Thursday 26 September 2019

Protecting integrated circuit layout designs in New Zealand

An integrated circuit is an electronic circuit in which all the components, such as transistors, diodes and resistors, have been assembled in a certain order on the surface of a thin semiconductor material, which is usually silicon. An integrated circuit typically contains a large number of active elements that are accommodated on a single chip.

An integrated circuit is an integral part of most electronic devices we use today.

Huge costs are involved in the design and development of the semiconductor layout of an integrated circuit. Lots of planning and creativity is involved in reducing the overall dimensions while simultaneously ensuring that the functionality is not compromised. It is generally not too difficult for copycats to replicate the layout designs, which, of course, is not desirable for the owners of the original designs. It is therefore important for the original owners to protect their layout designs.

What statutory protection is there for layout designs? 

In New Zealand, the statutory protection for layout designs of integrated circuits is governed by the Layout Designs Act 1994 (the Act) and the Layout Designs Amendment Act 1999. This legislation is similar to overseas legislation, particularly the Australian Circuit Layouts Act 1989, and is based on the principles of the Trade-Related Aspects of Intellectual Property Rights (TRIPS agreement), which is an international agreement between all the member nations of the World Trade Organisation.

The Act was introduced to enable New Zealand to conform to the TRIPS agreement. The protection provided by the Act is somewhat analogous to that provided by copyright legislation, and although the New Zealand copyright legislation may have provided an effective protection regime for layout designs of integrated circuits, it was decided to introduce a specific Layout Designs Act. Accordingly, the New Zealand Copyright Act includes a specific provision excluding layout designs from being protected.

A ‘layout design’ is defined in the Act as:

the 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; it includes such a three-dimensional disposition prepared for an integrated circuit intended for manufacture.

Similarly, an ‘integrated circuit’ is defined in the Act as:

a circuit, in its final or an intermediate form, in which the elements, at least 1 of which is an active element, and some or all of the interconnections are integrally formed in or on a piece of material and that is intended to perform an electronic function.

How to protect the layout design

Some countries require layout design to be registered for protection. However, in New Zealand, the layout design is an unregistered right and there is no formal system for registration. So, the protection is automatic in New Zealand.

To be eligible for the protection conferred by the Act, the design must be original. A layout design is not original in case of one or more of the following:

  • The making involved no intellectual effort by the maker.
  • It was commonplace at the time it was made.
  • If it involves a combination, and the combination as a whole involved no intellectual effort by the maker.

As well as being original, to be eligible, either the maker must have been an eligible person, or the design must have been first commercially exploited in New Zealand or in an eligible country. The definition of eligible person is provided in the Act as any of the following:

  • A New Zealand citizen or resident.
  • A body corporate incorporated in New Zealand.
  • A citizen or body corporate of an ‘eligible country’.

Eligible countries are those where both New Zealand and the other country are party to an international agreement or arrangement for the protection of layout designs, or those where reciprocal protection for layout design is available in both countries.

Who owns the intellectual property (IP) right?

A person who makes an eligible layout design is the first owner of the layout design rights in the eligible layout design.

Where a layout design is made by a person under terms of employment by another person under a contract of service or apprenticeship, the employer is the first owner.

Where a person commissions the making of a layout design for valuable consideration, the person who commissioned the work is the first owner.

The provisions relating to employment and commissioning above may be excluded or modified by agreement.

If none of the foregoing applies, the person who makes an eligible layout design is the first owner.

What rights does the owner of the layout design have?

The owner has the exclusive right to:

  • copy the layout design (directly or indirectly) in a material form,
  • make an integrated circuit in accordance with the layout design or copy of the layout design, and
  • commercially exploit the layout design in New Zealand.

How long does the IP protection last?

The protection can last for 10 years or 15 years, depending upon commercial exploitation. The term of protection of a layout design is:

  • 10 years after the year in which the layout design was first commercially exploited, provided the layout design was first commercially exploited within five years of the year in which the layout design was made; and
  • in any other case, at the end of 15 years after the year in which the layout design was made.

How can AJ Park help?

Our experienced team of IP experts can assist with any IP-related matter of layout designs including:

  • advising you on protecting the layout designs in New Zealand, Australia and other countries
  • registering the layout designs in countries, where required
  • assessing if your layout design can be, should be, or is already protected
  • advising on IP ownership
  • preparing licencing and other commercial agreements
  • enforcement of your layout design rights in New Zealand and overseas.