I've discussed why I don't think Obfuscation is an effective means of protection against cracking here:
Protect .NET Code from reverse engineering
However, your question is specifically about source theft, which is an interesting topic. In Eldad Eiliams book, "Reversing: Secrets of Reverse Engineering", the author discusses source theft as one reason behind reverse engineering in the first two chapters.
Basically, what it comes down to is the only chance you have of being targeted for source theft is if you have some very specific, hard to engineer, algorithm related to your domain that gives you a leg up on your competition. This is just about the only time it would be cost-effective to attempt to reverse engineer a small portion of your application.
So, unless you have some top-secret algorithm you don't want your competition to have, you don't need to worry about source theft. The cost involved with reversing any significant amount of source-code out of your application quickly exceeds the cost of re-writing it from scratch.
Even if you do have some algorithm you don't want them to have, there isn't much you can do to stop determined and skilled individuals from getting it anyway (if the application is executing on their machine).
Some common anti-reversing measures are:
- Obfuscating - Doesn't do much in terms of protecting your source or preventing it from being cracked. But we might as well not make it totally easy, right?
- 3rd Party Packers - Themida is one of the better ones. Packs an executable into an encrypted win32 application. Prevents reflection if the application is a .NET app as well.
- Custom Packers - Sometimes writing your own packer if you have the skill to do so is effective because there is very little information in the cracking scene about how to unpack your application. This can stop inexperienced RE's. This tutorial gives some good information on writing your own packer.
- Keep industry secret algorithms off the users machine. Execute them as a remote service so the instructions are never executed locally. The only "fool-proof" method of protection.
However, packers can be unpacked, and obfuscation doesn't really hinder those who want to see what you application is doing. If the program is run on the users machine then it is vulnerable.
Eventually its code must be executed as machine code and it is normally a matter of firing up debugger, setting a few breakpoints and monitoring the instructions being executed during the relevant action and some time spent poring over this data.
You mentioned that it took you several months to write ~20kLOC for your application. It would take almost an order of magnitude longer to reverse those equivalent 20kLOC from your application into workable source if you took the bare minimum precautions.
This is why it is only cost-effective to reverse small, industry specific algorithms from your application. Anything else and it isn't worth it.
Take the following fictionalized example: Lets say I just developed a brand new competing application for iTunes that had a ton of bells and whistles. Let say it took several 100k LOC and 2 years to develop. One key feature I have is a new way of serving up music to you based off your music-listening taste.
Apple (being the pirates they are) gets wind of this and decides they really like your music suggest feature so they decide to reverse it. They will then hone-in on only that algorithm and the reverse engineers will eventually come up with a workable algorithm that serves up the equivalent suggestions given the same data. Then they implement said algorithm in their own application, call it "Genius" and make their next 10 trillion dollars.
That is how source theft goes down.
No one would sit there and reverse all 100k LOC to steal significant chunks of your compiled application. It would simply be too costly and too time consuming. About 90% of the time they would be reversing boring, non-industry-secretive code that simply handled button presses or handled user input. Instead, they could hire developers of their own to re-write most of it from scratch for less money and simply reverse the important algorithms that are difficult to engineer and that give you an edge (ie, music suggest feature).
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