He reverse engineered patents, part time, for a living and then got ripped off. I'm not diminishing what he accomplished, but when I say it out loud it has an interesting ring to it.
From what I did understand he was not "reverse engineering" patents, he was "circumventing" patents. There should be nothing to "reverse engineer" in a patent, as a patent is a public document which explicitly describes as a newly-invented apparatus operates, with drawings and explicit technical explanations.
Patents serve three purposes:
1) disseminate knowledge (instead of keeping it secret) so that others can build upon it
2) protect the inventor from carbon-copies of his invention, lacking further inventive steps, and ensuring him some economical value, for a limited number of years (usually 20) as a compensation for the knowledge that he developed and that he accepted to disclose publicly
3) stimulate innovation, so other inventors will create different ways of accomplishing the same goal
So Ted Eldred was exploiting the goal n. 3) above. A noble goal!
And this effectively resulted in a big innovative step, which could have also been patented, if he had enough money.
The whole patent system, while noble in its original conception (outlined here), was later flawed by increasing costs for filing and maintaining patents, making it unsustainable for people without relevant economical resources.
Do you remember the patent on telephone, claimed by mr. Bell, despite the previous patent application filed by Meucci, but left expiring for lack of money for paying the patent office fee?
here the story:
Bell did not invent telephone, US rules
In my view, filing a patent should be free, and its worldwide extension should be automatic, and done by the government which issues the first national patent.
On the other side, patents should be granted only for really relevant innovative steps: I wonder how in the US it was possible, say, to patent successfully the XOR logical operator, or some "magic numbers". And even the DNA code of portions of human genoma...
Sorry for going slightly off topic...