Copyright: Reverse Engineering - Replication or Piracy?
As South African companies come out of isolation to compete with foreign companies, many are finding that their slice of the pie of the South African market is under attack. They find that they have to be leaner, faster, more efficient and productive. Under increasing pressure of rising costs, a falling Rand and labour unrest, most companies are looking out for new markets into which to move and profitable opportunities.
One opportunity which some engineering companies are eyeing as a potentially lucrative possibility is a so-called "reverse engineering" project which most often presents itself in one of the following scenarios :
Imagine a large local or overseas original equipment manufacturer ("OEM") which, in the years of South Africa´s isolation, managed to establish a well-developed customer base in South Africa. It is not unreasonable to expect that a large part of that OEM´s present revenue will be derived from the supply of spare parts for the extensive equipment it has installed for its customers out there in the field. Percentages of up to 80% of turnover are not unheard of in cases where the spare parts are wearing parts requiring frequent replacement. If those spare parts could be copied, or "reverse engineered", it might be possible for a replicator company to take advantage of that OEM´s efforts in getting all that original equipment installed in the first place and move in on the captive spare parts market. Thus, for a company which has manufacturing equipment lying idle, it is often tempting to embark on such an exercise in the hope that a company´s fortunes can be turned around.
Similarly, situations have arisen where a local company has quite happily manufactured and sold parts and equipment here during the isolation years under licence to an overseas company which, for political reasons, did not wish to be seen to have a presence here. That overseas company now wants to return to South Africa to operate on its own account and cancels the licence agreement, seeking return of all drawings and information supplied to the local company in terms of the licence agreement. The local company is understandably somewhat put out by this unexpected turn of events and, assuming that it did not agree to be restrained from doing so, looks at ways of lawfully competing with its previous business, even if this has to be in competition with its erstwhile licensor. The "reverse engineering" opportunity again presents itself.
Unfortunately, such a project is not always the golden opportunity it may at first appear to be. As will be discussed below, there are several obstacles, both practical and legal which must be overcome. Success can be achieved, but only if all the significant risks have been considered and plans have been made to deal with them. "Reverse engineering" has, with some justification, been described as a high risk opportunity and should not be undertaken lightly. When under pressure to compete, it is all too easy, wittingly or unwittingly, to take short cuts and thereby infringe the rights of the OEM. In such circumstances, where would-be replicators turn pirate, the OEM is quite justified in seeking to vindicate its rights to the fullest extent of the law.
Before discussing the various pitfalls of "reverse engineering", it is important to consider under which field of law so-called "reverse engineering" falls. The applicable law is that of copyright and in what follows it will be assumed that no patents or registered designs exist to protect the parts or equipment which are sought to be "reverse engineered".
Traditionally, copyright has served to protect artistic, literary or musical works such as best-seller novels, oil paintings or the Beatles´ songs, for example. It transpired one day, that a lawyer acting for an OEM challenged by a replicator seeking to move into its spare parts market came up with the interesting proposition that if oil paintings could be protected by copyright, why couldn´t a technical drawing? Just as much effort and originality, if not more, can go into the creation of such a two-dimensional "work", even if it is of a technical nature. The OEM went to Court and the argument was upheld, with the result that the replicator´s copying of the OEM´s drawings to produce a three dimensional replica or "pirate" part was held to be an infringement of copyright. This is still the case today.
Until the early 1980´s, it was also an infringement of copyright to reproduce or copy the three-dimensional OEM part itself. OEM´s were thus in a very strong position to take action against replicators, irrespective of whether these replicators copied the OEM´s drawings or parts in the course of their reverse engineering efforts.
The lawful window of opportunity for "reverse engineering" became a viable possibility when our copyright law was turned on its head by the introduction of section 15(3A) into our Copyright Act in 1983. In broad terms, this section provides that where an owner of copyright, in our scenario the OEM, distributes, or sells to the public its own spare parts (which the Act refers to as "authorised" three-dimensional versions of the "work" in question), it shall not be an infringement of copyright for someone to copy those three-dimensional parts, provided that the parts in question have a utilitarian purpose and are made by an industrial process, which in our case of course they do. These provisions were introduced into our law as a sanctions - busting move in the days when the powers that be were fearful that supplies of critical spare parts from overseas would dry up. The authorities wish to release our engineering companies to be free to "reverse engineer" spare parts lawfully, should this be necessary.
In any event, it thus became permissible, in terms of copyright law, to purchase an OEM part, "reverse engineer" it by measuring it up to take its dimensions and then reproduce it to make an exact replica. Many South African engineering companies, particularly armaments manufacturing companies, made good use of this loophole in the law. What you could not, and still cannot do, today is copy the OEM´s two-dimensional drawings of that part.
It is here most often that shortcuts are made. Faced with the expense and time required legitimately to reverse engineer an OEM´s products, the disgruntled ex-licensee in our scenario above, may be tempted to run off an illicit set of photocopies of the OEM´s drawings before returning them to the OEM in the hope that these will assist it in getting to the spare parts market more quickly. The drawings are then used on the quiet to produce competing spare parts. In doing so, our genuine replicator turns pirate and lends itself open to action from the OEM on the basis of copyright infringement as a result of copying the drawings, and also unlawful competition as a result of using any confidential information contained on the drawings. Such short cuts give the pirate what our Courts have called an unlawful "spring-board" advantage.
The methods of obtaining dimensions for a part in order to reverse engineer it have been well documented by experts in the field such as Allan Wightley of Warman International Limited in his articles "Reverse engineering - a high risk opportunity" (presented at the Materials and Manufacturing in Mining and Agriculture Conference, June 17 and 18, 1993) and "Enforcing intellectual property rights abroad - an international perspective" (presented at the AIC Intellectual Property Seminar, September 13 and 14, 1993), and also by Steven Moriarty in his article entitled "Reverse Engineering" in the September 1996 issue of "The SA Mechanical Engineer". These methods are all perfectly acceptable when a replicator seeks to produce a replacement part on a once-off basis which can be machined and trimmed at length in order to make it fit into the machine for which it is intended. By using sophisticated three-dimensional software, laser or touch probes and NC machines, it is entirely feasible to produce a single replicated part which is substantially identical in all respects to its original counterpart.
But what if you as a replicator want to put this part into full-scale production? How do you know that your stock of spare parts will all fit into the entire range of machinery or equipment that the OEM has so painstakingly installed into the field. Any production engineer knows that full-scale production involves manufacturing errors resulting from sources such as tool wear, materials shrinkage or expansion, varying ambient temperatures and different coefficients of thermal expansion.
If you wish to become a serious contender in the spare parts market, your replicated parts will have to fit, otherwise you are not going to present any commercial competition to the OEM. If you don´t know how accurate to make your parts, it is conceivable that you might end up having to scrap a large part of your replicated stock once you attempt to fit the parts on a trial and error basis. Imagine how irate a mine manager would be if his reduction plant had been down for hours and your allegedly more cost effective replicated part, bought by the mine as part of its cost reduction efforts, could still not be made to fit into his machine. In such circumstances, wouldn´t a priceless gem of information be the range of manufacturing tolerances used by the OEM? Such information would be like a beacon in the dark and would tell you exactly how accurate to make your spare parts to ensure that all of them fitted into the field. It is precisely this information which is probably the item of highest value on an OEM´s drawing and which is the key to full-scale replicator production.
Unscrupulous reverse engineering companies have sought to circumvent the provisions of the Copyright Act by making up drawings of their own based on dimensions derived from the OEM part and then adding all the other helpful confidential information contained on the OEM´s drawing. In other words, they seek to make a "clean" drawing which does not offend against the provisions of the Copyright Act, and then introduce all the other illicit information afterwards in the hope that this is somehow not unlawful. This can still amount to misuse of confidential information and is actionable by the OEM. It goes without saying that all OEM manufacturers should keep their manufacturing drawings completely confidential under lock and key.
If you are an OEM, the key to winning a copyright infringement case in a "reverse engineering" matter is to show, firstly, that you own the copyright in question (not always an easy task), secondly, that there is an objective similarity between what is shown on your drawings and the alleged infringing pirate part, thirdly, that the alleged infringer has had access to your drawings and, finally, that there is some evidence that it is your drawings which have been copied, and not your parts. Preferably, also, you should be able to show that there are one or more items of your confidential information contained on the pirate´s drawings.
This tell-tale evidence that your drawings have been copied can present itself in many ways. For example, it may appear in the form of a feature or "fingerprint" which is present on your genuine OEM drawing and also evident on the pirate part, but which for some reason is not present on your genuine three-dimensional part. To elaborate, suppose the OEM draughtsman calls for a series of square bolt holes to be present around the suction eye of a pump volute liner, for example, and duly depicts these in square form on his drawing. The drawing is then passed on to the mould maker who makes his own set of mould drawings to make a mould which will be used to make long production runs of the pump liner in question. The mould maker is not happy with the square holes designed by the draughtsman as this means an expensive milling machine must be used, as opposed to a simple drilling machine which can be used quite easily to make round holes. Without telling the draughtsman or altering the original OEM drawing in any way, the mould maker produces the mould as cheaply as he can and the authorised genuine pump liners go into production and out to the public with round bolt holes.
Thus, if such a part were genuinely reversed by a replicator it would in all likelihood demonstrate round bolt holes, particularly where the replicator is going to do everything he can to make sure his spare parts are identical to the genuine counterpart. On the other hand, were the pirate parts to appear on the market with square bolt holes, there would be a strong inference that it was the drawings which had been copied. This is just a simple example, but will hopefully demonstrate how such a feature can be used as a tell-tale fingerprint to demonstrate unlawful copying of two dimensional drawings.
Another way of telling if an OEM drawing has been copied is to look at the dimensioning. The same information can be presented in a number of different ways and yet, on the face of it, look quite different. To use another simple example, you could specify that two bearings on a shaft one metre long are to be provided at a distance respectively of 30cm and 40cm from one end. Alternatively, if you did not wish to make this information "look" the same, you could specify on your copied drawings that the bearings are to be located 70cm and 60cm respectively from the other end, and in this way attempt to "launder" your drawings in the same way that a school pupil might attempt to fudge copied homework. Replicators who have not gone about their business lawfully will sometimes try to use such tactics to cover their tracks.
Let´s now look at the situation from the side of the replicator. If you are bona fide in your intentions and have gone about your reverse engineering legitimately, make sure that you keep full documentary evidence of each and every reverse engineering step you take. For example, it is sometimes possible to approximate the OEM´s manufacturing tolerances closely by purchasing a statistically valid range of identical OEM parts and then measuring each of these parts to determine to what extent they each deviate from a mean. As long as you make your own replicated tolerances slightly tighter, there should be no problem. In doing so, each and every measurement you take should be carefully documented and recorded somewhere so that you can demonstrate to the satisfaction of a Court, if you are ever challenged by an OEM, that you have gone about your business lawfully. Thus, if you are about to embark upon a reverse engineering exercise, you should factor in the cost of keeping and maintaining full documentary records.
If you have lawfully been in the possession of the OEM´s drawings in the past and have been asked to return them, try to get the OEM to acknowledge that each and every drawing has been returned to it. Invite the OEM to inspect your premises if you like. Bear in mind that section 15(3A) (the "reverse engineering" section ) is an exception to the rights of the OEM and is accordingly interpreted restrictively and this puts several legal obstacles in your way.
One of these issues is that you as the replicator relying on section 15(3A) for your defence will bear the onus at the trial to show that you have satisfied the provisions of the section. If you are not able to produce convincing evidence demonstrating a clean sequence of events showing every step of the reverse engineering process, you are going to be in trouble.
More importantly, make sure you buy authorised parts from the OEM itself to reverse engineer from, and do not try to rip off the parts of some other pirate who might be selling non-genuine parts in competition with the OEM in question. For a start, these parts have not been "authorised" by the OEM (and hence arguably fall outside the provisions of section 15(3A)), and they might not have been genuinely reverse engineered themselves. Worse, they might even have been copied from the OEM´s drawings in the first place without your knowledge. Remember the old saying, ignorance is no defence in the law.
You should also be aware as a replicator that if you make your own part drawings, even if these are in the form of "as-built" drawings, as it were, of the parts you have genuinely reverse-engineered, there is still a risk of such drawings being found to be unlawful copyright infringements. The reason for this is that section 15(3A) arguably only excuses the distribution of three-dimensional reproductions of the OEM parts. The section says nothing about a replicator being allowed to produce two-dimensional reproductions, in other words drawings.
It is also probable that you will wish to make a mould to produce your legitimate replicated parts on a full-scale production basis. Even if your parts have been genuinely reverse engineered in good faith, your mould might still infringe the copyright residing in the OEM´s mould drawings as there is no forfeiture of copyright in these drawings for the reason that the OEM´s moulds (as opposed to its parts) have not been distributed to the public by consent as required to invoke the provisions of section 15(3A).
At the end of the day, if you have any doubt about the legality of your proposed "reverse engineering" project, it would be wise to obtain sound legal advice before commencing or continuing any further. If you do require the services of an attorney, it is often helpful to go to a law firm which has technically qualified staff in its ranks who often have some degree of experience in engineering and can "speak the same language".
SPOOR & FISHER