The U. S. Court of Appeals for the Ninth Circuit upheld a jury verdict of infringement of the Semiconductor Chip Protection Act (SCPA) where the alleged infringer used the plaintiff's bitstream logic to program an application specific integrated circuit chip. Altera Corp. v. Clear Logic, Inc., Case Nos. 03-17323, 03-17334 (9th Cir. Sept. 15, 2005) (Hug, J.).
Altera manufactures programmable logic devices, or PLDs, which are chips that can be programmed to perform various functions. Clear Logic manufactures single-function chips, called application-specific integrated circuits (ASICs). Unlike PLDs, ASICs cannot be programmed by the customer. Clear Logic creates ASICs compatible with Altera chips by having Altera’s customers send it the bitstream file generated by use of the Altera chip programmed to a certain function. Clear Logic uses this bitstream to create an ASIC for the customer that mimics the operation of a programmed Altera chip.
Altera sued Clear Logic under the SCPA, the federal statute that protects mask works embodied in semiconductor chip products. Altera also asserted various state law claims. Altera asserted that Clear Logic copied Altera’s placement of groupings of transistors on the chip and claimed such copying was a violation under the SCPA. Clear Logic denied liability and asserted reverse engineering as an affirmative defense. The jury found in Altera’s favor on all claims, awarding approximately $36 million in damages and entering an injunction against Clear Logic. Clear Logic appealed.
On appeal, Clear Logic argued that Altera’s placement of groupings of transistors was a system or idea and was not entitled to protection under the SCPA. The Ninth Circuit agreed the SCPA grants the owner of a mask work the exclusive right to reproduce the mask work and does not protect ideas described or embodied in the mask work, but found that Altera’s layout design was not just a mere idea. The Court reasoned that the boundaries and organization of those groupings of transistors were more than conceptual and properly considered part of the mask work.
The Ninth Circuit also held Altera’s state law claims for intentional interference with contract and inducement of Altera’s customers to breach their software license agreements were not preempted by federal copyright law because the state law claims were based on use, not reproduction of the bitstream, i.e., a right not included within the Copyright Act’s protections.