Should we update the law for semiconductor layout protection?

Abstract

Semiconductor industry is a significant part of global economy. WTO, the US and China have enacted legislations to protect semiconductor layout design work. This paper discusses these legislations and their differences. In addition, the author analyzes why these legislations are outdated and offer little use. The author suggests encouraging semiconductor manufactures to protect and even to police semiconductor layout design works submitted by their customers and infringers.

Introduction

Importance of semi-conductor

Semiconductor plays a significant role in our daily life¹. Semiconductor chips have embedded in almost all kinds of products, from microwave oven to traffic lights to computers. Some said human civilization could advance in unprecedented speed in the past few decades is mainly to the invention and adoption of semiconductor².

Over the next five years to 2008, IDC expects the worldwide semiconductor market to grow at a compound annual growth rate of 12.5 percent, rising from US$160 billion in revenue in 2003 to US$282 billion in 2008.

On a separate survey, Semiconductor Industry Association (SIA) reported worldwide sales of semiconductors rose to $16.28 billion in March 2004, from the $15.58 billion reported in February 2004 and a 32.3 percent increase from March of2003. SIA also reported global sales of semiconductors grew to $48.8 billion in the first quarter of 2004 compared to $36.4 billion in the first quarter of 2003.

Semiconductor industry growth will “create opportunities for new applications that will spawn new industries and it will ensure the continued vitality of many of the information technology industries. Semiconductors have had this unprecedented impact on the economy because the industry has provided its customers with exponential increases in performance per unit expenditure of resources for several decades.”³

This is why intellectual property of semiconductor is a key element in the intellectual property industry, legislation and lobbying. This paper focuses on how WTO, China and the US protect semiconductor layout design, which is a crucial processing of making semiconductor chips, their comparisons and where should the intellectual protection goes from here.

What is a layout?

A layout in semiconductor could have many meanings for semiconductor design engineers. It can refer to an electronic diagram, a process to connect elements in a chip, a manual process to place components on a chip or a film developed for lithography process.

In this paper, the WTO definition of semiconductor design work will be used. The US Copyright Law called semiconductor layout design as “mask work” because of historical reason.

Mask

The manufacturing of a mask ready for semiconductor chip manufacturing is a much sophisticated process comparing to the manufacturing process two decades ago. This is because the size of semiconductor transistors has shrunken significantly. The toleration and resolution of a mask becomes very strict.

Figure 1 shows, from a very high level, how a design schematic turns into a semiconductor chip. Once a silicon layout is created from a design schematic, a mask could be manufactured. The mask is a piece of film that has the silicon layout printed on it. Then a laser or electronic beam will project the silicon layout on a silicon wafer.

Figure 1. Semiconductor Lithography⁴

Infringement

It can be noticed that shall the design schematic, silicon schematic or the mask is not protected technically or legally, an infringer could easily⁵ reproduce silicon chips. The access of design schematics and silicon schematics usually could be controlled within a semiconductor design company. The mask, however, could be transferred among the semiconductor design company, mask manufacture and the silicon chip manufacturer. This is where an infringer could steal or infringe the intellectual property on the mask.

Semiconductor Layout Protection

Many countries have enacted legislation to protect semiconductor layout work. This is due to three reasons:

1. to comply with WTO membership requirement
2. to protect their domestic semiconductor layout design companies
3. to promote protect their domestic semiconductor manufacturing companies

The third point is probably the main driver why China, Japan, and Korea agree to the semiconductor layout work protect originated from the US.

WTO

In May 1989, World Intellectual Property Organization (WIPO) adopted a treaty on integrated circuits at Washington, D.C., USA. Some refer this treaty to “Washington Treaty”¹. The Washington Treaty did not enter into force until WTO included an agreement² (“WTO Agreement”) on Trade Related Intellectual Property (TRIPs) that cross-referenced the Washington Treaty.

The WTO Agreement requires all WTO members to establish legislations to protect semiconductor layout-design.

Layout Design

WTO Agreement defined the design to be “three-dimensional disposition, however expressed, of the elements, at least one of which is an active element, and of some or all of the interconnections of an integrated circuit, or such a three-dimensional disposition prepared for an integrated circuited intended for manufacture.”

Registration

There is no specific layout design registration requirement under WTO Agreement. A member of WTO can choose to have (i) no registration required, (ii) voluntary registration required or (iii) mandatory registration required.

If there is no registration required, a semiconductor layout design usually enjoys automatic protection when it is created. In a voluntary registration system, a designer can choose to register the layout design or not. The advantage of registration for the inventor is to establish a priority date. A designer must register the layout design in order to enjoy the protection in the mandatory registration system.

There are pros and cons when a member of WTO adopts one of these three registration schemes. A more detailed analysis will be discussed later.

Duration

The protection required under WTO Agreement is at least ten years. WTO Agreement stated that the ten year period is calculated from the first date of registration.

Infringement

WTO Agreement considered the follow two situations as an infringement to the holder of the semiconductor layout-design if authorization of the holder is not seek:

1. reproducing, whether by incorporation in an integrated circuit or otherwise, a protected layout-design in its entirety or any part thereof, except the act of reproducing any part that does not comply with the requirement of originality; and
2. importing, selling or otherwise distributing for commercial purpose, a protected layout design or an integrated circuit in which a protected layout design is incorporated.

WTO Agreement identified three exceptions that certain reproduction and selling are allowed.

1. for the purpose of evaluation, analysis, research or teaching
2. for the preparation of a second and original layout design
3. if a layout design is independently developed

The main purpose of these exceptions is to allow continual innovations on semiconductor layout design. This theme is similar to those exceptions in copyright, patent and industrial designs.

China

China enacted its own semiconductor layout design work legislation, Regulation on Integrated Circuit Layout Design Protection (“China Regulation”), in March 2001. The act became effective on October 1, 2001. Basically, the law follows closely with the WTO Agreement.

Layout Design of Integrated Circuit

The definition of integrated circuit is “semiconductor integrated circuit, that is, a product, in its intermediate or final form, which uses semiconductor material as its chip, in and/or on which two or more elements, at least one of which is an active element, and some or all of the interconnections are integrally formed and which is intended to perform a certain electronic function.”⁶ The layout design work is defined as a “three-dimensional disposition of the two or more elements, at least one of which is an active element, and some or all of the interconnections of an integrated circuit, or such a three-dimensional disposition prepared for the manufacture of an integrated circuit.”⁷

Priority Date

The China Regulation does not state explicitly how to determine priority date. In Article 12, it indicated that the term of protection under the China Regulation starts “from the date of filing an application for registration or from the date on which it was first commercially exploited anywhere in the world, whichever expires earlier”.

Registration

Layout design works must be registered with the intellectual property administration department of the State Council of China in order to enjoy the China Regulation protection. According to Article 8, any unregistered layout-design shall not be protected under the China Regulation.

Duration

The China Regulation offers a ten year protection to layout design work from the first date the protection starts.

Exceptions

China Regulations allows “reverse engineering” exception to foster innovation, include “reproductions for the purpose of evaluation, analysis, research, or teaching -- it is legal to create and sell an original layout design based on the aforementioned evaluation and analysis of the protected layout designs.”⁸

Another exception is in cases of national emergency, Chinese government could license the layout design work compulsorily⁹ with reasonable compensation to the layout design work owner.

Enforcement

China Regulation, like many other legislations and contracts in PRC, try to promote consultation between the owner of the semiconductor layout design and infringer first before escalating the disputes to the judiciary system. “The intellectual property administration department of the State Council (“SIPO”) may, upon the request of the parties, mediate in the amount of compensation for the damage caused by the infringement of the exclusive right of layout-design. If the mediation fails, the parties may bring a law suit before the people's court in accordance with the Civil Procedure Law of the People's Republic of China.”¹⁰

SIPO has the authority to issue order to stop the infringement, confiscate or destroy the infringing products. It also has the power to impose penalty but no power to award compensation.¹¹

USA

In the US legislation semiconductor layout design is called "mask work". The concept of mask work to layout design is the same to the semiconductor industry: especially the US does not restrict a mask work to its technical definition, such as a film with printed circuits on it as discussed earlier.

Mask

The definition of semiconductor under the US Copyright Law is a product¹²:

1. having two or more layers of metallic, insulating, or semiconductor material, deposited or otherwise placed on, or etched away or otherwise removed from, a piece of semiconductor material in accordance with a predetermined pattern; and
2. intended to perform electronic circuitry functions;

A "mask work" is a series of fixed or encoded related images:

1. having or representing the predetermined, three-dimensional pattern of metallic, insulating, or semiconductor material present or removed from the layers of a semiconductor chip product; and
2. in which series the relation of the images to one another is that each image has the pattern of the surface of one form of the semiconductor chip product;

Priority Date

Under US Copyright Law, Chapter 9, Article 902(al), a layout design enjoy protection on the date the layout design is (i) registered (the date of application, deposit of identify materials and fee submitted to the US Copyright Office) or (ii) first commercially exploited anywhere in the world, whichever occurs first.

Article 902 (a2) gives the President of the US Copyright Office the power to extend the protection to layout works from nations, which also have comparable priority scheme in their semiconductor layout work legislations.

Registration

The US adopts a mandatory system to protect layout design. It mandates designers to submit their layout design for registration in order to enjoy protection. Designers has a two-year window from the first date when the layout design work is first commercially exploited anywhere in the work.

Duration

The US Copyright Law offers a ten year protection to layout design work from the first date the protection commenced as described in Registration.

Exceptions

Although the owner of the layout design work enjoys exclusive rights in his work, there are exceptions to those rights in order to promote fair use and innovations. Exceptions to those rights, listed in Article 906, are:

1. reproduction of layout design work solely for the purpose of teaching, analyzing, or evaluating the concepts or techniques embodied in the layout design work or the circuitry, logic flow, or organization of components used in the layout design work; or
2. distribution of a product that incorporates the results created from (1) in an original layout design work which is made to be distributed

Enforcements

The US applies civil action principle to enforce owners' rights of semiconductor layout design works. Under Article 910, the owner is entitled to institute a civil action for infringement against the alleged infringer. Shall the infringement is from a product imported from aboard, the owner could obtain a court order to restrict the import. Violations of the court order could result seizure of the imports.

However, the court may ask the owner to post a surety bond in case the infringement is proven to be unjustified to compensate the loss suffered by the alleged defendant.

Comparison

Legislation

The WTO agreement and legislations enacted by China and the US are similar. There is not much difference.

One of the most controversial legislations is that China has the right to utilize a layout design work in national emergency.

Enforcement

The US supports a transparent and standardized court procedure that makes their judicial system accessible. In China, the judicial track has proven to be 'problematic' for a number of reasons: first, lack of professional training of Chinese judges and legal officials; second, official corruption; third, 'outside pressures', such as threats to judges; fourth, Chinese judges have no security of tenure; fifth, there are few penalties for non-enforcement of court rulings (refusing to obey a court order is not a crime in China and there is also a lack of infrastructure to enforce the rulings).

In the case of layout designs in China, all disputes are handled out of the central office in Beijing. This may be advantageous to foreign layout design rights holders because provincial authorities may be more concerned about the local economic effects of shutting down a counterfeit operation, while the central government is more likely to focus on the long term economic benefits that arise from IP protection.

Registration

Under Article 15 of the Chinese law, “In case the layout design applied for registration contains sensitive information of national security or of great importance to the country and needs to be held confidential, the information will be handled according to relevant regulations of the State.” This comes down to the question of how China would interpret the phrase “of great importance to the country”. China does recognize that the protection of IP is in its self interest. Chinese entrepreneurs will only be successful if they are able to earn a return on their research efforts, profits that will be greatly reduced if their products are copied.

Problem with the current mask-work protection

In the US, the numbers of semiconductor layout design works registered were 352, 508, and 558 in 2003, 2002, and 2001 respectively¹³. The number was 758 in 1999. This trend shows that the current semiconductor layout design work legislation is not respected by the semiconductor designers and their companies. The legislation must be amended to reflect the current status of semiconductor design.

The semiconductor industry dynamics has changed dramatically in the last two decades. There are three major driving forces shaping the semiconductor industry and making current legislations outdated and inadequate – (i) mark manufacturing, (ii) fabless design, and (iii) design methodology.

Mask Manufacturing

A piece of mask allows semiconductor circuits to be projected on semiconductor wafer. Projection through the mask using laser or electron beam allows mass production of semiconductor chips possible.

Currently, the state-of-art semiconductor fabrication is going to 90 nm width. 90nm is a major technical challenge because the width of a circuit on the chip is very close to the visible light wavelength. This makes mask fabrication process more expensive. Lasers and electron beams are used to reduce diffraction to ensure the projection on the semiconductor wafer is within the tolerance. This involves huge amount of capital investment in purchasing expensive equipment. This raises the entry barrier.

The number of qualified mask manufacturers has been decreasing. Those who are still staying in the industry are those having long term perspectives and more unwilling to help others in manufacturing masks for infringed semiconductor chips.

Fabless Design

In 1980s, the semiconductor fabrication industry was not as capital intensive as nowadays. The term “fabless design” was not even invented. Almost all semiconductor design companies took the vertical integration business model that they manufactured what they designed. There was almost no semiconductor fabrication only company. Companies like Intel, Texas Instruments, Motorola, and IBM all have their semiconductor fabrication facilities.

Figure 2. Texas Instrument Semiconductor Fabrication Sourcing¹⁴

The semiconductor industry business model has evolved dramatically. It changes from all-in-one vertical model to a multi-horizontal model. A semiconductor design company, especially those in low-volume and new comers, nowadays outsource mask production, fabrication, testing, packaging and backend designs to third parties, which are specialized in their own fields. Some may purchase intellectual property cores from other designers to shorten the development time and risk.

Semiconductor fabrication becomes so specialized that even the major traditional semiconductor companies are outsource a large portion of their manufacturing to semiconductor manufacturing companies, such as Taiwan Semiconductor Manufacturing Company Ltd. (TSMC) and Semiconductor Manufacturing International Corporation (SMIC). Texas Instruments and Motorola have announced to outsource some of their semiconductor factorization process to Chinese semiconductor fabrication companies¹⁵.

The semiconductor manufacturing companies has no incentives to assist semiconductor layout design infringers. Infringers are usually pundits who are small and have no capital. A semiconductor manufacturing company would have to risk its reputation when assisting an infringer. Once its reputation is ruined, it would be almost impossible to receive any manufacturing order any more.

Semiconductor manufacturing companies are offering practical protections that semiconductor layout design legislations have been trying to offer.

Design Methodology

The major force that makes current semiconductor layout design protection obsolete is probably the semiconductor design methodology. In the past, when the number of transistors inside a semiconductor chip was small, it was possible to layout the semiconductor chips manually. As the semiconductor industry has evolved to millions of transistors being manufactured in a semiconductor chip, semiconductor designers have been increasingly relying on abstract models to simplify designs and make the designs more manageable.

These abstract models, such as algorithms, synthesizing codes, schematics, netlist, and test vectors, can be created in many different stages of semiconductor design. These abstracts models are created electronically and be transferring electronically with a stroke on a keyboard.

When a pundit steals or copies an original abstract model from an owner, the pundit could eventually develop a semiconductor chip that is very different from the original abstract model. Without assistance from whistle bowler, it would be very difficult to collect evidence against the pundit.

There is still solution on this. Since state-of-art semiconductor chip designs must obey rigorous design rules and conditions suggested by semiconductor manufacturers, a semiconductor chip developed by a pundit must still display certain technical characteristics of the original design. Semiconductor manufacturers could act as a referee or a policeman to ensure their customers are playing fairly. The assumption is that a semiconductor manufacturer values its reputation as its the most important asset.

Conclusion

The importance of protecting intellectual property of semiconductor layout design work is obvious. The current WTO, the US and China legislations try to protect intellectual property by focusing on the layout design work. Unfortunately, this approach has not much value nowadays. Semiconductor designers, manufacturers and legislators should work together to update legislations to reflect the new trends in semiconductor industry.

[1] S. McIntosh – “If current annual semiconductor growth trends continue, it has been predicted that by the end of the first decade of the 21st century, electronics will be the biggest industry after agriculture.”, Conquering Semiconductor’s Economic Challenges by Increasing Capital Efficiency, Proc. 1997 IEEE Int. Symp. On Semiconductor Manufacturing, pp. 1-3, 1997.

[2] Mr. Kastenmeier in the The House Report on the Semiconductor Chip Protection Act of 1984 presented on May 15, 1984 illustrated the official view on the semiconductor industry – “Integrated circuits, better known as semiconductor chips, have revolutionized our entire way of life. Semiconductor chips are used to operate microwave ovens, cash registers, personal and business computers, TV sets, refrigerators, hi-fi equipment, automobile engine controls, automatic machine tools, robots, printing presses, cardiac monitors and pacemakers, X-ray imaging and scanning equipment, blood testing equipment, word processors and printers, telephones, and many other medical, consumer, business, and industrial products. New and better uses for chips are emerging regularly and society is rewarded with a corresponding enhancement of life. More than perhaps any other invention, the semiconductor chip has brought us into the information age.”

[3] Erich Bloch, Dr. Ralph Cavin, The Economy, Federal Research and The Semiconductor Industry, Semiconductor Industry Association, March 8, 2000

[4] Gerhard Schlueter, Klaus-Dieter Roeth, Carola Blaesing-Bangert, Michael Ferber, Next generation mask metrology tool,

[5] “Easily” is relative. Mask manufacturing for 0.6μm and for 90 nm semiconductor layout designs involves fundamentally different technologies. The more advanced a mask manufacturing process, the more difficult to infringe. More detailed analysis will be discussed in later sections.

[6] Regulations on the Protection of Layout-Designs of Integrated Circuits, Chapter I, Article 2 (1)

[7] Regulations on the Protection of Layout-Designs of Integrated Circuits, Chapter I, Article 2 (2)

[8] Daryl G. Hatano, China’ Semiconductor Chip Protection Law – A Work in Progress, December 4, 2003

[9] Regulations on the Protection of Layout-Designs of Integrated Circuits, Chapter I, Article 25

[10] Regulations on the Protection of Layout-Designs of Integrated Circuits, Chapter I, Article 31

[11] Grace C. Chen, Protecting Your Semiconductor Technology: An IPR Road Map, www.usembassy-china.org.cn/ipr

[12] Protection o/Semiconductor Chip Products, US Copyright Office

[13] Copyright Law Administration, Copyright Registration, US Copyright Office, 2001-2003

[14] K. Ritchie, Manufacturing and Process Technology, http://www.ti.com/corp/docs/investor/analyst/ritchie/ritchie.pdf

[15] http://www.motorola.com/mediacenter/news/detail/0,,3432_2843_23,00.html