111 Yale L.J. 1575 (2002)

Reverse engineering has a long history as an accepted practice. What it means, broadly speaking, is the process of extracting know-how or knowledge from a human-made artifact. Lawyers and economists have endorsed reverse engineering as an appropriate way to obtain such information, even if the intention is to make a product that will draw customers away from the maker of the reverse-engineered product. Given this acceptance, it may be surprising that reverse engineering has been under siege in the past few decades.

While some encroachments on the right to reverse-engineer have been explicit in legal rulemaking, others seem implicit in new legal rules that are altogether silent on reverse engineering, including the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the Economic Espionage Act of 1996 (EEA). TRIPS is an international treaty that, among other things, obligates member states of the World Trade Organization to protect trade secrets, yet it neither requires nor sanctions a reverse engineering privilege. The EEA created the first federal cause of action for trade secrecy misappropriation. Its lack of a reverse engineering defense has troubled some commentators because rights granted under the EEA arguably implicate certain reverse engineering activities previously thought to be lawful.

Among the explicit legal challenges to reverse engineering are these: In the 1970s and 1980s some states forbade the use of a direct molding process to reverse-engineer boat hulls. In the late 1970s and early 1980s, the semiconductor industry sought and obtained legislation to protect chip layouts from reverse engineering to make clone chips. In the mid-1980s and early 1990s, a controversy broke out about whether decompilation, a common form of reverse engineering of computer programs, was legal as a matter of copyright law. Even after U.S. courts ruled that decompilation was acceptable for purposes such as achieving interoperability, a related controversy broke out over the enforceability of licenses forbidding reverse engineering of software and other digital information. More recently, questions have arisen about whether the decompilation of computer programs infringes upon patent rights in software components. In 1998, Congress outlawed the reverse engineering of technical protections for digital versions of copyrighted works and prohibited both the creation and distribution of tools for such reverse engineering (except in very limited circumstances) as well as the disclosure of information obtained in the course of lawful reverse engineering.

Our objectives in this Article are, first, to review legal developments regarding the right to reverse-engineer, and second, to understand their economic consequences.

We start in Part II with a discussion of the well-established legal right to reverse-engineer manufactured goods. In our view, the legal rule favoring reverse engineering in the traditional manufacturing economy has been economically sound because reverse engineering is generally costly, time-consuming, or both. Either costliness or delay can protect the first comer enough to recoup his initial research and development (R&D) expenditures. If reverse engineering (and importantly, the consequent reimplementation) of manufactured goods becomes too cheap or easy, as with plug-molding of boat hulls, it may be economically sound to restrict this activity to some degree.

In Parts III, IV, and V, we consider the law and economics of reverse engineering in three information-based industries: the semiconductor chip industry, the computer software industry, and the emerging market in technically protected entertainment products, such as DVD movies. In all three contexts, rules restricting reverse engineering have been adopted or proposed. We think it is no coincidence that proposals to restrict reverse engineering have been so common in information-based industries. Products of the information economy differ from traditional manufactured products in the cost and time imposed on a reverse engineer. With manufactured goods, much of the know-how required to make the goods remains within the factory when the products go to market, so that reverse engineering can capture only some of the know-how required to make the product. The information-rich products of the digital economy, in contrast, bear a higher quantum of applied know-how within the product distributed in the market.

For so-called digital content (movies, sound recordings, and the like), the relevant knowledge is entirely on the surface of the product, at least in the absence of technical protections such as encryption. Technical protections create costs for reverse engineers. When computer programs are distributed in object code form, a difficult analytical process is required to ascertain information embedded in the program, but it is there for the taking if a reverse engineer is willing to spend the time to study it. For computer chips, the relevant knowledge is circuit design, which is not only embodied within the chip, but also readily accessible using technologies discussed below. The challenge is to design legal rules that protect information-rich products against market-destructive cloning while providing enough breathing room for reverse engineering to enable new entrants to compete and innovate in a competitively healthy way.

Part III focuses on the semiconductor chip industry. When the competitive reverse engineering and copying of semiconductor chip designs became too easy and too rapid to enable innovators to recoup their R&D costs, Congress responded by enacting the Semiconductor Chip Protection Act of 1984 (SCPA) to protect chip makers from market-destructive cloning while affirming a limited right to reverse-engineer chips. The SCPA allows reverse engineers to copy circuit design to study it as well as to reuse information learned thereby in a new chip, but it imposes a forward engineering requirement that inevitably increases a second comer's development time and increases its costs. In the context of the chip industry, we think this restriction on reverse engineering is economically sound.

Part IV focuses on the software industry. Reverse engineering is undertaken in the software industry for reasons different from those in other industrial contexts. The most economically significant reason to reverse-engineer software, as reflected in the case law, is to learn information necessary to make a compatible program. The legal controversy over whether copies made of a program during the decompilation process infringe copyrights has been resolved in favor of reverse engineers. But as Part IV explains, the economics of interoperability are more complex than legal commentators have acknowledged. On balance, however, we think that a legal rule in favor of reverse-engineering computer programs for purposes of interoperability is economically sound.

Part V discusses the emerging market for technically protected digital content. Because technical protection measures may be defeated by countermeasures, copyright industry groups persuaded Congress to enact the Digital Millennium Copyright Act (DMCA), which creates new legal rules reinforcing technical measures used by copyright owners to protect their works. It protects them against most acts of circumvention, against the manufacture and distribution of circumvention technologies, and against dissemination of information resulting from privileged acts of circumvention. In our view, these new rules overly restrict reverse engineering, although the core idea of regulating trafficking in circumvention technologies may be justifiable.

Part VI steps back from particular industrial contexts and considers reverse engineering as one of the important policy levers of intellectual property law, along with rules governing the term and scope of protection. The most obvious settings for the reverse engineering policy lever are "on" (reverse engineering is permissible) and "off" (reverse engineering is impermissible). However, our study reveals five additional strategies for regulating reverse engineering in the four industrial contexts studied: regulating a particular means of reverse engineering, adopting a "breadth" requirement for subsequent products, permitting reverse engineering for some purposes but not others, regulating tools used for reverse engineering, and restricting the dissemination of information discerned from reverse engineering. In this discussion, we distinguish between regulations affecting the act of reverse engineering and those affecting what the reverse engineer can do with the resulting information. Some restrictions on reverse engineering and on post-reverse-engineering activities may be economically sound, although we caution against overuse of restrictions on reverse engineering because such restrictions implicate competition and innovation in important ways. Part VI also considers policy responses when innovators seek to thwart reverse engineering rights by contract or by technical obfuscation.

Intellectual property law in the United States has an important economic purpose of creating incentives to innovate as a means of advancing consumer welfare. The design of intellectual property rules, including those affecting reverse engineering, should be tailored to achieve these utilitarian goals and should extend no further than necessary to protect incentives to innovate. Intellectual property rights, if made too strong, may impede innovation and conflict with other economic and policy objectives.

111 Yale L.J. 1707 (2002)

Following the lead of Alexander Bickel's The Least Dangerous Branch: The Supreme Court at the Bar of Politics, legal scholars have been obsessed with the countermajoritarian aspects of judicial review. Much of the literature is normative--how can the dilemma of judicial review in a democracy be reconciled theoretically? In this vast, important, and sometimes self-important literature, one might, in the whimsical manner of William Prosser, find examples of arguments ranging from the philosophical to the lawyerly. In contrast, political scientists who study judicial behavior generally take a descriptive tack, contending that judicial review is best understood as simply correlating with the political values of the Justices or as representing the strategic behavior of self-interested actors in a complex institutional setting. One would be hard-pressed in academe to find many other scholarly areas with so much overlap and so little congruence.

Generally speaking, judges are probably untroubled by these conflicts, finding them, if you will, academic. Recently, however, the Supreme Court has operationalized judicial review in cases concerning congressional authority to invade state prerogatives, not so much by normative articulation of constitutional standards as by descriptive evaluation of the nature and quality of the congressional process underlying the enactment of the statute. In this respect, the Court has invited a new intersection of legal scholarship and political science, one concerning the judicial capacity to evaluate and to control congressional processes under our constitutional system of separated national powers.

In this Essay, we combine our mutual perspectives to analyze the Court's performance at this new juncture of constitutional law and political science. We demonstrate that the Court's intrusion into congressional processes is not simply too rigorous, but institutionally wrongheaded in a variety of ways. Whatever might be said about the outcomes in these federalism cases--and for purposes of this Essay, we remain agnostic on that score--some of the techniques of judicial review exercised in them are contrary to any plausible scholarly understanding of Congress as an institution. Whatever might be said, whimsically or otherwise, about the Court as philosopher or lawyer, it has flunked political science.

We are not the first commentators to criticize the methodology of the new federalism cases. Several articles have examined the trend in the case law, complaining that it, among other things, is contrary to precedent, wrongly transplants to constitutional statutory review the model of judicial review of administrative decisionmaking, unfairly retroactively imposes procedural obligations upon Congress at the expense of the constitutionality of important legislation, constitutes impermissible judicial interference with Congress contrary to the separation of powers, and improperly translates congressional questions of legislative fact into judicial questions of law. There is much to admire in these commentaries, and our analysis necessarily overlaps with them in many more ways than can be demonstrated productively by citation within the confines of the essay format. Our goals are to use our interdisciplinary partnership to advance this literature in two important ways. First, largely from the perspective of public-law theory, we situate the federalism cases within broader jurisprudential frames of reference, examining theories of due process of lawmaking and the intersection of judicial review and statutory interpretation. We ask not only whether the theories undermine the cases, but also whether the cases undermine the theories. Second, largely from the perspective of social science, we present a focused and detailed interdisciplinary evaluation of the legislative deliberation model based on a more complete understanding of congressional decisionmaking processes.

In Part I, we begin by identifying three models of judicial interaction with the political branches that turn in large part on institutional and procedural concerns rather than on normative articulation of constitutional principles. Part II then discusses the federalism cases within the domain of our study, with particular focus on the judicial review of congressional processes at the heart of them. These cases appear to fit our third model of judicial proceduralism-institutionalism, one inquiring whether the political actor duly deliberated before making the law in question. Part III provides a thorough evaluation of the "due deliberation" model in the federal cases in light of the common understanding of Congress found in the social sciences. We conclude that Congress is capable of meeting the Court's fact-gathering requirements, but cannot satisfy the Court's requirement of due deliberation and rational, articulated decision. In our judgment, at least this aspect of the Court's model is likely to be abandoned eventually. One reason is that the model is a dysfunctional imposition upon Congress. Another, more ironic, reason is that the majority coalition of Justices in these cases was assembled in apparent violation of the very principles of nonstrategic interaction, deliberation, and articulation of reasoned, sincere decisions that the coalition has seemingly sought to impose upon Congress. The concluding portions of the Essay examine some alternatives suggested in recent literature for the future of judicial review focused on legislative processes.

111 Yale L.J. 1815 (2002)