Protection of Semiconductor Layouts in India's Chip Ecosystem

Introduction : The Semiconductor Integrated Circuits Layout-Design ("SICLD") Act of 2000 is a statutory legislation in India aimed at protecting the intellectual property in the design of the layout for the semiconductor chips. The SICLD Act was enacted to enable India to be in accordance with the TRIPS Agreement (Articles 35-38) that calls for the legal protection of the integrated circuit (IC) topographies. It provides the legal right of an innovator to claim the protection of a unique arrangement of transistors, resistors and the interconnections which is an invention coming out from an extensive R&D process. With India positioning itself more and more as a global hub for chip design, as evidenced from companies such as Intel, Qualcomm and Tata Elxsi opening design centres there, the SICLD Act has a critical role to play in promoting the research and development in design technologies including VLSI, the design of specialized hardware for AI, 5G chips, IoT, among others. 

This exclusive yet vital IP regime finds ways to meet conflicting interests of commerce and social good by making reverse-engineering a legitimate activity for research purposes and by not granting an endless protection for semiconductor layout design since the technology is changing rapidly, the period of the protection is limited to 10 years from the date of registration.

The paper will discuss the legal provisions of the Act, types of protection under it, protection rights of the owner, mechanism for the enforcement of protection and so on, also compare the Indian Semiconductor Layout-Design Act with the provisions of TRIPS and highlight some futuristic tech challenges for the development of semiconductors such as reverse engineering, machine learning-aided chip design, among others that are currently being neglected.

What constitutes the layout-design of an integrated circuit?

An Integrated Circuit, means an electronic device that may be in its final or an intermediate form, consisting of components like at least one active component (e g a transistor), and their links being made permanently through the semiconductor substrate, usually silicon, to perform an electronic function. The layout-design or "topography" is basically the three-dimensional disposition of these components and interconnections, be it represented in any form or not, or prepared the same how for manufacturing.

If we look from the operational side of a layout-design, it is like the blueprint telling a manufacturer where to place exactly each transistor, resistor, diode, and wire on a chip with the help of which. Developing the blueprint requires a team of skilled engineers, specialized software, and a lot of iterations. The final design will, with respect to all the major aspects, be a result of one's thinking, and that design can bring in substantial revenue from the market.

Which kinds of layouts are eligible for protection?

The law governing integrated circuit layout-designs allows not all of them to be registered. For a design to be eligible according to the SICLD Act, it must satisfy three conditions:

Originality: A design is only considered original if it stems from the designer's intellectual effort and at the moment of its creation, it was not common knowledge among layout-design creators and IC makers. Even a combination of common elements can be seen as "original" if the designer puts effort into it.

Distinctiveness: The design should clearly be different from existing layout designs which are registered.

A design cannot be registered if it has been commercially exploited (in India or a convention country) for two years before the application date.

Implications for Indian Companies

The development of the semiconductor sector in India, including initiatives like design incentives and chip-design centres, will result in major in-house layout-design operations. Currently, a large part of these design activities is dependent on patents that are only covering the circuit designs or by confidentiality agreements.

With limited applications and no backlog, the SICLD Act is a good alternative for companies to register their layout-designs as property.

Electronics manufacturers, semiconductor start-ups, and research centres in India need to seize this opportunity. It is very timely for those companies that already patent their circuit innovations. Through making SICLD filings a part of their IP strategies, they can protect themselves from the risks of reverse engineering or copying layout designs without authorization.

Why does this protection matter for India’s semiconductor ambitions?

This protection plays a very important role in realizing India's ambition of becoming the semiconductor industry leader.

In the past, most Indian semiconductor companies worked as chip design service providers, whereas their focus was not on chip manufacturing. A large number of talents are working in the field of design but still the Semiconductor Integrated Circuits Layout Designs Act aims to protect the design of semiconductor circuits to prevent theft or unauthorized duplication. After the India Semiconductor Mission (ISM's) initiation in 2021, the government has committed to raise India's semiconductor self-sufficiency and to increase the domestic production of semiconductors and design. Experts have pointed out that layout designs registrations will be significantly increased, as they have been relatively low despite the existence of the law for over twenty years.

The reason for the high protection level is very simple: the layout-design of a chip can cost millions of rupees in investment as well as several months in development. A competitor, in the case of no legal protections, can effortlessly reverse-engineer and copy a design at a very low cost, thereby, putting the original designer at a loss regarding his return on investment. IP protection is what gives you a commercial asset of sorts, that was once only an intellectual effort; thus, turning investment in semiconductor innovations into a profitable venture.

Overlapping and adjunct IP Legislation 

The SICLD Act is a basic law. However, there are other Indian IP laws that collectively offer various forms of protection to semiconductor chips and related elements of technology:

Patents Act, 1970

The Patent Law of India is an important legislation for the protection of semiconductor inventions. It protects:

• New and non-obvious methods of chip production.

• The chip's circuit or new chip component, provided that it fulfils the conditions for the novelty, non-obviousness, and industrial applicability.

However, the Patents Act under the provisions of 3(o) of Schedule II clearly stipulates that the "topography of integrated circuits" cannot be patented. This means that SICLD Act is a much-needed specialist law on this subject matter besides protecting the intellectual property rights in layout design.

On the other hand, under the provisions of Section 3(k) of the Act, software is not patentable as such. Still, if the software gives rise to a technical effect and operates with the hardware of the chip, the protection is possible.

Copyright Act, 1957

As far as layout designs are concerned, the Copyright Act of 1957 protects a source code or an artist's representation of it and even mask works (the blueprint of physical layers of the chip) as literary or artistic works. But, as copyright only protects against unauthorized reproduction of the expression of a work and not the work per se, the law cannot stop others from reproducing the expression of a copyrighted work in different forms without infringing on the copyright. So, copying the chip by reverse-engineering methods doesn't violate a copyright.

The international picture: a sui generis category comes of age

India is the first country to have a particular legal framework, but there are several other countries like the United States, the European Community which have a regulatory regime in this field through their semiconductor-related laws such as the "1984 Semiconductor Chip Protection Act" (the USA), the "Directive on the Legal Protection of semiconductor product topographies" (European Union), the "Circuit layout rights Act" (Japan), etc. These national legislations are indicative of the unanimous recognition at the global level that the semiconductor industry requires its own framework of legislation because the semiconductor layout designs are not covered by any of the established forms of intellectual property, and hence they need to be separately protected.

The TRIPS Agreement has the Washington Treaty's text to provide for such exclusive protection. Under this agreement, that protection will be a fundamental duty that each individual WTO member is required to carry out with respect to other WTO members to which they trade. Consequently, it will establish a certain minimum threshold for the protection of the innovation done in the semiconductor industry worldwide.

The availability of a proper layout-design protection regime for a country like India which has the objective of becoming a global hub for chip design and, over time, manufacturing, it's much more than a mere legal requirement. On the contrary, it's one of the key requirements for creating an environment favourable to the inflow of investment and retention of experts besides the ability to make semiconductors business a profitable venture.

Case Law

The implementation of the SICLD Act of 2000 has been a major factor, yet the number of cases that have been settled under this law remains much lower than in domains like Patents or Trademarks.

Though there are few detailed judgments from Indian courts, one of the few cases often cited regarding the SICLD Act is the Maxim Integrated Products Inc. v. Analog Devices Inc. case. In that case, Maxim filed suit against Analog Devices for infringement of its semiconductor integrated circuit layout-design rights inside India. This case, shows the Act's role as a backbone providing the legal system to the parties involved to safeguard against IC layout-design infringements. This matter has demonstrated how the SICLD Act can be utilised as a formal legal mechanism, by prominent global semiconductor companies operating in the Indian market, thereby paving the enforcement of the law, and serving as the precedent to it. Moreover, that the dispute was not only technical but also the lengthier it indicates the level of complexity associated with the enforcement of intellectual property rights in this industry.

Conclusion: Nurturing the Chip Ecosystem

The legal system in India aimed at protecting semiconductor intellectual property rights is complex, Semiconductor Integrated Circuits Layout-Design Act, 2000 is the main law for protecting IC layout designs. This law provides a unique protection against chip piracy in a limited time period that can also be enforced by criminal action. In this regard, besides the criminal element, original work only is necessary, as against patent requirements such as novel invention and step of invention. The focused protection together with the Patents Act for processes and architectures underlying is an attempt to create a very strong legal environment, an environment that is very attractive. Such law environment plays very essential part in promoting India as a design manufacturing hub for semiconductor in semiconductor business. Continued initiatives aimed at public awareness, registry efficiency, and specialized judicial training are of the most importance for us to get the most out of this legislative base.

Author: Harsimar Kaur in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney