China tightens regulations on chip design originality and enforcement

Revised IC Layout Regulations

China has updated its regulations concerning the protection of domestically developed integrated circuit (IC) layout designs. The revisions are intended to curb the practice of Chinese companies obtaining legal protection for copied chip designs by introducing stricter originality requirements and registration procedures.

Stricter Originality Requirements

To qualify for legal protection, applications for IC layouts must now demonstrate independent development and formally attest to the design's originality. Applicants must also specify which parts of the layout constitute their own creative contribution. This allows authorities to identify strong technological capabilities and distinguish genuinely designed-in-China chips from those obtained elsewhere.

Enhanced Enforcement and Penalties

The new rules, effective from mid-October, strengthen enforcement mechanisms. In infringement disputes, courts can now determine compensation based on losses incurred by the rights holder or profits gained by the infringing party. Punitive damages have also been introduced as an option. Additionally, the regulations clarify procedures for licensing, transferring, or using IC layout-design rights as collateral, and mandate reasonable rewards for personnel who create protected designs.

Implications for Chipmakers

These changes will make it harder for companies to copy ICs from rivals. However, Chinese chipmakers retain the ability to produce their designs in facilities located in Taiwan or South Korea. This indicates a focus on promoting domestic design originality while maintaining access to advanced manufacturing capabilities abroad.