The Supreme People's Court pointed out in an appeal case of infringement of exclusive rights to an integrated circuit layout-design that the protection of civil rights shall presuppose their legitimacy and legality, and when a party asserts that their civil rights should be protected and an opposing party raises challenges with supporting evidence, the People's Court has the authority to conduct an appropriate review and handling of this matter. If the layout-design involved in the case has serious rights defects and cannot be protected in this case, the rights holder's claims are unsupported.
This article involves a dispute over infringement of exclusive rights to an integrated circuit layout-design. The rights holder of the integrated circuit layout-design involved in the case (hereinafter referred to as “the subject layout-design”) is Company A, and the application date is October 24, 2017. Company A filed a lawsuit with the Court of First Instance, alleging that Company B infringed its exclusive rights to the subject layout-design by commercial exploitation of reproduction and sale.
The Court of First Instance dismissed Company A's claim. The Court of First Instance held: To determine whether an alleged act constitutes infringement, the scope of protection of the subject layout-design must first be determined. The protected layout-design should meet the requirement that the layout-design is a three-dimensional disposition of components and circuits, at least one of which shall be an active component. The layout-design drawing submitted by Company A for registration does not contain any active components, thus failing the fundamental definition for layout-design. Although the subject layout-design has been granted exclusive rights which remain valid, it is not eligible to be the subject of layout-design exclusive rights and cannot be protected by layout-design exclusive rights because it does not fall under three-dimensional disposition of components and circuits for performing an electronic function.
Company A, being dissatisfied with the ruling, lodged an appeal.
The Supreme People's Court dismissed the appeal and upheld the original judgment. It was found in the Second Instance: Company C issued the “Statement on the Entrusted Manufacturing Unit for Chips” to the Court of First Instance, which recorded that Company C of Suzhou delivered a total of 25 batches of chip wafers of the subject layout-design to Company A from March 24, 2014 to October 13, 2015. Even excluding the batches required for the tape-out phase, the remaining batches, calculated at the industry standard of 25 wafers per run, with 7,000 chips per wafer, would yield approximately 3 million chips in total.
The Supreme People's Court held that the 12-layer layout-design drawing submitted by Company A, while omitting active components, depicted the three-dimensional disposition relationship between active components and circuits, so that the interface with active components is clarified, and with foundry standard cells, the subject layout-design has been able to accomplish the corresponding circuit functionality; therefore, it can be considered that the subject layout-design falls under the three-dimensional disposition that has two or more components, at least one of which shall be the active component, and has part or all of interconnected circuits.
Article 17 of the Layout-design Regulations stipulates: "The intellectual property administrative authority under the State Council shall not register any layout-design in respect of which no application for the registration is filed therewith within two years from the date when it is first put into commercial exploitation anywhere in the world." In this case, Company A continuously entrusted Company C to manufacture chips containing the subject layout-design from March 24, 2014 to October 13, 2015, and from the perspective of order frequency and chip quantities, the chip volume far exceeded what was needed for test tape-outs, therefore, it should be determined that the subject layout-design was put into commercial exploitation before October 24, 2015. In view of the fact that the application for registration of the subject layout-design on October 24, 2017 occurred more than two years after its first commercial exploitation, Company A’s registered layout-design, due to serious flaws in its rights, cannot be protected in this case.
The Supreme People's Court held that the protection of civil rights naturally shall presuppose their legitimacy and legality, when a party asserts that their civil rights should be protected and an opposing party raises challenges with supporting evidence, the People's Court has the authority to conduct an appropriate review and handling of this matter. Failure by the People's Court to adequately review challenges to rights raised by a party in infringement litigation could lead to manifest injustice in case handling.
Through the above judgment, the Supreme People's Court points out that the People's Court has the authority to conduct an appropriate review and handling of challenges to rights raised by the party in infringement litigation, and this offers significant guidance in further refining the judicial reasoning for adjudicating integrated circuit layout-design infringement cases and is also conducive to the healthy development of the chip industry.
(2022) Zui Gao Fa Zhi Min Zhong No. 2133
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