Judgment on Infringement on Exclusive Right of Integrated Circuit Layout Design
——HiTrend Technology (Shanghai) Co., Ltd. v. Renergy Micro-Technologies (Shenzhen) Co., Ltd. and Shanghai Yachuang Texin Electronics Co., Ltd.
[Syllabus]
Due to limited space for innovation in layout design of integrated circuits, in the judgment on layout design infringement, stricter standards should be adopted to ascertain identicalness or substantial similarity between two layout designs.
The plaintiff shall bear the burden of proof for the layout design of the integrated circuit for which it claims protection. If the evidence provided and the explanations made by the plaintiff can prove that the layout design for which it claims protection is not a conventional design, it will be deemed that the plaintiff has satisfied the preliminary burden of proof. If the defendant claims that the relevant layout design is a conventional design, it should provide evidence to prove otherwise.
Any original part of the protected layout design shall be protected by law, regardless of its size or role in the overall layout design. The act of reproducing all or any original parts of the protected layout design constitutes infringement.
The law does not prohibit the act of conducting reverse engineering by photographing the layout design of other people's chips and analyzing the principle behind the circuit design. However, the law does not allow direct copying of other people's layout designs through reverse engineering.
[Case No.] Shanghai Higher People's Court (2014) HGMS (Z) ZZ No. 12
[Cause of Action] Dispute over infringement of integrated circuit layout design
[Collegial Panel Members] Ding Wenlian Ma Jianfeng Xu Zhuobin
[Keywords] Exclusive right of integrated circuits (IC) layout design, reproduction, substantial similarity, originality, reverse engineering
[Relevant Legal Provisions] Article 2, Clause 1 of Article 3, Article 4, Article 7, Article 23, Article 30 and Clause 1 of Article 33 of Regulations on Protection of Integrated Circuit Layout Design
[Basic Facts]
In the case of dispute over infringement of exclusive right of integrated circuit layout design among the appellant (plaintiff in the court of first instance, HiTrend Technology (Shanghai) Co., Ltd., referred to as HiTrend Company), the respondent (the defendant in the court of first instance, Renergy Micro-Technologies(Shenzhen) Co., Ltd., referred to as Renergy Company) and the defendant in the court of first instance (Shanghai Yachuang Texin Electronics Co., Ltd., referred to as Yachuang Company), HiTrend Company completed its IC layout design titled “ATT7021AU” on March 1st, 2008 and registered the layout design in the same year. The registered IC layout design drawing indicates 16 layers. It is noted in the “Brief Description on Structure, Technology and Functions of ATT7021AU IC Layout Design” included the registration documents that: 1. Satisfying the best of breed layout design requirements of function/performance-optimized area (single-phase energy measurement); 2. A chip layout design with Digital-analog hybrid high anti-interference/ high-electrostatic protection; 3. Applying circuit design technology and layout technology, such as rational layout of metal layer, diffusion layer and signal flow, to achieve sensitive signal noise shielding and isolation of big and small signal interference.
The review by the Patent Reexamination Board of the State Intellectual Property Office did not find any defect warranting revocation in the exclusive right of the layout design of HiTrend Company according to Regulations on the Protection of Layout Design of Integrated Circuits (the Regulations); hence, the revocation proposed by Renergy Company was terminated.
On January 20th, 2010, HiTrend Company purchased 100 pieces of integrated circuit chips at Yachuang Company’s business site, with notarization and the model number being RN8209G. Yachuang Company confirmed that it sold those chips and Renergy Company confirmed that RN8209 and RN8209G chips were manufactured and sold by them. The website of Renergy Company shows: As of September 2010, the sales volume of RN8209 exceeded 10 million pieces. Some VAT special invoices seized from Renergy Company indicated that a total of 1,120 RN8209G chips were sold, at a unit price ranging mostly between RMB4.80 and RMB5.50, with one invoice bearing the unit price as about RMB2; a total of 6,610 pieces of RN8209 chips were sold, with the unit price ranging between RMB4.20 and RMB4.80.
Beijing Zitu Intellectual Property Judicial Appraisal Center (referred to as Zitu Appraisal Center) was commissioned by Shanghai No. 1 Intermediate People's Court for carrying out the judicial appraisal. The appraisal conclusions are shown as follows: 1. RN8209 and RN8209G are the same as the Original Feature No. 5 claimed by the plaintiff (layout for connection of digital ground rack and analog ground rack); 2. RN8209 and RN8209G are the same with the layout of independent booster circuit in the second section of the Original Feature No. 7 claimed by the plaintiff (layout of the analog-to-digital conversion circuit) ; 3. Based on existing evidences, Item 1 and Item 2 afore-mentioned are ascertained to be original and exclusive, and not conventional.
In 2006, HiTrend Company signed labor contracts and confidentiality agreements with Chen Qiang and Zhao Cong. HiTrend Company hired Chen Qiang as the sales manager and Zhao Wei to engage in IC design work in the R&D department. Later on, Chen Qiang worked at Renergy Company as its General Manager and Zhao Wei also worked at Renergy Company. During the trial, Zhao Wei stated that he had seen the layout design of ATT7021AU IC chip of HiTrend Company while he was working at HiTrend Company; Renergy Company did not reverse engineer HiTrend Company’s ATT7021AU IC chip.
The plaintiff held that the acts of the two defendants infringed on the exclusive right of IC layout design, and thus filed a lawsuit with the court, requiring the two defendants to cease the infringement, make public apology, and compensate RMB15 million for its economic losses.
Holding
On December 24th, 2013, the court of first instance, Shanghai No. 1 Intermediate People's Court ruled that Renergy Company should immediately cease the infringement on the exclusive right of ATT7021AU (registration no. of BS.08500145.7) IC layout design held by HiTrend Company; Renergy Company should compensate RMB3.2 million to HiTrend Company for its economic losses and reasonable expenses for stopping the infringement; the remaining litigation requests of HiTrend Company were rejected. HiTrend Company did not accept the compensation award of the court of first instance, and Renergy Company refused to accept the decision of the court of first instance, and they both appealed to Shanghai Higher People's Court. Shanghai Higher People's Court rejected the appeals on September 23rd, 2014 and upheld the original judgment.
[Reasoning]
Shanghai Higher Intermediate People’s Court held that:
I. Whether the corresponding layout designs of RN8209 and RN8209G chips involved in the case are the same as the “layout for connection of digital ground rack and analog ground rack” and the “independent booster circuit layout” in ATT7021AU IC layout design of HiTrend Company
Due to limited space for innovation in layout design of integrated circuits, stricter standards should be adopted for the ascertainment of identicalness or substantial similarity of two layout designs in the judgment of layout design infringement. The main features of “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout” of RN8209 and RN8209G chips are corresponding and identical to the main features of “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout” of HiTrend Company. Although the wiring in the layout designs of the parties differed considering the M2 layer, the three-dimensional configuration of the combination between wiring and the interconnected components had not changed substantially. As for the difference claimed by Renergy Company with respect to connection position, rack width, arrangement of specific layout, size and shape, and the difference in size of MOS tube in M1, M2, M3 and PL layers, all of these are minor and insignificant, and do not substantially change the three-dimensional configuration of the combination between the wiring and the interconnected components. The difference in ST layer is caused by the parties using different processes. The above differences are not sufficient to change the judgment that the two layout designs is substantially similar to each other. Therefore, in this case, even in accordance with the more stringent judgement criteria, the corresponding layout designs of RN8209 and RN8209G chips of Renergy Company constitute a substantial similarity with the “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout” in the ATT7021AU IC layout design of HiTrend Company.
II. Is there originality in the “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout” in ATT7021AU IC layout design of HiTrend Company?
According to the provisions of Article 4 of the Regulations, originality of layout design means that the layout design is the result of the inventor's own intellectual work, and at the time of its creation, the layout design is not a standard design generally accepted by layout design inventors and integrated circuit manufacturers. Moreover, HiTrend Company should bear the burden of proof for the originality of the integrated circuit layout design for which it claims protection, but it is neither necessary nor possible for HiTrend Company to exhaust all relevant conventional layout designs to prove that its layout design is an unconventional design. As long as the evidence provided and the explanations made by HiTrend Company can prove that the layout design it claimed protection for is not a conventional design, it should be deemed that HiTrend Company has satisfied the preliminary burden of proof. Under this circumstance, Renergy Company claimed that the relevant layout design is a conventional design, and it will be able to overturn the non-conventional design claim of HiTrend Company, by providing an identical or substantially similar conventional layout design. In this case, to substantiate its claim that “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout” in ATT7021AU IC layout design are original, HiTrend Company has already provided the Registration Certificate for IC Layout Design, and the conclusion of the Review Board that there is no defect that warrants a revocation of the registration, as well as the appraisal conclusion and other evidences. These actions are sufficient to meet the requirements of preliminary burden of proof. Under this circumstance, the evidence provided by Renergy Company, or the circuit schematic diagram, or the layout design where the feature points differ from layout design of HiTrend Company, are insufficient to prove that “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout” in ATT7021AU IC layout design are conventional. Therefore, it can be ascertained that the “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout” of HiTrend Company have originality.
III. Whether the conducts of Renergy company in producing and selling RN8209 and RN8209G chips violate the Plaintiff 's exclusive rights to ATT7021AU IC layout design
According to Article 30 of the Regulations, reproduction of all or any of the original parts of the protected layout design constitutes an infringement. It can be seen that any original part of the protected layout design is protected by law, regardless of its size or role in the overall layout design. In this case, there are conventional designs readily available for “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout”. Renergy Company have the choices either to adopt these conventional designs, or to develop different layout designs with originality by themselves. However, Renergy Company did not take either of the above approaches, but instead directly copied the “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout” in ATT7021AU IC layout design of HiTrend Company, to manufacture and sell RN8209 and RN8209G chips. Such practice has already constituted infringement.
Chips that achieve the same or similar functions must have similarities in circuit work mechanisms, which do not meet the criteria of being protected with exclusive rights as stipulated in the Regulations. Therefore, the law does not prohibit the act of conducting reverse engineering by photographing the layout design of other people's chips and analyzing the circuit work mechanisms. However, the law does not allow the direct copying of other people's layout designs through reverse engineering, as it will massively reduce the time and costs invested by the imitators, thus severely weakening the competitive advantage of the businesses that created the original design, and ultimately lower the incentives for innovation in the entire integrated circuit industry. In this case, the motivation of Renergy Company partially copying the HiTrend Company’s ATT7021AU IC layout design was neither for personal purpose, nor for the purpose of evaluation, analysis, research, teaching, etc., but for developing a new IC for commercial exploitation. Renergy Company admitted that it did not obtain HiTrend Company’s ATT7021AU IC layout design through reverse engineering; instead it directly copied the original “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout” in HiTrend Company’s ATT7021AU IC layout design, to manufacture and sell RN8209 and RN8209G chips. Therefore, regardless of whether or not Renergy Company’s RN8209 and RN8209G chip layout design are original, Article 23 of the Regulations shall not apply to any of its practices.
In summary, Renergy Company admitted the fact that it accessed HighTrend Company’s ATT7021AU IC layout design. Without the permission of HiTrend Company, Renergy Company incorporated the original “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout” of ATT7021AU IC layout design into its RN8209 and RN8209G chips that it produced and sold. Such practices violated the exclusive right of HiTrend Company to ATT7021AU IC layout design and thus should bear the relevant civil liabilities.
IV. Whether the amount of compensation decided by the court of first instance is reasonable?
As Renergy Company refused to provide its financial information, and therefore the information on sale of 10 million pieces as displayed on its website could be used as the basis for calculating the amount of compensation in this case. In this case, neither party submitted evidence to prove the profit from the sales of the alleged infringing products; the appraisal report clarifies that the other original parts claimed by HiTrend Company are not identical or substantially similar with that of Renergy Company, so there is absence of evidence on the part of HiTrend Company to claim compensation on the full profits of Renergy Company on the ground that there is similarity in other modules. The “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout” don't play a core and important role in the alleged infringing chip, and the layout occupies a really small area. By directly copying HiTrend Company’s “layout for connection of digital ground rack and analog ground rack” and “independent booster circuit layout”, Renergy Company saved on investment in research and development, shortened chip development time, and accordingly, obtained a competitive advantage in the market. Therefore, the amount of compensation cannot be determined completely in line with the proportion of the two layouts of the whole chip. In summary, there is no inappropriateness in Shanghai No. 1 Intermediate People's Court's ruling to rule according to the actual situation of the case that Renergy Company shall compensate RMB3.2 million to HiTrend Company for its economic losses and reasonable expenses.
