China cracks down on copycat chip designs with new regulations and penalties — new guidelines enforce originality and independent development

China has revised its regulations concerning protection of integrated circuit (IC) layout designs developed domestically. The new regulations are intended to make it harder for Chinese companies to obtain legal protection for copied chip designs by tightening originality requirements, registration procedures, and infringement remedies, Reuters reports. As a result, it will get harder for underperforming China-based companies to copy ICs developed by their more successful rivals. Meanwhile, Chinese chipmakers will be allowed to produce their designs in Taiwan or South Korea.

The amended regulations apply to physical chip layout designs that define how circuit elements are arranged on silicon and represent a substantial amount of engineering work, including for companies that specialize in chip design rather than manufacturing. To qualify for legal protection of their IC layouts, applications must now demonstrate that the layout was independently developed, formally attest that the design is original, and specify which parts of the layout constitute their own creative contribution (perhaps to give authorities an idea about which were licensed or obtained from open sources). As a result, authorities will be able to filter out weak claims and distinguish companies with strong technological capabilities. Furthermore, they will also be able to determine whether a particular chip was designed and built in China, or its alleged developer obtained its product elsewhere and attempts to disguise it as a 'Made in China' silicon.

The new rules also strengthen enforcement. From mid-October and onwards, in infringement disputes, courts may determine compensation based either on losses suffered by the rights holder or profits earned by the infringing party. Punitive damages will also become an option. In addition, the regulations clarify procedures for licensing, transferring, or using IC layout-design rights as collateral. Organizations that develop protected layouts are also required to provide reasonable rewards and payments to personnel responsible for creating those designs.

Chinese policymakers were also reportedly considering measures to prevent strategically important domestic technologies from being transferred abroad, acquired by foreign companies, or produced overseas. If these strict proposals were approved by the CCP and the government, Chinese chip designers would be unable to produce their chips at TSMC in Taiwan or Samsung Foundry in South Korea, and would force them to exclusively make them domestically at Semiconductor Manufacturing International Corp., Hua Hong, and other domestic contract producers that are decades behind market leaders.

The report claims the updated regulations reflect the strategic importance China now assigns to technologies developed by its domestic semiconductor industry. For now, it is evident that China is not ready to implement overseas production of advanced designs. However, the report does not explicitly claim they are completely off the table, according to Reuters.

The updated rules were signed by Premier Li Qiang on July 23 and will take effect on October 15.

Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.