The Semiconductor Industry Association (SIA) Outlines steps for Improved Intellectual Property Protection In China

Beijing seminar spotlights need for increased IP enforcement in China

SAN JOSE, Calif. – November 16, 2004 – Leaders of industry, government, and academia from the United States and China met at a seminar in Beijing today to examine ways to improve intellectual property (IP) protection in China, the Semiconductor Industry Association (SIA) reported today. The seminar focused on IP protection problems in the semiconductor industry where the SIA says IP enforcement is a major problem that injures both Chinese companies and foreign firms doing business in China.

“Intellectual property protection is a cornerstone of every technology-based industry,” said SIA President George Scalise. “China must significantly strengthen its IP protection regime in order to attract investment from both foreign and Chinese firms in research, manufacturing plants, and design centers in China. Without better IP protection, technology-based companies are likely to limit their investments in China.”

Scalise pointed out that effective IP protection is vitally important to the semiconductor industry. “The IP content of semiconductors accounts for virtually all of their value,” said Scalise. “Innovative designs and process technology provide nearly all of the added value in semiconductor devices. It is impossible to have a healthy and competitive semiconductor industry without effective IP protection.”

The seminar highlighted a number of steps China must take to have an effective IP protection regime, including elimination of high monetary thresholds that must be met before prosecutors will initiate criminal investigations, removal of unrealistic proof-of-sale requirements, and establishing criminal sanctions that can provide an effective deterrent to counterfeiting and other types of IP infringement.

“China has made significant progress in recent years by enacting rules and other measures to protect intellectual property,” said Scalise. “The problem is that enforcement of IP protection rules has not been effective. The seminar was an opportunity for U.S. and Chinese experts to identify steps that can be taken to address this issue, and we hope that it will serve as a catalyst for action.”

Scalise said that China could take an important step toward improving IP protection by joining the World Semiconductor Council (WSC) and adopting its proposal for semiconductor layout design protection. WSC members include the semiconductor industries of the US, Japan, Europe, Korea, and Taiwan. The WSC proposal includes layout design IP guidelines, greater responsibility by foundry companies to assure that suppliers of chip designs are the rightful owners, and fast-track proceedings to deal with counterfeiting.

“Effective IP protection is as important to technology customers as it is to technology suppliers,” Scalise noted. “When technology suppliers are assured protection of their trade secrets and other IP, they are more likely to work more closely with their customers to get the most effective use of semiconductor devices. Without effective IP protection, information sharing occurs at a much slower pace, if at all. The obvious conclusion is that better IP protection is in China’s own self-interest,” Scalise concluded.

The seminar was part of the 2004 Work Plan of the Information Industry Working Group of the U.S.-China Joint Commission on Commerce and Trade (JCCT), an effort led by the U.S. Department of Commerce and China’s Ministry of Commerce.

About the SIA
The SIA is the leading voice for the semiconductor industry and has represented U.S semiconductor companies since 1977 and SIA member companies comprise more than 85% of the U.S. semiconductor industry. Collectively, the chip industry employs a domestic workforce of 255,000 people. More information about the SIA can be found at www.sia-online.org.