Is Integrated Circuit Layout Design Protected by China Judicial Judgment?

(By You Yunting) Introduction to the case:

Appellant (plaintiff at first instance): Hi-Trend Technology (Shanghai) Co., Ltd (the “HTT”)

Appellant (defendant at first instance): Shenzhen Rui Micro-Technology Inc. (the “RMT”)

Respondent (defendant at first instance): Shanghai Yachuang Electronic Component Co., Ltd. (the “YEC”)

Court of first instance: Shanghai No.1 Intermediate People’s Court  No.: (2010)沪一中民五(知)初字第51号

Court of second instance: Shanghai Higher People’s Court  No.: (2014)沪高民三(知)终字第12号

In May 2006, the HTT signed a Technology Transfer Contract and supplementary agreement with Zhuhai Actions Semiconductor Co., Ltd. (the “Action Semi”) that the Action Semi transferred its proprietary technology of a chip to the HTT at the price of RMB 12 million. After then, the HTT made a subsequent research and gained an exclusive right in 2008 at the registration of layout design numbered ATT7021AU (the “disputed design”) with the State Intellectual Property Office. However, the HTT found that, the RMT who developed a chip copied from the disputed design in a serious manner, and that the ex-sales manager Mr. Chen, ex-designer Mr. Zhao and ex-engineer Mr. Yang act respectively as the manager, the design director, and the technical consultant in the RMT.

The HTT claimed that, the RMT which copied the copyrighted disputed design had commercially sold the integrated circuit that contains the disputed design with the YEC, infringing the exclusive rights of the HTT. And then filed the case to the court.

The court held the following after the trial:

  1. Even in accordance with the strict standard, a small segment of the two designs is constituted substantial similarity.
  2. The HTT provided its design certificate to prove its originality of his disputed design and the Patent Re-examination Board of SIPO ceased the cancellation procedure upon the examination. The authentication institution also concluded that there are two originality in the disputed design. However, the RMT cannot prove the disputed design to be a routine design.
  3. The two non-core originality, even if occupied a small percentage in the disputed design, shall be protected. In this case, the RMT was unauthorized to copy the two originality directly and made commercial sale, constituting infringement.
  4. as the RMT refused to provide financial documents, it is correct that the first instance determined the RMT to compensate RMB 3.2 million to the HTT, on the basis of the number of sales on its websites, partial invoices the court preserved, the area percent and its function of the originality, and the competitive advantages obtained from copying the disputed design.

Therefore, Shanghai Higher People’s Court dismissed the appeal, affirming the original judgment.

Lawyer’s Comment:

The Regulations on Protection of Integrated Circuit Layout Design in 2001 established the exclusive right over the design as the type of intellectual property. The attribute of this right is closer to the copyright, but the protection term of this right lasts more similar to the patent right, much shorter than that of copyright. Adding to the embarrassment, even if this right is one of intellectual rights, this right does not use normally, but rarely pursued.

This case was a few successful lawsuit used in the industry of the integrated circuit layout design, with the support from the court. It is likely that the judgment will make a certain degree of effects in both the industry and the design. Because it made the industry and the design realized that the exclusive right of integrated circuit layout design could be an enforceable right indeed, instead of a philosophy.

Lawyer Contacts

You Yunting86-21-52134918

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