Why are reverse engineering and independent derivation proper means rather than misappropriation?
Because both statutory schemes define misappropriation around how information was obtained, and neither route involves a breach of duty or a wrongful acquisition. The Defend Trade Secrets Act is explicit: 18 U.S.C. section 1839(6) defines improper means to include “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means,” and then provides that improper means “does not include reverse engineering, independent derivation, or any other lawful means of acquisition.”
The Uniform Trade Secrets Act reaches the same place through its Comment. Section 1(1) of the Act with 1985 Amendments gives the same partial list of improper means, and the Comment to Section 1 sets out five proper ones: “1. Discovery by independent invention; 2. Discovery by ‘reverse engineering’, that is, by starting with the known product and working backward to find the method by which it was developed…; 3. Discovery under a license from the owner of the trade secret; 4. Observation of the item in public use or on public display; 5. Obtaining the trade secret from published literature.” The same Comment notes that “Because a trade secret need not be exclusive to confer a competitive advantage, different independent developers can acquire rights in the same trade secret.” State enactments vary, so the governing state’s version of the Act is the text that matters.
This is a structural feature of trade secret protection, not a loophole. In Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974), the Supreme Court wrote that “A trade secret law, however, does not offer protection against discovery by fair and honest means, such as by independent invention, accidental disclosure, or by so-called reverse engineering, that is by starting with the known product and working backward to divine the process which aided in its development or manufacture.” The Court drew the contrast with patents directly: “While trade secret law does not forbid the discovery of the trade secret by fair and honest means, e. g., independent creation or reverse engineering, patent law operates ‘against the world,’ forbidding any use of the invention for whatever purpose for a significant length of time.” A patent is a right against everyone; a trade secret is a right against improper acquisition and breach of duty.
What does a defendant actually have to show to prove reverse engineering?
Two things, and the first is often the weaker link: that the article it started from was obtained lawfully, and that there is a demonstrated path from that article to the result. The Comment to Section 1 of the Uniform Trade Secrets Act attaches the condition plainly — “The acquisition of the known product must, of course, also be by a fair and honest means, such as purchase of the item on the open market for reverse engineering to be lawful.” A unit that arrived through a confidential relationship, an evaluation sample delivered under a nondisclosure agreement, or a prototype that left with somebody is not an open-market purchase, and the defense does not begin.
The second is a record. Provenance of the sample, purchase and shipping documentation, dated teardown notes, measurements, test data, tooling and fixtures, and the sequence in which things were learned are what make the account checkable. Expert testimony matters here because the question is capability as well as history: in Comet Technologies USA, Inc. v. XP Power, LLC, Nos. 23-15601, 23-15709, 25-745 (9th Cir. July 14, 2026), the panel noted that the jury “had to weigh conflicting testimony from experts on what XP or others could have reverse-engineered,” and that the issue “depends on an evaluation of what another expert in the field could have learned by proper means.”
It is worth keeping reverse engineering distinct from a related statutory concept it is frequently confused with. Whether information is “readily ascertainable through proper means” under 18 U.S.C. section 1839(3)(B) goes to whether the information qualifies for protection at all, and Comet Technologies USA, Inc. v. XP Power, LLC describes the instruction on that element as asking whether the information could be “obtained, discovered, developed, reverse-engineered, or compiled without significant difficulty, effort, or expense.” That is a question about what the field could do. Whether a particular defendant actually did reverse engineer a lawfully obtained article is a question about what happened. The two often turn on overlapping evidence and they are not the same issue.
What evidentiary record makes an independent development defense credible?
A contemporaneous one that starts before the disputed information could have arrived and continues through the result. Dated design documents, version control history, laboratory notebooks, test results, procurement and vendor records, and internal review artifacts are persuasive because they were created for another purpose and cannot be assembled later. A record that begins abruptly after a hire, or that consists mainly of testimony about how the work was done, tends not to carry the point — and comparison analysis is unforgiving, because independent developers do not reproduce another organization’s dead ends, vestigial artifacts and odd naming conventions.
Formal clean room practice exists to produce that record deliberately. Computer Associates International, Inc. v. Altai, Inc., 982 F.2d 693, 700 (2d Cir. 1992), describes the mechanics as the court saw them: after the dispute arose, Altai’s Vice President of Research and Development, James P. Williams, “put eight other programmers on the project, none of whom had been involved in any way in the development of OSCAR 3.4.” Claude Arney, the programmer who had worked with the earlier code, “was entirely excluded from the process, and his copy of the ADAPTER code was locked away.” Williams “provided the programmers with a description of the ZEKE operating system services so that they could rewrite the appropriate code.” As to the rewritten version, OSCAR 3.5, the Second Circuit recorded at 714 the district court’s observation that “there remained virtually no lines of code that were identical to ADAPTER,” and the judgment of no copyright infringement as to that version was affirmed.
Two cautions on that example. Computer Associates International, Inc. v. Altai, Inc. is a copyright case, and the Second Circuit “vacate[d] the district court’s preemption ruling with respect to CA’s trade secret claim, and remand[ed] the case to the district court for further proceedings” — a clean room answered one claim on that record, not every claim. And the isolation only counts if it is documented: who was walled off, what specification they received, who reviewed it, when. The same discipline applies to preservation generally, which is covered in what to do first after a departure and in the Institute’s work on misappropriation evidence.
Can a contract prohibit reverse engineering, and are those clauses enforced?
Sometimes, and the answer has turned on preemption rather than on trade secret law. In Bowers v. Baystate Technologies, Inc., 320 F.3d 1317 (Fed. Cir. 2003) — the opinion issued January 29, 2003 on rehearing, which superseded the panel’s 2002 opinion — a shrink-wrap license prohibited reverse engineering, and the United States Court of Appeals for the Federal Circuit held “that, under First Circuit law, the Copyright Act does not preempt or narrow the scope of Mr. Bowers’ contract claim.” The reasoning ran through the First Circuit’s extra-element test, under which a state claim escapes preemption where it “requires an extra element, beyond mere copying, preparation of derivative works, performance, distribution or display”; the mutual assent and consideration a contract requires supply that element. Quoting ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1454 (7th Cir. 1996), the Federal Circuit framed the distinction: “A copyright is a right against the world. Contracts, by contrast, generally affect only their parties; strangers may do as they please, so contracts do not create ‘exclusive rights.’” The court added that it “left untouched the conclusions reached in Atari Games v. Nintendo regarding reverse engineering as a statutory fair use exception to copyright infringement.” Judge Dyk dissented in part, concluding that state law authorizing shrink-wrap licenses that prohibit reverse engineering is preempted.
It does not always come out that way. In Vault Corp. v. Quaid Software Ltd., 847 F.2d 255 (5th Cir. 1988), the Fifth Circuit held that the provision of the Louisiana Software License Enforcement Act permitting a software producer to prohibit adaptation by decompilation or disassembly conflicts with the rights of computer program owners under section 117 of the Copyright Act, concluding “that at least this provision of Louisiana’s License Act is preempted by federal law, and thus that the restriction in Vault’s license agreement against decompilation or disassembly is unenforceable.”
Two practical consequences follow for a trade secret matter. First, a clause binds the parties to it and not the world — a competitor who buys the same article on the open market without agreeing to anything is in a different position from a licensee. Second, breach of a reverse engineering clause and improper means under a trade secret statute are separate questions with separate elements, and whether conduct that breaches a license also constitutes improper means is a legal question that varies by jurisdiction and belongs with counsel in the relevant state.
Who carries the burden on reverse engineering and independent derivation?
It depends on the statute and the state, and the distinction has decided cases. On independent development, Moore v. Kulicke & Soffa Industries, Inc., 318 F.3d 561, 563 (3d Cir. 2003), applying Pennsylvania law, held that “the ultimate burden of persuasion remains on the plaintiff to prove that the defendant did not arrive at a technique similar to the trade secret through its own independent development.” Raising the defense shifts the burden of production — the defendant has to put on evidence — but it does not shift the risk of non-persuasion. On that approach independent development is not a true affirmative defense so much as a denial of an element.
On ready ascertainability, the federal and some state answers diverge, and Comet Technologies USA, Inc. v. XP Power, LLC (9th Cir. July 14, 2026) is the recent statement of it. The district court had instructed the jury that the defendant bore the burden of proving its “affirmative defense” that the alleged trade secrets were “readily ascertainable by proper means.” The Ninth Circuit held that instruction erroneous, because “the DTSA instead puts the burden of proof on the plaintiff to show that its alleged trade secrets were not readily ascertainable by proper means,” citing 18 U.S.C. section 1839(3)(B), and that the instruction “erroneously flipped the burden of proof on an essential element” of the claim. The panel reversed the judgment and remanded for a new trial.
The same opinion names the contrast directly: “Some states, including California, put the burden of proof on the defendant by making ready ascertainability an affirmative defense to a trade secret claim,” citing California Civil Jury Instructions No. 4420 (2025), and observes in a footnote that the California version “requires the defendant actually to have obtained the information lawfully.” The plaintiff in Comet Technologies USA, Inc. v. XP Power, LLC voluntarily dropped its California Uniform Trade Secrets Act claims mid-trial while the instruction stayed as drafted. Which statutes are pleaded, and through to when, changes who has to prove what.
None of this reaches the question of what a claim is worth. Whether a matter involves reverse engineering, independent derivation or neither, the measures of loss and any royalty question belong to the Economic Damages Institute at economicdamagesinstitute.com. What this Institute works on is the evidence underneath: what the record shows, what an expert in the field could have learned by proper means, and whether the claim has been specified precisely enough to test — see how specifically you have to identify a trade secret and what counts as reasonable measures.