China has revised regulations protecting integrated-circuit layout designs to tighten registration standards and allow punitive damages for serious infringement. The updated rules require applicants to demonstrate that filings result from genuine creative activity and to submit declarations of originality.
Under the new framework, organizations leading the creation of chip designs are required to provide eligible personnel with reasonable rewards and remuneration. Damage calculations for infringement can now be based on either the losses suffered by the rights holder or the gains made by the infringer.
The Chinese Justice Ministry and the China National Intellectual Property Administration announced the regulations in a document published by Xinhua on August 3. Chinese Premier Li Qiang signed the revised regulations on July 23, and they are set to take effect on October 15.
The regulations reflect the strategic importance Beijing assigns to technology developed by Chinese companies, though they do not constitute export controls. This follows reports from the Financial Times last month stating that Chinese policymakers have considered measures to prevent strategically important domestic technologies from being transferred overseas or acquired by foreign companies.
The move comes as China's semiconductor industry has accelerated efforts to develop domestic alternatives following US restrictions on advanced semiconductor-design software and manufacturing equipment.
Updates
The revised regulations specify that applicants must clearly identify original elements in their materials and clarify procedures for licensing, transferring, or using layout-design rights as collateral. Additionally, the rules cover detailed physical layouts of circuit elements on silicon and establish a clearer basis for challenging improper registrations. While the State Council decree aims to protect these designs, the Financial Times reported that proposals to prevent technology transfer could include restrictions on the overseas production of advanced chips based on Chinese designs.
The revised regulations specifically cover detailed chip layouts and require applicants to clearly identify original elements in their submissions. Under these rules, layout-design rights can now be licensed, transferred, or used as collateral, while courts are empowered to award punitive damages for serious infringements. Additionally, the regulations aim to strengthen mature-node processes and advance high-performance processors and high-density memory capabilities.
The revised regulations, which consist of six chapters and 54 articles, mandate that applicants clearly identify original elements in their filings and clarify how layout-design rights can be licensed, transferred, or used as collateral for loans. If infringement damages cannot be determined based on losses or profits, courts are empowered to award punitive damages or set a lump-sum amount of up to 5 million RMB. Additionally, the rules ensure equal treatment for foreign rights holders depending on prior financial exploitation in China or international treaty ratification, while providing authorities new mechanisms to verify if a chip was truly designed and built in China.
