The Hindu Business Line : At the heart of the chip...

ALTERA Corporation vs Clear Logic, Inc is a case that the US Court of Appeals for the Ninth Circuit decided on September 15. The dispute was between competitors in the semiconductor industry, involving arguments on innovation and reverse engineering.

Altera is a manufacturer of PLDs or programmable logic devices. PLDs are chips that can be programmed, using software such as Altera's MAX+PLUS II, to perform various logic functions. Altera's customers are companies such as printer manufacturers, who used the PLDs in the devices.

What does the software do? It generates `a file called a bitstream', and helps to route the functions through the thousands of transistors that make up the PLD, ideally achieving the maximum functionality for the particular function desired, as the text of the court's verdict describes. "Because the PLD can be programmed and reprogrammed, the customer, working with Altera, can continue to work with the PLD and the software until the PLD meets the customer's exact needs. This process can take months."

Clear manufactured a different type of chip, the ASIC or Application-Specific Integrated Circuit. "These chips are designed to perform one specific function and cannot be programmed by the customer. They use less power, are smaller and, for a customer with a large order, are often cheaper," noted the court. ASIC is "a kind of integrated circuit, often referred to as `gate-array' or `standard-cell' products, developed and designed to satisfy one customer's specific application requirement, such as a pager," defines www.synopsys.com.

Bitstream model

A customer using PLD may wish to move over to ASIC once the chip's work is well defined. To work for the appropriate ASIC, the customer has again to start from `a high level of description'. The process may take a few months, and "there is a substantial risk that even after the initial attempt, the first chip will not work and more time and money will have to be invested in perfecting the product."

But there was a shortcut, which became Clear's business model. When customers approached it for the right chip, Clear asked them to send the bitstream file. This, then, became the basis for making the ASIC compatible with Altera's, using laser process, with "a turnaround time of just a few weeks".

Altera suffered a loss of millions of dollars in the hands of competition. So, one fine morning, Altera knocked the court's doors, challenging Clear's business model. It said that Clear infringed its rights under the Semiconductor Chip Protection Act of 1984 (SCPA) "by copying the layout design of its registered mask works for three families of chip products". Clear defended itself, by asserting "an affirmative defence of reverse engineering". Altera also alleged violation of its software licensing agreement by the customers.

At the district court level, the decision went in favour of Altera: "$30.6 million in damages, $5.4 million in prejudgment interest, and $394,791.68 in costs". Also, the court issued "a permanent injunction preventing Clear Logic's activities that were found to violate Altera's rights under the SCPA and to induce the breach of Altera's software licences with its customers". That brought Clear to the Circuit Court, contesting its liability and also taking shelter behind reverse engineering.

Chips and masks

Both companies agreed that chip design starts with a high level idea and moves toward the placement of individual transistors on a chip in several layers. However, there were basic differences in the way the two companies understood chip design. To one, it was physical; and to the other, it was conceptual. Thus, Altera presented the Circuit Judges Procter Hug, Jr, Warren J. Ferguson, and Pamela Ann Rymer its understanding of the chip design process. The layout is the physical arrangement of the components on the chip, said Altera. The architecture comprised "the components and the structures that are physically arranged within the chip," it added.

Clear didn't subscribe to the `physical' argument. Chip architecture is essentially a block diagram showing the basic arrangement of the chip, it said. "From this conceptual plan, the designer creates floor plans that show the arrangement of functional modules, focusing on how the designer will group major components. The floor plan and the architecture are both at high levels of abstraction," Clear explained.

"The designer next creates an electrical schematic, which is a two-dimensional abstract drawing. After this, a layout designer creates a three-dimensional layout design, which includes the specific placement of all of the elements of the chip and is used to make the glass masks that are printed onto the chip," using photolithography. "Generally, there are eight to twelve layers to the chip, each of which requires a separate mask. The series of all of the masks is the mask work," educates the judgment.

SCPA's definitions

SCPA defines `mask work' as a series of related images, however fixed or encoded — (A) having or representing the predetermined, three-dimensional pattern of metallic, insulating, or semiconductor material present or removed from the layers of a semiconductor chip product; and (B) in which series the relation of the images to one another is that each image has the pattern of the surface of one form of the semiconductor chip product. Mask work is also the final or intermediate form of any product— (A) having two or more layers of metallic, insulating, or semiconductor material, deposited or otherwise placed on, or etched away or otherwise removed from, a piece of semiconductor material in accordance with a predetermined pattern; and (B) intended to perform electronic circuitry functions.

The Act grants the owner of a mask work the exclusive rights to reproduce the mask work and to import or distribute a semiconductor chip product in which the mask work is embodied, as the court observed, citing 17 USC {frac14}905. However SCPA doesn't extend protection "to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work," the court pointed out.

More than a mere idea

When deciding against Clear, the district court was of the view that Altera's layout design is more than a mere idea. "Altera's layout is fixed in the final chip product: the placement of the components and their interconnection lines on the actual chip are created using masks which are the physical embodiment of the layout design chosen by Altera design engineers. It is the blueprint for the layout of the semiconductor chip." The Circuit Court concurred with this view. "Clear Logic argues that the placement of the groupings is a system or an idea and is not entitled to protection under the SCPA. We reject this contention; the boundaries and organisation of these groupings are more than conceptual. ... these groupings are physically present in the mask work."

The court reiterated its reasoning, with the help of an analogy: "Unlike the outline of an article or the chapters in a book, these groupings physically dictate where certain functions will occur on a chip and describe the interaction of parts of the chip. The placement of logic groupings in a mask work is not an abstract concept; it is embodied in the chip and affects the chip's performance and efficiency as well as the chip's timing."

Reverse engineering

Clear tried to take the case forward using the `reverse engineering' defence. Reverse engineering has long been an accepted practice in the semiconductor chip industry, noted the court, and explained the process for starters. "By photographing and chemically dissolving each layer of the chip, a second company can recreate the entire mask work for any chip. The process allows legitimate analysis of chips to spur innovation and improvement on existing designs, but also makes direct copying of chips feasible."

Law accommodates the practice. For instance, Section 906 of SCPA "protects the right of (1) a person to reproduce the mask work solely for the purpose of teaching, analysing, or evaluating the concepts or techniques embodied in the mask work or the circuitry, logic flow, or organisation of components used in the mask work; or (2) a person who performs the analysis or evaluation described in paragraph (1) to incorporate the results of such conduct in an original mask work which is made to be distributed."

This reverse engineering provision explicitly protects industry practices and encourages innovation, said the court, but hastened to add, citing a precedent: "The second mask work must not be `substantially identical to the original,' and as long as there is evidence of `substantial toil and investment' in creating the second mask work, rather than `mere plagiarism,' the second chip will not `infringe the original chip, even if the layout of the two chips is, in substantial part, similar.'"

The district court had paid attention to this point: "A firm that simply copied another firm's mask work would have no evidence of its own investment and labour, whereas a legitimate reverse engineering job would require a trail of paper work documenting the analysis of the original chip as well as the development of an independent design."

Quite appropriate, it was, therefore, that the Circuit Court complimented the district court and the Judge James Ware, for the thorough analysis of the reverse engineering angle, to make a complex subject understandable. The Circuit Court affirmed the district court's judgment and injunction. And that should restore faith in innovation.

Cases@TheHindu.co.in

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