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First Decision Under Mask Work Act Creates Conservative Test for Infringement

April 1989

The Semiconductor Chip Protection Act (the “Act”) became law in January 1985. The Act protects against the copying of “mask works”: the designs, created by engineers to represent the three dimensional pattern of a chip’s topography, which are embodied in the chip during the manufacturing process.

In November, 1988, the first suit for infringement under the Act was filed. Brooktree Corporation, a manufacturer of powerful color palette chips used in high performance graphics workstations, filed suit against Advanced Micro Devices (“AMD”), claiming that in the process of designing chips that would be plug-compatible with the Brooktree chips, AMD had illegally copied the mask works used in Brooktree’s chips.

This case brought into focus an important issue which was left unresolved when the Act was passed four years ago: what legal standard should a court apply in determining whether infringement of a mask work has occurred? Both the Copyright Act and the Mask Work Act are silent on the standard for judging infringement. Under the copyright laws the courts have held the standard to be “substantial similarity.” However, the Mask Work Act contains provisions permitting the reverse engineering of chips, suggesting to some legal observers that the Act is intended only to prohibit outright piracy of chip topography. This in turn suggests that the test for infringement should be substantial “identicality.” This test permits a chip manufacturer to prove reverse engineering by showing a “paper trail” indicating the study and analysis of another company’s chip.

In the Brooktree case, on Brooktree’s motion for a preliminary injunction to stop AMD from selling its color palette chips, the court issued the first judicial declaration on this issue. Adopting the test of the conservative commentators, the court held that if AMD could produce a paper trail suggesting it had reverse engineered Brooktree’s chips, the appropriate standard for determining infringement would be substantial “identicality” rather than substantial similarity. AMD was able to produce documentation purporting to show a reverse engineering effort, and the court found that AMD’s mask works were not substantially identical to Brooktree’s works and denied the request for a preliminary injunction.

TLB Comment: The Brooktree court endorsed an extremely conservative standard for proving infringement under the Mask Work Act, creating difficult obstacle for plaintiffs to overcome. Unless a future plaintiff is willing to undertake the risk and expense of persuading another judge to adopt a more liberal standard, the Brooktree decision may signal the end of enforcement of the Act in all but cases of outright piracy. Even then enforcement will be difficult, since it will be a rare chip manufacturer which will be unable to create the “paper trail” necessary to invoke the protective cloak of “substantial identicality.”

Postscript: Brooktree won the initial battle but it lost the war, when a jury ultimately ruled against it in this case and issued a $26 million verdict, which was upheld by a federal court of appeals.