Reverse engineering has long been held a legitimate form of discovery in both legislation and court opinions. The Supreme Court has confronted the issue of reverse engineering in mechanical technologies several times, upholding it under the principles that it is an important method of the dissemination of ideas and that it encourages innovation in the marketplace. The Supreme Court addressed the first principle in Kewanee Oil v. Bicron, a case involving trade secret protection over synthetic crystals manufacturing by defining reverse engineering as "a fair and honest means of starting with the known product and working backwards to divine the process which aided in its development or manufacture." [416 U.S. 470, 476 (1974)] The principle that reverse engineering encourages innovation was articulated in Bonito Boats. v. Thunder Craft, a case involving laws forbidding the reverse engineering of the molding process of boat hulls, when the Supreme Court said that "the competitive reality of reverse engineering may act as a spur to the inventor, creating an incentive to develop inventions that meet the rigorous requirements of patentability." [489 U.S. 141 160 (1989)]
Congress has also passed legislation in a number of different technological areas specifically permitting reverse engineering. The Semiconductor Chip Protection Act (SCPA) explicitly includes a reverse engineering privilege allowing semiconductor chip designers to study the layout of circuits and incorporate that knowledge into the design of new chips. The Competition of Contracting Act of 1984 allows the defense industry to inspect and analyze the spare parts it purchases in order to facilitate competition in government contracts.
The law regarding reverse engineering in the computer software and hardware context is less clear, but has been described by many courts as an important part of software development. The reverse engineering of software faces considerable legal challenges due to the enforcement of anti reverse engineering licensing provisions and the prohibition on the circumvention of technologies embedded within protection measures. By enforcing these legal mechanisms, courts are not required to examine the reverse engineering restrictions under federal intellectual property law. In circumstances involving anti reverse engineering licensing provisions, courts must first determine whether the enforcement of these provisions within contracts are preempted by federal intellectual property law considerations. Under DMCA claims involving the circumvention of technological protection systems, courts analyze whether or not the reverse engineering in question qualifies under any of the exemptions contained within the law.