engineering, such defense is not accepted, and patent infringement will still be considered established. Therefore, reverse engineering is rarely used as defense by the defendant in patent infringement cases,” she explained. 

Patent or trade secret? 

Business enterprises are sometimes confronted with the question of whether to file for patent protection for an invention or to keep it a trade secret. 

Patents and trade secrets each have their own set of advantages and disadvantages.   

For one, maintaining a trade secret is cheaper compared to acquiring a patent. The latter is not just expensive; it is also a lengthy and often unpredictable process.  

Also, there are no limitations attached to trade secrets. In contrast, patent protection is provided only for a limited period. Plus, it is made available only to inventions that fulfill the patentability requirements. 

The disadvantage of trade secrets? 

“They are vulnerable to reverse engineering,” said Yadav. “So, if a competitor arrives upon a trade secret by reverse engineering a product legally, the protection is lost.” 

That being said, should the specter of reverse engineering then prompt a business enterprise or individual to go for a patent instead of a trade secret with regard to an invention? 

Yadav answered in the affirmative.  

“If an invention is such that it can be deciphered by reverse engineering, it is recommended to protect it by a patent,” she said.  

Li agreed it is better to obtain patent protection in this case. 

“Yes, if a product containing invention-related technology is made public, it is easier or more likely for others to obtain the invention-related technology through reverse engineering the product obtained legally. It will indicate that such invention, which was researched and developed with high cost and over a long period of research time, could not get effective protection,” she explained. 

“If there is a genuine prospect of reverse engineering, then a patent is essential if possible,” added Andrew Wiseman, a partner at Allens in Sydney. “The whole rationale for the patent system is the quid pro quo of sharing knowledge – so all may grow and develop – whilst providing monopoly rights to inventors, and those financing them, to ensure there is a financial reward for the high risk associated with investment in R&D.” 

Likewise, Mulcahy revealed that if it can’t be kept a secret, then filing for patent protection may be the only recourse.   

“The higher the ratio between the numerator – the benefit of reverse engineering and reproducing the innovative technology – and the denominator – the cost of the reverse engineering project and subsequent implementation of the innovation – the more likely a competitor will try to reverse engineer your product,” Mulcahy said. “This is particularly true when you are not licensing your technical know-how or you set your licensing rates too high in comparison to the costs of reverse engineering.”  

However, Wiseman was quick to point out that reverse engineering is very difficult, if not impossible, to undertake in certain instances, as in the case of Coca-Cola’s recipe. 

“If there is a choice, then the 20-year monopoly – in exchange for disclosure and sharing – may not be worth it. In this case confidential information may be the way to go because the monopoly arising from confidentiality may ensure for many decades or more,” Wiseman said. 

But there’s another factor that should be taken into account, and some questions to be answered, before finally making a decision. 

The questions are: How long is the invention’s useful life, whether it is patentable or not? Will it be superseded so quickly that the expensive regime of patenting, along with enforcing and defending the validity of patents, will not turn out to be worth the time and costs after all?  

“It might be better to just keep it secret,” said Wiseman, “unless easily reverse engineerable.” 

“If the speed of innovation outpaces that of the patent office, an innovative company can rely on trade secret law to protect its inventions through their commercial lifespan and then roll out the next-generation innovation while their competitors are still copying the first,” Mulcahy said.  

“In practice, the innovative enterprises usually make an advance assessment on the possibility of reverse engineering the technical information contained in the product after it is released, and then choose to protect it with patent or technical secrets,” Li added. “If the latter is chosen, further increasing the difficulty of reverse engineering the product or imposing obligation to prohibit reverse engineering is usually made accordingly.” 

For Anand, weighing patent protection against protecting something as a trade secret is, first and foremost, a business or strategic decision. Such decision depends on the company’s business goals, the technology under consideration, type of information or invention and other factors.  

“The enforcement of a trade secret is usually through a breach of confidence/contract claim, whereas enforcement of a patent can take place through the various remedies available in the Patents Act, 1970, such as ex parte injunctions, deposit of bank guarantee. Furthermore, in patent disputes, one can approach the court while one apprehends the violation of a patent and before the launch of a product that infringes the patent. This is known as a quia timet action. In contrast, trade secret actions may invariably be after a theft has taken place. Therefore, the enforcement of a right is also strategic and depends on the company’s objective,” explained Anand. 

Citing an example of trade secret protection, Anand shared: “An example of trade secret protection could be perhaps the development of an AI algorithm by a company, who may want to keep the process of developing the AI system confidential, till there is better clarity on the type of IP protection it may be able to apply for.”  

Yadav maintained however, that business enterprises may use a patent and trade secret on complementary terms such that, a product is patented while its know-how or the method of developing the product may be kept as a trade secret. 

According to her, India has no specific legislation governing trade secrets. Its courts have enforced rights in trade secrets under contract law, principles of equity or by way of a common law action for breach of confidence. 

Currently, a lot of innovation is happening in the reverse engineering space, rapidly improving its techniques and further decreasing the cost and time involved in the process. 

“Consequently, this increases the rate of returns for reverse engineers. But, it also adds pressure on companies to innovate more,” said Mulcahy. 

With these in mind, it is best that companies learn everything they can about reverse engineering and the intellectual property issues connected with it, particularly patents and trade secrets to better protect their inventions, grow their business and gain the upper hand over the competition.