FORT LAUDERDALE BUSINESS LITIGATION: REVERSE ENGINEERING A TRADE SECRET

Trade secret laws can offer broad protections for products during the conceptualization, design, test, and improvement phases when patentability is often uncertain. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989) (stating that “protections of state trade secret law are most effective at the developmental stage, before a product has been marketed [when] the threat of reverse engineering becomes real.”). However, trade secret protections can be more limited after a product is placed into the stream of commerce and available for public consumption because the product is susceptible to reverse engineering. The United States Supreme Court has ruled that a “trade secret law… 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.” Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974). The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

Reverse engineering can be a legitimate method to uncover a trade secret when performed using proper means. The reason for this is that most trade secret statutes define trade secret misappropriation to encompass trade secret acquisitions from another “who knows or has reason to know that the trade secret was acquired by improper means.” Fla. Stat. § 688.002. Therefore, the concept of improper means is significant to whether an act of reverse engineering a trade secret was lawful. Improper means under Florida’s Uniform Trade Secret Act includes theft, bribery, misrepresentation, breach or the inducement of a breach of a duty to maintain secrecy, and espionage through electronic or other means. But this is not an exhaustive list. Actions may be considered improper for trade secret misappropriation purposes even if they are not unlawful. E. I. duPont deNemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir. 1970) (rejecting the argument “that for an appropriation of trade secrets to be wrongful there must be a trespass, other illegal conduct, or breach of a confidential relationship”). In addition, litigants cannot transform an improper act into a proper act by demonstrating the trade secret owner did not adequately protect its trade secrets because the actions of the trade secret owner are irrelevant to the analysis of improper means. Compulife Software Inc. v. Newman, 959 F.3d 1288 (11th Cir. 2020). It does not matter that a defendant discovered a method to circumvent the trade secret owner’s protections so long as those protections were reasonable under the circumstances.

The mere possibility that a trade secret could be reversed engineered is not sufficient to avoid liability for trade secret protection. Mallet and Company Inc. v. Lacayo, 16 F.4th 364 (3d Cir. 2021) (“[W]hile reverse engineering is a defense to misappropriation of [a] trade secrets claim, the possibility that a trade secret might be reverse engineered is not a defense … To hold otherwise would fly in the face of commonsense and allow a defendant to escape liability for unlawfully stealing trade secrets as long as someone might—hypothetically and at unknown cost in time, effort, and money—figure out some means to discover them through reverse engineering.”). Therefore, a trade secret defendant must prove he actually and successfully reversed engineered the product using proper means to escape trade secret liability. La Potencia, LLC v. Chandler, 733 F. Supp. 3d 1238 (S.D. Fla. 2024).

The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.