China Revises Chip Design Protection Regulations, Adding Punitive Damages and Tighter Standards

China has revised its integrated-circuit layout-design protection regulations, effective October 15, 2026. Signed by Premier Li Qiang, the rules introduce punitive damages up to five times the calculated loss for serious infringement and establish a statutory damages cap of RMB 5 million. To support fabless chip designers, the overhaul allows layout designs to be pledged as loan collateral for the first time. Applicants must now submit explicit declarations of originality, while foreign entities without a local presence must use Chinese patent agencies.

IC layout regulation revision

• ▪The revised regulations comprise 54 articles across six chapters, aiming to protect exclusive rights, encourage innovation, and curb fraudulent filings
• ▪Chinese Premier Li Qiang signed revised regulations protecting integrated-circuit layout designs on July 23, which will take effect on October 15, 2026

Punitive damages enforcement

• ▪Courts may award up to RMB 5 million in statutory damages under Article 46 when losses, profits, and license fees are undeterminable
• ▪The revised regulations allow courts to impose punitive damages of one to five times the calculated base damages for serious, intentional infringement

Layout designs as collateral

• ▪The revised rules allow chip designers to jointly register a layout-design pledge with the China National Intellectual Property Administration to secure debt financing
• ▪China's chip-design industry recorded $90.99 billion in sales in 2024, representing an 11.9% increase from 2023

Registration originality standards

• ▪The China National Intellectual Property Administration is authorized to reject applications that obviously fail to meet the originality standard
• ▪Applicants must submit a declaration of originality identifying original design areas, key features, and electronic functions of the layout

Foreign semiconductor company implications

• ▪Foreign applicants without a permanent residence or business address in China must engage a Chinese patent agency to handle layout-design registration
• ▪The revised framework specifies that licensing agreements require filing with the China National Intellectual Property Administration within three months of taking effect