SCPA Part II: How to Protect Your Mask Work Rights

Semiconductor chips have become a popular and widely used product in almost all electronics today. Considering how ubiquitous these products are, it might be surprising to learn that the owners of these chips are extended large amounts of protection over their work.

In late 1984 Congress passed the Semiconductor Chip Protection Act (“SCPA”, also known as 17 USC §§901-914). This Act provides protective mechanisms to innovators (“mask work owners” in the Act) of original semiconductor chip products. The Act is part of the United States Copyright Act, meaning protections afforded and mechanisms for enforcement bear some resemblance to those found in other areas of Copyright Law. To learn more about the protections provided and who can hold these protections, see Part I of this two-part series.

Starting with section 910, the Act turns to consider enforcement of legal rights granted under the Act, and civil remedies should an owner’s rights be breached. This section provides that the owner can bring a claim against any individual or State that violates his rights and protections afforded under the Act once his product has been registered by with Copyright Office.

The Act then goes on to cover possible remedies available to the court in the event a civil action is brought. These can include the granting of temporary restraining orders, preliminary injunctions and permanent injunctions. Should the court find the infringer liable to the owner, the court will award actual damages suffered by the owner as a result of the infringement. This will often include any profits the infringer made from using and selling the owner’s technology in the infringer’s goods. Unlike many other areas of US civil law, in the case of infringement under the SCPA, the court is allowed to grant full recovery costs, including attorney’s fees, to the winning party. This provides a strong incentive to make a claim only in very solid cases.

There is also a Statute of Limitations element found in the Act, providing that an infringement claim is barred unless the action is started within three years after the claim has accrued.

As mentioned above, a claim for infringement can be brought against both individuals and States. The Act removes any possible immunity protections normally offered to States and governments, providing that the Eleventh Amendment of the US Constitution will not protect these parties.

The remainder of the Act, sections 912, 913, and 914 outline that the Act trumps State laws and other laws related to semiconductors. It also breaks down what is known as the “transitional period” where individuals are prevented from bring their claim for a period of time to give the government and judiciary time to establish an appropriate system to deal with these claims.

For more information about the SCPA, contact Revision Legal’s Copyright attorneys through the form on this page or call 855-473-8474.

Civil Remedies Under the SCPA

Section 910 of the SCPA, 17 U.S.C. § 910, creates a civil cause of action for mask work owners whose rights are infringed. The remedies available mirror those in the Copyright Act and include injunctive relief, actual damages and lost profits, impoundment and disposition of infringing articles, and attorney’s fees in the court’s discretion. One significant departure from standard copyright law is the SCPA’s cap on damages: under 17 U.S.C. § 911(b), a prevailing plaintiff may be awarded actual damages or the infringer’s profits, but not both. And under § 911(c), if the court finds that neither actual damages nor profits can be established with reasonable certainty, it may award statutory damages in an amount not exceeding $250,000.

The statutory damages ceiling under the SCPA — $250,000 — is notably lower than the Copyright Act’s maximum of $150,000 per work for willful infringement. This reflects Congress’s judgment that semiconductor chip mask works are a specialized commercial technology that does not require the same deterrence structure as consumer-facing creative works. Nevertheless, $250,000 per infringed mask work can represent substantial exposure for a competing chip manufacturer who copies a rival’s layout.

The Innocent Purchaser Defense

The SCPA contains a specialized defense not found in general copyright law: the innocent purchaser defense under 17 U.S.C. § 907. An innocent purchaser is a person who purchases an infringing semiconductor chip product without knowledge that it embodies an unauthorized copy of a protected mask work, and who does not have reasonable grounds to believe it does so. The innocent purchaser defense limits, but does not eliminate, the infringer’s liability.

An innocent purchaser who resells or distributes infringing chips before receiving notice of the infringement is not liable for damages for those pre-notice transactions. However, once the purchaser receives notice — either from the mask work owner or from court process — continued distribution creates full liability. The practical effect is that a distributor who unknowingly sells infringing chips can limit its exposure by immediately ceasing distribution upon receiving a cease and desist letter. Companies that continue distribution after notice lose the innocent purchaser defense entirely and face the full damage remedies available under § 911.

The Reverse Engineering Exception

The SCPA’s most commercially significant limitation is the reverse engineering exception under 17 U.S.C. § 906. Unlike standard copyright law, the SCPA expressly permits the copying of a protected mask work for the purpose of teaching, analyzing, or evaluating the concepts or techniques embodied in the mask work. More importantly, § 906(b) permits a person to incorporate the results of reverse engineering analysis into an original semiconductor chip product. This is sometimes called the “paper tiger” provision, because it means that a competitor can study a protected chip layout and create a competing chip that incorporates insights from that study — as long as the resulting chip is itself an original work and not merely a copy.

The reverse engineering exception reflects a deliberate policy choice by Congress: semiconductor chip technology advances through iterative improvement, and a regime that prevented engineers from studying competitors’ chip layouts would impede innovation in ways that the SCPA was not intended to produce. The exception drew heavily from industry norms in chip design, where reverse engineering for compatibility purposes had been commonplace before the SCPA’s enactment.

Registration Requirements and the Registration Process

To obtain the full benefits of SCPA protection, including the right to sue for infringement and to recover statutory damages, a mask work owner must register the work with the U.S. Copyright Office within two years of its first commercial exploitation anywhere in the world. Registration is accomplished using Form MW, accompanied by a deposit of identifying material — typically a set of drawings, photographs, or electronic representations of each layer of the chip layout.

The Copyright Office examines the application for compliance with formal requirements but does not evaluate the originality of the mask work. Registration is not a guarantee of protection — that is determined by courts in infringement proceedings. But registration is a jurisdictional prerequisite to filing suit, and the registration date establishes the starting point for the statute of limitations: 17 U.S.C. § 910(b) provides a three-year limitations period from the date the plaintiff knew or had reason to know of the infringement.

Strategic Considerations for Semiconductor Companies

For companies that design original semiconductor chips, a comprehensive mask work protection strategy should include: (1) registering each significant chip design within two years of first commercial exploitation; (2) maintaining detailed design records that document originality and the design process; (3) auditing supply chain and distribution agreements for SCPA compliance provisions; and (4) conducting due diligence on acquired chip designs to ensure that any mask work rights were properly assigned or licensed.

For companies that use semiconductor chips designed by third parties, the relevant consideration is whether the supply or licensing agreement provides adequate protection against SCPA claims arising from the supplier’s mask works. A chip that incorporates unlicensed protected mask works exposes the entire product line to SCPA infringement claims, and the innocent purchaser defense has limits once notice is received.

If you design semiconductor chips and need to register your mask works, have received notice of a potential SCPA infringement claim, or are evaluating whether a competitor’s chip infringes your protected layout, Revision Legal’s intellectual property attorneys can assist. Contact us through the form on this page or call 855-473-8474.