China steps up protection for chip designs in revised regulations

China has updated regulations safeguarding integrated-circuit layout designs, intensifying registration requirements and imposing financial penalties for severe violations. Premier Li Qiang approved the amendments on July 23, with the modifications entering effect on October 15, according to the Justice Ministry and China National Intellectual Property Administration.

These rules pertain to the precise layouts dictating component arrangement within a chip, which often embody considerable engineering effort and are crucial to semiconductor development, even for entities not engaged in chip manufacturing.

The modifications do not constitute export controls but underscore Beijing's heightened strategic importance placed on technology created by Chinese firms. This follows the industry's intensified focus on developing domestic substitutes due to successive US restrictions on access to advanced semiconductor-design software and manufacturing equipment.

Chinese authorities have also contemplated broader measures to prevent strategically important domestic technologies from being exported to or acquired by foreign entities, as reported by the Financial Times last month. The recent revisions aim to deter unauthorized replication of such work or acquisition of rights over designs developed by others.

Applicants must demonstrate that filings represent genuine creative endeavors, furnish declarations of originality, and distinctly identify original components in materials submitted to authorities. Regulators will be able to reject applications that clearly lack these qualifications. The changes also establish a clearer basis for contesting registrations that should not have been granted.

Infringement remedies are reinforced, allowing damages to be calculated based on losses suffered by rights holders or gains by infringers, with punitive damages permissible in serious cases. The rules also elucidate how layout-design rights can be licensed, transferred, or utilized as collateral, and require organizations leading their creation to provide eligible personnel with reasonable rewards and remuneration.