In this blog post, Hitender Sharma, a member of the Bar of the District Court Mandi Town, Himachal Pradesh and currently pursuing a  Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, writes a note on the Semiconductor Integrated Circuit Layout Design (SICLD) Act, 2000.

Semiconductor Integrated Circuit Layout Design (SICLD) Act, 2000

Semiconductor Integrated Circuit Layout Design(SICLD) Act, 2000, has come into operation in India w.e.f. 4^th September 2000. As per the provisions of this Act, Registrar Semiconductor Integrated Circuits Layout-Design Registry under the  Ministry of Electronics and Information Technology (MeitY) has been appointed with its head office at Electronics Niketan, 6 CGO Complex, Lodi Road New Delhi-110003.The Registry maintains the Register of Layout-Designs and records in it the registered layout-designs with the names, addresses, and descriptions of the proprietor and such other matters related to the registered layout-designs.

Procedure for Registration of Layout design

Acceptance of Application

Any person who wants to register his layout-design is required to apply in writing to the Registrar Semiconductor Integrated Circuits Layout-Design Registry in the concerned territorial jurisdiction, as per the procedure prescribed in the SICLD Act, 2000.

The Registrar after scrutiny may refuse the application or may accept it absolutely or with amendments or modifications, as he may consider necessary.

Prohibition of registration of certain layout-designs

The SICLD Act, 2000 prohibits the registration of certain Layout designs. Layout design  which is not original is prohibited. Similarly, the registration of layout design which has been commercially exploited anywhere in India or a convention country has been prohibited. Layout design which is not inherently distinctive or which is not inherently capable of being distinguishable from any other registered layout-design also cannot be registered. The Act, however, provides that a layout-design which has been commercially exploited for not more than two years from the date on which an application for its registration has been filed either in India or a convention country shall be considered as not having been commercially exploited.

According to SICLD Act, 2000, layout-design is to be considered as original if it is the result of its creator’s intellectual efforts and is not commonly known to the creators of layout-designs and manufacturers of semiconductor integrated circuits at the time of its creation. The Act further provides that a layout-design consisting of such combination of elements and interconnections that are commonly known among creators of layout-designs and manufacturers of semiconductor integrated circuits shall be considered as original if such combination taken as a whole is the result of its creator’s intellectual efforts. Furthermore, this Act provides that where an original layout-design has been created in execution of a commission or a contract of employment, the right of registration to such layout-design shall belong, in the absence of any contractual provision to the contrary, to the person who commissioned the work or to the employer.

Withdrawal of acceptance

As per provisions of SICLD Act, 2000, the Registrar has the power to withdraw the acceptance of an application for registration (before registration of layout design) if it comes to his knowledge that the layout-design is prohibited of registration under the provisions of this Act.The Registrar may however, provide the opportunity of being heard to the applicant if he so desires, before the withdrawal of the acceptance.

Advertisement of application

According to SICLD Act, 2000, when an application for registration of a layout-design has been accepted, the Registrar is bound to advertise the accepted application within fourteen days after the date of acceptance. After the advertisement, the Registrar has the discretion to advertise the application again if the application has been corrected or is permitted to be amended under the Act and notify in the prescribed manner the correction or amendment made.

Opposition to registration

Any person under the SICLD Act, 2000 can oppose the proposed registration of layout design. After  an application for registration of a layout-design has been accepted,  any person can give notice in writing to the Registrar of his  opposition, within three months from the  date of advertisement or re-advertisement or within further period not exceeding one month in the aggregate, ( as may be allowed by the Registrar ) as per the procedure provided .

The Registrar is required to serve a copy of the notice to the applicant for registration. The applicant for registration may send a counter-statement of grounds on which he relies,  within two months of the receipt of notice of opposition and if he does not do so, he shall be deemed to have abandoned his application. The Registrar shall send a copy of the counter-statement of the grounds to the person giving notice of opposition. Both the applicant and the opponent may also submit any evidence relied upon to the Registrar if they so desire. If the applicant for registration or the opponent sending notice of opposition neither resides nor carries on business in India, the Registrar may require them to give security for the costs of proceedings before him and, in default may treat the opposition or application, as the case may be, as abandoned. The Registrar then decides the matter regarding the registration based on the material before him. The application for registration is treated as abandoned if it is not completed within 12 months due to the reason of default on the part of the applicant or within such extended time as may be allowed by the Registrar.

Registration

According to the  SICLD Act, 2000, Registrar shall register the layout-design in the register, if the application  has not been opposed within the prescribed time limit or the application has been opposed and the opposition has been decided for the applicant. The date of making the application is considered to be the date of registration of layout-design.  After registration, the Registrar issues certificate of registration sealed with the seal of the Semiconductor Integrated Circuits Layout-Design Registry. Registration gives exclusive rights to the creator of layout-design for 10 years. It enables him to exploit the creation commercially and in the case of infringement, get reliefs permitted under the Act. Once the layout design is registered, the original registration and all subsequent assignments and transmissions of layout-design are admissible as a  prima facie evidence of its validity. It cannot be held invalid on the ground that it was not a registerable layout design except upon evidence of originality and if such evidence was not submitted to the Registrar before. The Act confer all the powers of a civil court to the Registrar for the purposes of receiving evidence, administering oaths, enforcing the attendance of witnesses compelling the discovery and production of documents and issuing commissions for examination the of witnesses. It can also refer disputes to the Appellate Board.

Duration of registration

As per SICLD Act, 2000, the registration of a layout-design is done only for ten years w.e.f.  from the date of filing an application for registration or from the date of first commercial exploitation anywhere in India or any country, whichever is earlier.

Infringement of layout-design

Only a registered proprietor of the layout-design or a registered user can make use the layout design. What will constitute the infringement of layout design has been explained in detail in the SICLD Act, 2000. Under the Act any person who infringes the layout design shall be liable to pay the proprietor of the registered layout-design,   royalty to be determined by negotiation between registered proprietor and that person or by the Appellate Board. Such royalty is negotiated keeping in view the benefit that accrued to the person who has infringed the layout design as per the SICLD Act, 2000. The users/purchaser of infringed layout design is entitled to the immunity from infringement under this Act. Use of registered layout-design with the written consent of the registered proprietor of a registered layout-design also shall not constitute infringement. Also, where any person creates a layout design by application of independent intellect which is identical to a registered layout-design, then, such act  shall not constitute infringement of the registered layout-design.

Assignment and transmission of registered layout-design

The proprietor of a registered layout-design has powers under the Act to assign the layout-design for any consideration. The registered layout-design may be transferred with or without good will. However, the person who becomes entitled by assignment or transmission to a registered layout-design shall also have to register his title with the Registrar as per the procedure provided in the Act.

Use of registered layout-design by registered users

When registered layout-design is intended to be allowed to be used by some other person, then such person is required to be registered with the Registrar as registered user. Registered proprietor and the proposed registered user shall have to make a joint application in writing to the Registrar in a prescribed manner along with agreement in writing (or a authenticated copy ) , entered into between them with regard to use of  layout design showing   particulars of the relationship, existing or proposed, including the degree of control by the proprietor over the permitted use which this relationship will confer.  The particulars should also clarify   whether  the proposed registered user shall be sole registered user and mention the place and duration of permitted use. After getting the compliance of requirements under the Act, the Registrar registers the proposed registered user.

The Registrar has powers under the Act to cancel the registration as a registered user of layout design on some of the following grounds:

1. registered user has not  used the layout-design  in accordance with the agreement
2. the proprietor or the registered user misrepresented, or failed to disclose some material facts at the time of application which would have an adverse bearing on the registration of the  registered user

• the circumstances have changed since the date of registration in such a way that at the date of such application for cancellation they would not have justified registration of the registered user

1. that the registration ought not to have been effected having regard to right vested in the applicant by a contract in the performance of which he is interested
2. registration may be canceled by the Registrar of his motion or on the application in writing  by any person on the ground that any stipulation in the agreement between the registered proprietor and the registered user regarding the topographical dimensions of the layout design is either not being enforced or is not being complied with
3. registration may be canceled by the Registrar if the layout-design is no longer registered

 The Registrar is required to issue notice in respect of every application received for cancellation of registration of registered user to the registered proprietor and each registered user (not being the applicant) of the layout-design.  However, before canceling of registration, the registered proprietor shall be given a reasonable opportunity of being heard.

Thus, it would be seen that  the  SICLD Act, 2000  Act has been enacted to provide for the protection of Intellectual Property of semiconductor integrated circuits layout-designs and matters connected therewith or incidental thereto. It  defines layout-designs of integrated circuits which can be registered under the Act. It also defines the rights conferred by registration of layout-designs. It clarifies as to what constitute an infringement of layout design. It also provides for a penalty for infringement of layout designs.  It almost covers all aspects of protecting intellectual property rights of semiconductor integrated circuits layout-designs.

In this blog post, Shivali Wal, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses and analyzes permanent Lok Adalats in India.

In this blog post, Saumya Jotwani, a student pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the role of ADR in mergers and takeovers. 

In this blog post, Sayan Mukherjee, a student of the University of Calcutta, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, analyzes the importance of party autonomy in arbitration. 

In this blog post,  Suraj Pattanaik, Student of KIIT school of law and the Diploma in Entrepreneurship Administration and Business Laws by NUJS, discusses the validity of an online arbitration in India. 

In this blog post,  Surbhi Agarwal, a student pursuing an integrated B.B.A., LL.B from University of Petroleum & Energy Studies, Dehradun and a Diploma in Entrepreneurship Administration and Business Laws by NUJS, discusses the importance of public policy while deciding a foreign arbitral award. 

In this blog post, Varun Prakash, who is currently pursung his masters from GNLU and is also pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, writes about the key features of the SEBI (Underwriters) Regulations.

The SEBI (Underwriters), Regulations, were framed to deal with the issues concerning registration of the underwriters, capital norms and adequacy, and obligations and responsibilities of the underwriters. And hence the regulations mentioned above were legislated and notified on October 8, 1993. Now, before we examine the key features of underwriter’s regulations, we must have an insight into the background about the underwriters and why a need for the regulations arose.

Traditionally, the underwriting services were provided by the financial institutions, banks, members of the stock exchange and persons with adequate financial resources, the desired worth and experience. To do away with this abstract framework, Rule 3(1) of the Securities and Exchange Board of India (Underwriters) Rules, 1993 was introduced which laid down that no person can act as underwriter unless he holds a certificate granted by SEBI under the Securities and Exchanges Board of India (Underwriters) Regulations, 1993. As per Rule 3(2), an exemption in this regard was provided to the merchant banker or stock broker holding a valid certificate of registration under Section 12 of Securities and Exchange Board of India Act, 1992 to obtain a separate certificate for underwriting. Rule 4(b) of the Securities and Exchange Board of India (Underwriters), Rules, 1993 prescribes that the underwriter is required to enter into a valid agreement with the issuer entity which inter alia would define the allocation of duties and obligations between the underwriter and the issuer entity.

The need for adequate regulations was most felt for the reason that the capital markets were constantly evolving and hence the underwriting practices had to be in consonance with the market developments. Gone are the days when it was felt that an underwritten issue was a sign of weakness and hence had to be backed by an underwriting support. These days it is perceived as a sign of strength for the issue. There is an optimist trend behind the underwritten issue which reflects that the intermediaries after assessing the risks are still backing the issue.

If we look into the definition of underwriting as defined in Rule 2(g) of the regulations, it is defined as “an agreement with or without conditions to subscribe to the securities of a body corporate when the existing shareholders of such body corporate or the public do not subscribe to the securities offered to them”. The definition, however, has not been exhaustive as it does not answer the practical needs which may arise in due course of capital market transactions. The existing definition restricts underwriting to “subscription to securities.” It also restricts the underwriting to issues by a body corporate and excludes “offer for sale” from its definition. In practice, however, the underwriter may not always subscribe by himself. Third party transactions are a common resort. However, this third party arrangement has not been provided in the current definition. The current definition can be modeled on the lines of the Companies Act which recognizes that commission may be paid in consideration of subscribing / procuring subscription. The model underwriting agreement prescribed by SEBI also records underwriter’s agreement to underwrite/procure subscription. To cater to the transactions carried out in due course of business, the definition may be remodeled to read as “an agreement to subscribe to or procure subscription for securities, issued or offered for sale, remaining unsubscribed. Underwriting includes sub-underwriting.”

As mentioned earlier, the regulations were introduced to deal with the issues concerning capital adequacy as well. As per Regulation 7(1) of the SEBI regulations, the existing capital adequacy requires minimum net worth of Rs 20 lacs. This adequacy norm for the underwriter was prescribed on 8^th October 1993. However as the time progressed, this ceiling limit has ballooned substantially as may be seen from the fact that minimum net worth for a merchant banker has gone up from Rs 100 lacs to Rs 500 lacs, while for a broker on The Stock Exchange Mumbai (BSE) it is Rs 50 lacs and on National Stock Exchange (NSE) it is Rs 200 lacs. The increase in the minimum net worth demands a higher level of commitment on the part of the underwriter and is a positive step in the direction of making the capital market more conducive and a safer place, also a higher floor shall ensure committed and quality underwriters. Since underwriting is a financial gamble, it is obligatory on the underwriter to establish his worthiness and for him to have adequate finances to tackle the risk associated. It is here that the role of chartered accountant assumes importance as he may grant the underwriter a certificate certifying his net worth. The current worth shall be computed as per Regulation 7 which includes paid-up capital and free reserves. It cannot be denied that the liquidity of the underwriter at any point of time is more critical than net worth as on a particular date. The current definition does not give adequate importance to tangible and liquid assets of the underwriters. The auditors may be consulted for computing net tangible assets or obtaining the certificate of liquidity.

The regulations have prescribed a ceiling on the underwriting obligations. At present, the current limit of maximum 20 times net worth as per Regulation 15(2) of Regulations was believed to be high given the fact that net worth was not explicitly defined. As per the customary practice, underwriting commission is paid to the underwriters much after the issue closure and listing permissions are obtained. Surprisingly, there is no obligation on the issuer company to expedite the release of the commission to underwriters. The earliest obligation is while making an application to the regional stock exchange for the release of its 1% deposit after four months from the date of listing permission. The commission/brokerage cannot be paid before listing permission, where one of the objects to the issue is to meet issue expenses since the funds in the issue account cannot be utilized unless the securities are listed on all stock exchanges where the listing is sought.

The regulations prescribe rules regarding registrations and other compliances thereto. As mentioned earlier rule 3(1) prescribes that no person shall act as an underwriter unless he holds a certificate granted by SEBI under the Regulations. One of the criteria for considering an application for registration as an underwriter, as per Regulation 6 and Form A of the Regulations, is necessary infrastructure and experience in underwriting. However, adequate infrastructure and experience are not clearly defined. Neither do these criteria ensure commitment towards underwriting. It is believed that underwriting involves a financial risk where adequate net worth is critical rather than adequate infrastructure and experience. Most of the underwriters today are already registered with SEBI for some activity or the other. They may be merchant bankers, stock brokers, mutual funds, etc. They are already regulated by SEBI for their actions under different regulations. Seeking one more registration for the same entity, as an underwriter, adds to the administrative burden of SEBI. Such separate registration may be avoided. Furthermore, there have been instances of regulatory overlapping, especially in the cases of banks and financial institutions which makes the entire process quite cumbersome.

The regulations also prescribe a code of conduct to be followed by the underwriters. However, the existing code is quite generic and is on lines with Regulation 13 and Schedule 3.

The regulations may also provide for the protection of the interests of the underwriters providing that no material/adverse development including regulatory changes after executing the agreement which affects the marketability of the issue unless conveyed to the underwriter and accepted by him.

In this blog post, Yashika Joshi, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, writes about the choice of law in international arbitration agreements.

International arbitration is an increasingly important part of the complex cross-border transactions. It is a great advantage over litigation. Not only is litigation expensive and time-consuming, but it tends to destroy business relationships. Developing a dispute resolution agreement at the beginning of any transaction acknowledges the disputes that may arise in future. A proper agreement called the international arbitration agreement can be drafted stating all the clauses that the parties wish to decide in anticipation of future disputes. Effective and fair procedures can be drafted for dispute resolution when the relationship is unaffected by disputes, rather than if you wait until a dispute arises and disturbs the smooth relationship. There are various forms of dispute resolution, one of them being arbitration. When an agreement is put forth between cross-border parties, such an agreement is called international arbitration agreement.

Features of international arbitration:

Flexibility

In arbitration, parties have enormous flexibility to tailor the procedure to suit their particular contract and needs.

Final and binding

International arbitral awards are final and binding. Alternative dispute resolution procedures such as mediation and conciliation are consensual and will not result in a resolution of the dispute unless the parties agree on an outcome. Litigation produces a binding determination, but may be subject to appeal. International arbitration awards, on the other hand, are not subject to appeal.

Enforceability

In international litigation, parties must resolve their dispute in the national courts of one of the parties. If the unsuccessful party has no assets in that country, the successful party might need to enforce the judgment in another country. This will depend on the existence of enforcement provisions in that country and can be expensive, time-consuming and sometimes ineffective. In contrast, a simple procedure for enforcing arbitration awards internationally is provided by the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) which is in force in some 145 countries.

Neutrality

Neutrality of the forum is an important difference between international arbitration and international litigation. Although judges in litigation are expected to be impartial and are thus neutral in that sense, the reference to neutrality in the context of international disputes concerns the nationality of the decision maker.

In international litigation, the judge is likely to have the same nationality as one of the parties. The mere perception that the judge shares an important characteristic, nationality, with one of the parties may of itself be enough to cause concern to the other party. In international arbitration sole arbitrators will almost invariably be of a different nationality to the parties. Where the tribunal consists of three arbitrators the chairperson of the tribunal will be a person from a third party.

Further, in the international arena, the prospect of prosecuting or defending a case through a foreign court system, using unfamiliar laws and procedures before a judge of the same nationality as the opponent, is perceived as a major disadvantage. International arbitration allows a neutral, agreed or known procedure and a decision of a national neutral arbitrator.

Confidentiality

Both the procedure and outcome of an international arbitration are private and confidential. The court proceeding is usually public.

Speed and costs

Arbitral proceedings can be commenced, and the dispute resolved, faster than litigation if an appropriate procedure is used. In arbitration, in contrast to litigation, the parties have to pay the fees and expenses of the decision makers. However, arbitration is as cost efficient as the parties allow it to be. By designing and managing the procedure effectively, the cost can be managed. This allows and encourages the parties and the tribunal to focus on the key issues at an early stage, and can avoid the process taking precedence over the real issues in dispute, a common perception. Further, it is becoming increasingly common for the successful party to be awarded all or part of its costs of the arbitration, without having to resort to a cumbersome taxation process which is common in some states.

Arbitration in international context involves numerous difficulties, one of the most troublesome of which is the choice of substantive law to be applied to a given dispute. The substantive law of the arbitration may be specified in their original agreement. In general, parties to an agreement containing an arbitration clause have virtually complete autonomy in selecting the substantive governing law; almost any choice of substantive law by the parties is enforceable, so long as the arbitral award itself is enforceable. If there is the absence of express or implied choice by the parties, the governing law may be chosen by the arbitrator. Although parties frequently specify the law of a particular jurisdiction as the background law governing the merits of any dispute, they often supplement such a choice, or avoid it altogether, by referring to Lex mercatoria, customs of the trade, or general principles of law. Of these three substantive schemes, the last is especially vague because of its broad scope and lack of explication in the literature. Particularly because there is no delineated set of general principles, the results become unpredictable, and parties to the agreement have little ground on which to base their expectations. Moreover, because general principles of law are an especially popular choice of substantive law when sovereign governments are involved in the agreement, and because such agreements are likely to proliferate as developing nations make a long term economic development contract with companies from industrial nations, the application of this term will become an even more important issue.

When the parties clearly specify the substantive law of a particular jurisdiction, there are little chances for the application of general principles of law. Nor would there be much justification for the imposition of such principles, as the agreement by the parties on an explicit, developed national law exhibits a common understanding of or familiarity with such law, as well as intentions.

In many cases, the parties simply are unable to agree on a particular national or non-national law and are willing to put off any conflict over the applicable law until the need arises. Arbitrators in such situations have more discretion than in any other case, as they may apply any substantive law that their arbitral rules and other procedural provisions allow. Traditionally, scholars believed that the arbitrator was bound to apply the conflict-of-laws system where the arbitral tribunal had its seat, but recently this view has been challenged; instead, arbitral tribunals now frequently apply the conflict-of-laws system they view most appropriate.

Alternatively, arbitrators may apply a variety of other conflict-of-laws standards that have only an indirect foundation in national law. The least significant departure from a national conflict-of-laws system is the cumulative application of the conflict-of-laws systems connected with the dispute. A more substantial departure is the application of the conflict-of-laws system the arbitrator views as most appropriate and most responsive to international commerce. A third, still greater departure is the application of a basic conflict-of-laws rule derived from a comparison of competing systems. The last step before attaining a fully denationalized arbitral procedure is the application of a national substantive law without reference to any conflict-of-laws system.

Finally, in the absence of any choice of Substantive law by the parties, an arbitrator in some cases may apply a fully non-national standard such as Lex mercatoria, standard usages, or general principles of law. In general, two elements in a contract might permit the application of such a non-national standard. First, the existence of an arbitration clause in an international transaction, together with the international character of the dispute and the reasons that parties choose arbitration to resolve disputes, although not sufficient to ensure the exclusive use of a non-national law to govern the agreement, provide a basis for the use, albeit non-exclusive, of non-national law in arbitrating the dispute. Second, when considering disputes over economic development agreements, particularly those containing stabilization clauses that limit a sovereign’s capacity to alter the rights of the private party, arbitrators invoke a non-national standard to assess the validity of the stabilization clause to protect the private party’s rights.

When the arbitrator is free to choose and interpret any such non-national law, the arbitrator’s inquiry must begin with the discovery and derivation of the general principles of law. Because there is no clearly delineated set of general principles, it is uncertain at the time of contracting what general principles will govern disputes arising under the agreement. Herein lies the greatest -weakness of the use of the non-national law: it creates uncertainty in arbitral decision-making, with the ultimate result that parties to such agreements are unable to predict the legality of their actions before arbitration confidently. Here, too, lies the strongest argument for developing a coherent set of principles based on published arbitral awards. Delineating the non-national law of international arbitration would capture the advantages of neutrality and fairness that are the fundamental aim of non-national standards, and at the same time reduce the uncertainty that results from the process of deriving the general principles in each arbitration.

In this blog post, Abhay Singh, a student of Amity University, Rajasthan, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the advantages of mediation during divorce proceedings. 

In this blog post,  Mansumyer Singh, Advocate and a student pursuing a Diploma in Entrepreneurship Administration and Business Laws by NUJS, discusses the rectification of a domestic arbitral award concerning the contemporary scenario in India.