# Chicago Lock v. Fanberg: Why Reverse Engineering Is Not Improper Means

> The Ninth Circuit reversed an injunction over published tubular lock key codes, holding reverse engineering by lawful owners is not improper means.

Topic: Trade Secrets  |  Author: Lidiia Levitska  |  Source: Intellectual Property Law (outsideipcounsel.com)
Canonical: https://outsideipcounsel.com/blog/chicago-lock-v-fanberg-improper-means-key-codes/


When a company sells a product to the public, how much of the know-how embedded in that product does it get to keep secret? *Chicago Lock Co. v. Fanberg*, 676 F.2d 400 (9th Cir. 1982), decided May 6, 1982 in an opinion by Circuit Judge Ely, gives the durable answer: a trade secret plaintiff must prove not just that its information was secret and valuable, but that the defendant acquired it by improper means. Reverse engineering a product you lawfully own is proper means, and no amount of the manufacturer's secrecy effort converts that lawful act into misappropriation.

The case reached the Ninth Circuit after a trial court had enjoined two locksmiths from publishing a compilation of key codes for Chicago Lock's tubular "Ace" locks. The appeals court reversed and ordered judgment for the defendants. The decision remains a first-year casebook staple because it isolates the element that trade secret plaintiffs most often overlook. Secrecy and value are necessary, but they are not enough. The wrong has to lie in how the information was taken.

## At a glance

- **Case:** *Chicago Lock Co. v. Fanberg*, 676 F.2d 400 (9th Cir. 1982) (also reported at 216 U.S.P.Q. 289).
- **Decided:** May 6, 1982, by a Ninth Circuit panel, opinion by Circuit Judge Ely, reversing the district court and remanding with instructions to enter judgment for the defendants.
- **Holding:** Compiling and publishing tubular lock key codes that individual locksmiths had derived by reverse engineering their own customers' locks did not involve acquisition by improper means, so there was no actionable trade secret misappropriation or unfair competition.
- **Significance:** The canonical illustration that misappropriation turns on the propriety of the means of acquisition, and that reverse engineering by lawful owners launders the information chain.

## The lock, the codes, and the compilation

Since 1933 Chicago Lock Company sold a tubular lock under the registered trademark "Ace." The design offered greater pick resistance than conventional pin tumbler locks, and millions were installed on vending and bill changing machines, burglar alarms, and other maximum security uses. Each lock carried a serial number, and Chicago Lock kept a confidential correlation between serial numbers and the corresponding key cuts. The company maintained those serial number to key code correlations indefinitely and in secret. It refused to sell tubular key blanks to locksmiths, and it stamped its keys "Do Not Duplicate."

The company's business model depended on that opacity. If you lost the key to an Ace lock, the intended path was to go back through channels the company controlled. A locksmith could nonetheless open and read a particular lock by picking it or disassembling it, then determine the key code for that specific lock. Locksmiths who did this for their customers built up private lists of serial number to key code pairs.

In 1975 Victor Fanberg, a locksmith in his own right and the son of locksmith Morris Fanberg, placed an advertisement in the trade publication *Locksmith Ledger*. He asked individual locksmiths to send in the serial number and key code correlations already in their possession, in exchange for a copy of the complete compilation once finished. Enough locksmiths responded that in late 1976 Victor and his father, doing business as A-Advanced Locksmith, began selling a two volume work, "A-Advanced Locksmith's Tubular Lock Codes," which let a reader look up a serial number and read off the key code. Chicago Lock sued to enjoin the publication.

## The doctrinal frame: secrecy plus improper means

Trade secret liability under California common law, as the court applied it, rested on the Restatement (First) of Torts § 757. Two things must be shown. First, the plaintiff must possess a trade secret, meaning information not generally known that provides a competitive advantage and is subject to reasonable efforts to keep it secret. Second, and this is the fulcrum of *Fanberg*, the defendant must have acquired or used that secret through a breach of confidence or other improper means.

Trade secret law does not grant exclusive rights against all comers. Citing comment a to § 757, the court framed the point this way: it is the employment of improper means to procure the trade secret, rather than mere copying or use, that is the basis of liability. The panel then restated the corollary in language it quoted from the California Court of Appeal's decision in *Sinclair v. Aquarius Electronics, Inc.*, 42 Cal. App. 3d 216 (1974): "It is well recognized that a trade secret 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, starting with the known product and working backward to divine the process." Reverse engineering sits alongside independent invention as a categorically proper way to learn a competitor's secret.

The district court had lost sight of this distinction. It found that Chicago Lock's high security policy was a valuable trade secret type asset and that the Fanbergs' publication so undermined that policy as to constitute common law unfair competition. But undermining a company's secrecy policy is not the legal test. The question was whether the codes reached the Fanbergs through improper means.

## Following the chain of acquisition

The Ninth Circuit traced the information back to its source and found every link lawful. The locksmiths who supplied the codes had obtained them by working on locks their own customers owned. Reverse engineering a lock you have been hired to open, or that belongs to your customer, is proper means. Chicago Lock effectively conceded the point. It acknowledged that if the Fanbergs had themselves bought Ace locks and disassembled them, the resulting reverse engineering would not be improper.

That concession was fatal, because the Fanbergs were one step further removed. They did not even do the disassembly. They aggregated data that others had lawfully generated. If the underlying act of reverse engineering by the locksmiths was proper, then collecting and publishing the results of that proper activity could not be improper.

Chicago Lock's fallback was to locate a breach of confidence somewhere in the chain. It argued that the individual lock owners were under an implied obligation not to have their locks reverse engineered and not to disclose the key codes, and that the locksmiths, and through them the Fanbergs, participated in a breach of that obligation. The court rejected the theory. Whatever duty of confidence a locksmith owes runs to the customer whose lock is being serviced, not to Chicago Lock. The customers owed the manufacturer no such duty at all.

## Why the court refused to imply a duty on lock owners

The most consequential passage in the opinion is its refusal to invent a confidential relationship between Chicago Lock and the purchasers of its locks. To reach the Fanbergs, Chicago Lock needed the ultimate source of the codes, the individual owners, to be bound to secrecy. The court declined to impose that obligation.

Reading such a duty into every sale, the court reasoned, would effectively give Chicago Lock a monopoly over the key codes far beyond what trade secret law contemplates. It would let a manufacturer sell a product into the open market and still forbid buyers from studying it or sharing what they learned. That is close to the exclusivity a patent confers, but without the disclosure and the time limit that the patent bargain requires. The court read that concern against the backdrop of federal patent policy, which under cases like *Kewanee Oil Co. v. Bicron Corp.*, 416 U.S. 470 (1974), tolerates state trade secret protection precisely because it does not bar reverse engineering or independent discovery. An implied duty on every purchaser would push state law into territory federal patent law reserves.

Because it found no improper means and no breach of a duty owed to Chicago Lock, the court reversed and remanded with instructions to enter judgment for the Fanbergs. It did not need to reach their First Amendment or vagueness defenses, and it did not decide whether the codes were trade secrets in the first place. The plaintiff lost on the means element even assuming secrecy.

## Open questions

The opinion resolves the improper means question cleanly but leaves several adjacent issues unsettled. It did not decide whether the serial number to key code correlations were trade secrets at all, so the case says nothing about how much secrecy effort would have sufficed if the acquisition had been tainted. It also predates the widespread use of contractual anti reverse engineering clauses and shrinkwrap or clickwrap terms. Whether an express contractual restriction on the buyer, rather than an implied one, could bind purchasers and change the analysis was not before the court, and later authority is mixed. The decision likewise arose under the Restatement rather than the Uniform Trade Secrets Act, which most states including California later adopted, though the UTSA carries forward the same improper means requirement and the same protection for reverse engineering.

## Implications for inventors and businesses

- **Secrecy is necessary but never sufficient.** A plaintiff who can prove only that information was valuable and guarded will lose if the defendant learned it by fair means. Build your case around how the information was taken, not merely that it was secret.
- **Reverse engineering of lawfully acquired products is protected.** If your competitive advantage lives in a product you sell to the public, expect that buyers may lawfully take it apart. Trade secret law will not stop them, and it will not stop third parties who compile what those buyers learn.
- **Do not rely on implied duties running from customers.** Courts will not read a confidentiality obligation into an ordinary sale. If you need buyers bound, you need an express, enforceable contract, and even then anti reverse engineering terms face preemption and enforceability limits.
- **Consider the patent tradeoff for reverse-engineerable products.** Where the innovation is exposed the moment a customer disassembles the product, a patent, which grants exclusivity against reverse engineering in exchange for disclosure, may protect what trade secret law cannot.

## Frequently asked questions

**Did the Ninth Circuit rule that key codes could never be trade secrets?** No. The court did not decide whether the serial number to key code correlations were trade secrets. It assumed they could be and still reversed, because Chicago Lock failed to prove the codes were acquired by improper means. The holding turns on the means of acquisition, not on the secret status of the information.

**Why did it matter that the locksmiths, not the Fanbergs, disassembled the locks?** The improper means inquiry follows the chain of acquisition. The locksmiths reverse engineered locks their own customers owned, which is proper means, and they owed no duty of confidence to Chicago Lock. Because each link in the chain was lawful, the Fanbergs' compilation and publication inherited no taint of misappropriation.

**Can a manufacturer stop customers from reverse engineering a product it sells?** Not through trade secret law alone. Chicago Lock argued for an implied duty on lock owners not to disclose their key codes. The court refused, reasoning that such a duty would give the manufacturer patent-like exclusivity without a patent, colliding with federal patent policy that leaves unpatented articles free to be copied.

## Authorities and sources

- [*Chicago Lock Co. v. Fanberg*, 676 F.2d 400 (9th Cir. 1982), full text](https://law.resource.org/pub/us/case/reporter/F2/676/676.F2d.400.80-5000.html)
- [*Kewanee Oil Co. v. Bicron Corp.*, 416 U.S. 470 (1974), full text (Cornell LII)](https://www.law.cornell.edu/supremecourt/text/416/470)
- [*Kewanee Oil Co. v. Bicron Corp.*, 416 U.S. 470 (1974), official U.S. Reports PDF (Library of Congress)](https://tile.loc.gov/storage-services/service/ll/usrep/usrep416/usrep416470/usrep416470.pdf)
- [18 U.S.C. § 1839(6) (federal definition of "improper means," which excludes reverse engineering)](https://www.law.cornell.edu/uscode/text/18/1839)