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But the clear-cut legality of hardware reverse engineering is coming to an end. In spite of legal protections, the waters are getting a bit muddier for Chipworks. And new legal challenges, both using the DMCA and those pecking away at the Chip Protection Act, could make things a lot worse.

Already as a result of litigation and new end-user license agreements there are gray areas, according to Jason Schultz, an attorney at the San Francisco-based Electronic Frontier Foundation, a nonprofit legal organization that defends technology companies and consumers. Schultz expects that the coming years will see challenges to reverse engineering, as companies strive to “leverage one product to make you buy another,” by having their hardware be compatible with only certain batteries, remote controls, or other devices.

“As more and more people get mobile devices, cell phones, PDAs, and Treos, the key battleground is going to be how easy it is to shift between them,” Schultz says. “If I have all my music on my iPod and some new music player comes out, I may want to buy that new music player. But the key question is: How easy is it going to be for me to import all of my music?”

Reverse engineering could lead to devices that make switching as easy as pushing a button. The same would be true for digitally recording TV shows, Schultz says, where reverse-engineering-enabled compatibility could be used to transfer the recorded files to any number of devices.

So far, two prominent lawsuits have tried to stop the creation of compatible devices. In both, companies had reverse engineered products, one to produce printer ink cartridges, the other remote controls. The litigation appealed to the DMCA, but the cases were eventually thrown out because judges decided no one was trying to steal copyrighted material.

Although these rulings upheld hardware reverse engineering used to create compatible products, Schultz expects there will be more challenges in the future. Specifically, end-user agreements that prohibit reverse engineering may pose a challenge, bringing contract law in conflict with copyright law. “That’s why it’s murky,” he says. “Different courts have come at it in different ways.”

Making matters even more confusing, national borders often provide little protection. Chipworks, for instance, needs to tread lightly when dealing with U.S. clients. Company patent advisor Girones says they keep an eye out for embedded code, which might be considered copyrightable, and warn their customers when they might be entering murky territory. “We have to be aware of it for our clients. We want to make sure everything’s on the up and up.”

The outcome of the current legal wranglings could have a profound impact. “It’s going to affect consumers directly,” says Schwartz. “The number of choices they’ll have will directly depend on how free reverse engineering is, how [legally] safe it is, because companies aren’t going to invest if they’re going to get sued.”

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