Malaysia’s semiconductor industry is moving up the value chain—from assembly and testing into front-end design, advanced packaging, and proprietary IP creation. To support this growth under the National Semiconductor Strategy (NSS), the Intellectual Property Corporation of Malaysia (MyIPO) and the Ministry of Domestic Trade and Cost of Living (KPDN) have proposed repealing the Layout-Designs of Integrated Circuits Act 2000 [Act 601] and replacing it with the new Layout-Design of Integrated Circuit Act 2027.
MyIPO launched a public consultation paper, and we were privileged to be invited to provide feedback on the paper. For IP managers, patent attorneys, and legal counsel in the semiconductor industry, this marks a fundamental shift from an automatic protection model to a formal registration system. Below are the 10 key changes in the proposed Act and what they mean for your IP strategy.
At a Glance: Proposed IC Layout Act Highlights
1. Say Goodbye to Automatic Rights: Registration is Now Essential
Under the 2000 Act, IC layout designs received automatic legal protection without formal filing. The proposed 2027 Act replaces this with a registration-based system. Unregistered layout designs will no longer be eligible for court enforcement or financial damages. Obtaining an official Registration Certificate from MyIPO will serve as prima facie evidence of ownership and legal validity.
2. Strict 2-Year Clock on Commercial Exploitation
If your company commercially launches a chip or circuit design anywhere in the world, a strict deadline applies. Under the proposed law, an application for IC layout registration must be filed with MyIPO within two years from the date of its first commercial exploitation globally. Missing this window will result in the loss of registrability.
3. Clear 10-Year Protection Period
The new Act establishes a protection term of 10 years from the filing date or the date of first commercial exploitation. This replaces the older framework's dual 10/15-year timeline, aligning Malaysia's standard with international standards under the TRIPS Agreement and the WIPO Washington Treaty.
4. Understanding Originality vs. "Commonplace" Layouts
To qualify for registration, a layout design must be original—meaning it is the result of the creator's own intellectual effort.
Excluded: Pure concepts, processes, methods of operation, or layout arrangements that are considered "commonplace" (standard or widely known across the industry at the time of creation).
Included: A combination of commonplace elements can be registered, provided the overall arrangement as a whole is original and reflects intellectual effort.
5. Clear Ownership Rules for Contractors and Employees
The proposed Act establishes clear default rules for layout ownership, subject to written agreements:
In-house creations: Layouts created by employees in the course of employment belong to the employer.
Commissioned work: Layouts created under a commission or contract belong to the commissioning party.
Independent creators: Layouts belong to the individual creator.
6. Mandatory Local Agents for Overseas Companies
If your enterprise does not reside or carry on business principally in Malaysia, you must appoint a registered Layout-Design Agent in Malaysia to handle filings and official interactions with MyIPO. To support client confidentiality, communications between rights holders and registered agents will carry legal privilege equivalent to solicitor-client privilege.
7. Layout Designs as Commercial Assets and Collateral
The new framework explicitly categorizes registered IC layout designs as personal or moveable property. They can be assigned, licensed, or pledged as security interest to secure corporate financing. However, any transfer of ownership, security interest, or licensing deal must be officially recorded in the MyIPO Register to be effective against third parties.
8. Safe Harbors for Reverse Engineering and Fair Use
To prevent IP protection from stifling technological progress, the proposed law outlines key non-infringing acts:
Evaluation & Research: Reproducing a layout solely for evaluation, analysis, research, or teaching is permitted.
Second-Generation Designs: Using research results to independently create a different original layout design is protected.
Independent Creation: If two companies independently design identical layouts, both independent creations are protected.
Parallel Imports: Commercial exploitation of genuine products originally sold anywhere in the world with the owner's consent (exhaustion of rights) does not constitute infringement.
9. Frameworks for Compulsory Licensing and Public Use
The draft law includes mechanisms for third-party compulsory licensing if a registered layout is not produced locally, not offered for sale, or sold at unreasonably high prices without valid reasons. Furthermore, the government retains the right to authorize public non-commercial use for national defense, security, or public interest, provided the rights holder receives adequate economic remuneration.
10. Digital Processing and Stronger Legal Remedies
MyIPO is introducing a modernized digital administration model. Preliminary formality examinations are targeted to take around 1 month, followed by 2 weeks for registration and official journal publication. Basic application fees are set at RM 600.
For legal enforcement, courts will have access to remedies including:
Interlocutory and permanent injunctions.
Compensatory damages or an account of profits.
Orders for delivery-up, forfeiture, or destruction of infringing chips and products.
Criminal enforcement powers, including search, seizure, and statutory fines.
Key Takeaways for IP Teams
Audit your current IC portfolio: Identify unreleased and recently commercialized silicon blocks, tape-outs, and topographies to prepare for registration filings once the law takes effect.
Review R&D contracts: Ensure employment contracts, vendor agreements, and joint-development agreements clearly define layout ownership.
Establish a 2-year tracking system: Implement strict monitoring of global commercial launch dates to ensure local filings meet the proposed two-year deadline.
What are your thoughts on the proposed IC Design Layout Act? Will mandatory registration affect your semiconductor roadmap?
Drop a comment below, or contact us if you need help auditing your IC layout portfolio.
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