Reverse Engineering: Unfair Competition or Catalyst for Innovation?

Abstract

This article analyzes the position of US and German intellectual property and trade secrets laws with regard to reverse engineering. While there is much consensus between both jurisdictions in the area of IP law, they take opposite positions on trade secret protection. US law has long accepted reverse engineering as a fair means of discovering information, whereas German courts have regarded this practice as being in conflict with trade secrets legislation. This article looks into the law and the policies of reverse engineering and argues that it is not unfair. Even the German statutory provisions, when construed in the light of Article 39 TRIPS, are broad enough to allow the necessary balancing exercise. Whether the use of the information so obtained as a “springboard” for identical copying is permissible is a different matter. The answer to this question should not distinguish between copying enabled by reverse engineering and imitation by means of other technical reproduction measures. When it comes to determining whether the law should prevent “unfair copying”, however, legislations and courts should keep in mind that both a reasonable protection of innovation and freedom of imitation are the lifeblood of a competitive economy.

Keywords: intellectual property, trade secrets, reverse engineering, unfair competition

JEL Classification: K11, K13