Protecting a chip layout under the 2000 Act

Section 2(h) defines a layout-design as a layout of transistors and other circuitry elements, including the lead wires connecting them, expressed in any manner in a semiconductor integrated circuit. Section 2(r) defines the circuit as a product having transistors and other circuitry elements inseparably formed on a semiconductor material or an insulating material or inside the semiconductor material, designed to perform an electronic circuitry function. What is registered is the layout, so the application describes the layout.

Under section 8(1), any person claiming to be the creator of a layout-design who wants to register it applies in writing to the Registrar in the prescribed manner. Where an original layout-design was created under a commission or a contract of employment, section 7(3) gives the right of registration, in the absence of a contractual provision to the contrary, to the person who commissioned the work or to the employer. A design services agreement should therefore say who files, because the default favours the commissioning party.

Section 14 deals with joint creators. No registration of two or more persons claiming to be the creator is authorised, save where each has put in combined intellectual effort or their efforts cannot be told apart, in which case they may be registered as joint proprietors. Under section 8(2) the application goes to the Registry office within whose territorial limits the applicant's principal place of business in India lies (the first-named applicant's, for a joint application). An applicant who does not carry on business in India files at the office covering the address for service in India.

Section 7(1) lists four layout-designs that shall not be registered: one that is not original, one commercially exploited anywhere in India or in a convention country, one that is not inherently distinctive, and one that is not inherently capable of being distinguishable from any other registered layout-design. The second bar is softened by the proviso discussed in the next section.

Section 7(2) tests originality. A layout-design is original if it is the result of its creator's own intellectual efforts and is not commonly known to creators of layout-designs and manufacturers of semiconductor integrated circuits at the time of its creation. The proviso then covers the common case of a layout assembled from familiar blocks. A combination of elements and interconnections that are commonly known is still original if the combination taken as a whole is the result of the creator's own intellectual efforts. The creator's design notes, showing what was chosen and why, are the evidence this test calls for.

Section 19 governs how the register is treated once the layout is registered. Under section 19(1), the original registration and all later assignments and transmissions are prima facie evidence of validity in legal proceedings, including an application under section 30. Section 19(2) says a registered layout-design shall not be held invalid on the ground that it was not registerable under section 7 except upon evidence of originality and that such evidence was not submitted to the Registrar before registration. That clause is hard to parse as printed, so a pleading that relies on it should quote it in full. Section 41(1)(a) separately lets any person apply to the Appellate Board to cancel a registration on the ground that the layout-design is prohibited under section 7.

Section 2(e) defines commercial exploitation as to sell, lease, offer or exhibit for sale or otherwise distribute the semiconductor integrated circuit for any commercial purpose. Offering or exhibiting a chip for sale therefore counts, even before any unit is delivered. The proviso to section 7(1) then says that a layout-design commercially exploited for not more than two years from the date on which an application for its registration has been filed, either in India or in a convention country, is treated as not having been commercially exploited. A layout sold for longer than that cannot be registered under section 7(1)(b).

Section 50 deals with the foreign side of the question. If a question arises in proceedings before the Registrar whether a layout-design has been commercially exploited for more than two years anywhere in a convention country, the Registrar refers it to the Appellate Board, and the Board's decision is final. A convention country, under section 2(f), is a country notified as such under section 93. Section 7(1)(b) bars exploitation in India or in a convention country only, so sales in a country that is not notified do not trigger that bar, but section 15 counts first commercial exploitation in any country, so those sales still start the ten years.

The two-year grace period and the ten-year term are separate clocks. Under section 13(1), a layout-design is registered as of the date of the making of the application, and that date is deemed the date of registration. Under section 15, the ten years run from filing or from first commercial exploitation, whichever is earlier. A layout first sold well before filing therefore has a shorter remaining term. Where a registration is cancelled in whole or in part, section 41(3) makes the cancellation effective from the date from which the ten years in section 15 is countable.

Under section 8(3) the Registrar may refuse the application, or accept it absolutely or subject to amendments or modifications. Section 12 lets the Registrar, on such terms as he thinks just, permit correction of an error in the application or an amendment of it at any time, before or after acceptance, and the same for a notice of opposition or counter-statement. Section 9 lets the Registrar, after acceptance but before registration, withdraw the acceptance if satisfied that the layout-design is prohibited under section 7, after hearing the applicant if he so desires.

Section 10(1) requires the Registrar to advertise an accepted application in the prescribed manner within fourteen days after the date of acceptance. Section 11(1) lets any person give written notice of opposition within three months from the date of advertisement or re-advertisement, with a further period not exceeding one month in the aggregate if the Registrar allows it on a prescribed application and fee. The applicant must send a counter-statement within two months from receiving the notice of opposition, and if he does not, section 11(2) deems the application abandoned. The Registrar hears the parties and decides after taking into account any ground of objection, whether relied upon by the opponent or not. Under section 11(6), a party who neither resides nor carries on business in India may be required to give security for costs, and default allows the Registrar to treat the opposition or the application as abandoned.

Under section 13(1), once the application has not been opposed and the time for opposition has expired, or the opposition has been decided in the applicant's favour, the Registrar registers the layout-design, subject to section 9. Section 13(2) provides for a certificate sealed with the seal of the Registry. Under section 13(3), if registration is not completed within twelve months from the date of the application because of the applicant's default, the Registrar may, after notice, treat the application as abandoned unless it is completed within the time the notice specifies. Section 6 provides for the Register of Layout-Designs, kept at the head office of the Registry. Fees and forms are prescribed by rules made under the Act, so check the current rules before filing.

File before the first commercial sale if you can, because section 7(1)(b) bars a layout-design already commercially exploited, and the two-year proviso is the only grace. Count two clocks: the two years of permitted prior exploitation that the proviso allows before filing, and the ten years under section 15 measured from filing or from first commercial exploitation, whichever is earlier. After advertisement, a rival has three months to oppose under section 11(1), extendable by one month, and the applicant has two months to send the counter-statement under section 11(2) or the application is deemed abandoned.

Section 17 says that registration, if valid, gives the registered proprietor the exclusive right to the use of the layout-design and to obtain relief for infringement in the manner the Act provides. Its Explanation says the rights are available whether or not the layout-design is incorporated in an article. Section 16, by contrast, bars any proceeding for an unregistered layout-design, so a proprietor with only a first sale and no certificate has no infringement action under this Act.

Section 18(1) defines infringement by a person who is neither the registered proprietor nor a registered user. Clause (a) covers reproducing a registered layout-design in its entirety or any part, whether by incorporating it in a semiconductor integrated circuit or otherwise, except a part that is not original within section 7(2). Clause (b) covers importing, selling or otherwise distributing for commercial purposes the layout-design, a circuit incorporating it, or an article incorporating such a circuit, where the person is not entitled to use it under the Act.

Under section 18(2), reproduction for the limited purposes of scientific evaluation, analysis, research or teaching is not infringement. Under section 18(3), a person who creates another original layout-design on the basis of such evaluation or analysis may incorporate and deal in it, though section 18(4) treats the original proprietor's use of that new layout-design as infringement after its date of registration. Under section 18(8), a layout-design created by application of independent intellect that happens to be identical to a registered one is not infringing.

Section 18(5) protects the innocent dealer: a person who had no knowledge, and no reasonable ground to know, that a circuit or article incorporated a registered layout-design does not infringe. After notice, that person may continue for the stock on hand or ordered before the notice, but must pay the proprietor a royalty fixed by negotiation or by the Appellate Board. Section 18(6) gives a later purchaser the same immunity, and section 18(7) excludes acts done with the proprietor's written consent or on goods put on the market by or with the proprietor's consent. Section 40 lets the registered proprietor apply to the Board to determine that royalty.

The criminal route is the one the Act describes most fully. Section 56 punishes a person who knowingly and wilfully contravenes section 18 with imprisonment up to three years, or a fine of not less than fifty thousand rupees and up to ten lakh rupees, or both. Section 57 punishes a false representation that an unregistered layout-design is registered, with imprisonment up to six months, or a fine up to fifty thousand rupees, or both. Under section 64(a), no court takes cognizance of either except on a written complaint by the registered proprietor or the registered user, and section 28 lets a registered user complain in his own name, subject to any agreement. Under section 62, where the accused pleads that the registration is invalid and the court finds the plea prima facie tenable, the case is adjourned for three months so that he can apply to the Appellate Board for rectification, and proceeds as if the registration were valid if he does not.

The Board route handles the register. Section 32 provides that the Central Government shall, by notification in the Official Gazette, establish the Layout-Design Appellate Board. Under section 30, a person aggrieved by an entry, or the absence of one, may apply for rectification to the Board or to the Registrar. Section 41 allows an application to the Board to cancel a registration on a section 7 ground, and if the ground is made out for only part of the layout-design, the Board cancels only that part and the remainder stays registered if it is capable of performing as a semiconductor integrated circuit. Section 42 allows an appeal against an order of the Registrar to the Board within three months from the date the order is communicated, with late admission on sufficient cause. Section 44 bars any other court or authority from exercising jurisdiction over matters under section 40(1) or section 42(1), and section 53 takes an appeal from a decision of the Board to the High Court within whose jurisdiction the head office or branch office of the Registry concerned is situated. Other intellectual property Acts had their Appellate Board omitted by the Tribunals Reforms Act, 2021 (33 of 2021) from 4-4-2021, and this Act as printed carries no such amendment. Section 32 requires the Central Government to establish the Board by notification, so confirm the Board's current position before choosing a forum under sections 30, 41, 42 and 53.

Section 16 speaks of proceedings to prevent infringement or recover damages, and section 40(4) makes a Board order on royalty executable by a civil court as a decree. The Act's provisions on rights, infringement and penalties do not name the civil court that hears an infringement suit, so confirm the forum against the rules and the current court structure before drafting a plaint. Section 2(1)(c)(xvii) of the Commercial Courts Act, 2015 lists intellectual property rights relating to semiconductor integrated circuits among commercial disputes, so a suit of specified value goes to the Commercial Court or the Commercial Division.

Under section 21 a registered layout-design is assignable and transmissible with or without the goodwill of the business, and under section 20 the person entered in the register as proprietor can assign it and give receipts. Where the assignment is made otherwise than with the goodwill of the business, section 22 says it does not take effect unless the assignee applies within six months, extendable by the Registrar by not more than three months in the aggregate, for directions on advertising the assignment, and then advertises as directed. Under section 23(1) the new owner applies to register title, and under section 23(2) an unregistered document is not admitted in evidence of title unless the Registrar, Board or court directs otherwise.

A licensee is dealt with through the registered user provisions. Section 25 requires the registered proprietor and the proposed user to apply jointly, with the written agreement and an affidavit giving particulars of the relationship, the degree of control the proprietor keeps, any restrictions on place of use and whether the use is for a period. Section 29 says a registered user gets no assignable or transmissible right, and section 26 lists the grounds on which the Registrar cancels a registered user, including use outside the agreement.

Section 51 is the Act's route for use without the proprietor's agreement. On an application by or on behalf of the Government, the Appellate Board may permit use by the Government or an authorised person, subject to conditions it considers fit, such as non-commercial public purposes, national emergency or extreme public urgency, a limited duration, non-assignability, use to the extent needed to remedy an anti-competitive practice, or supply predominantly for the Indian market. Unless the Government certifies that the use is required by national emergency, other circumstances of extreme urgency or public non-commercial use, the Board must first be satisfied that the authorised person tried and failed to agree reasonable commercial terms within the prescribed period. Section 51(2) has the Board fix the royalty and section 51(3) lets it cancel or amend the permission on the proprietor's application.

A layout is drawn, so the boundary with copyright and designs comes up. Section 15(1) of the Copyright Act, 1957 says copyright does not subsist in a design registered under the Designs Act, 2000. Section 15(2) says copyright in a design capable of registration but not registered ceases once an article to which the design has been applied has been reproduced more than fifty times by an industrial process. Section 2(d) of the Designs Act defines a design as only features of shape, configuration, pattern, ornament or composition of lines or colours applied to an article, which in the finished article appeal to and are judged solely by the eye, and excludes any mode or principle of construction.

A layout's value lies in its electrical arrangement, which is not judged by the eye, so the Designs Act definition fits it poorly. That is a reading of the two definitions. The Layout-Design Act gives its exclusive right only on registration, under section 17, and section 16 closes the door on an unregistered layout-design. A copyright claim for an unregistered layout would meet the objection described in the Cryogas card below.