Avant!, Cadence granted split decision by court

Electronic News, March 24, 1997 by Judy Erkanat

San Jose, Calif.--Claims of victory came from both camps last week over the U.S. District Court's latest ruling in the Avant!/Cadence Design Systems legal fracas. The court, in fact, partly granted and partly denied Cadence's motion for a preliminary injunction.

The court found a preliminary injunction would harm Avant!, which did not seem to be sharing allegedly protected Cadence source code with third parties. Since IC place-and-route products are more than 60 percent of Avant!'s business, the court decided an injunction at this time would seriously jeopardize Avant!'s survival.

The court said there was a likelihood of success in Cadence's case of copyright infringement and misappropriation of trade secrets because the evidence established Avant! copied some of Cadence's framework source code. But, in spite of current evidence leading the court to conclude Cadence will prevail over the inadequacy of Avant!'s "clean-room" procedures, it found merit in Avant!'s claim it independently wrote similar portions of the code in question.

"We are delighted and pleased at the court's decision," said Vic Kulkarni, Avant!'s VP of marketing and corporate product management. "This is what everyone here was waiting for. We feel like a big weight has been lifted off our backs. There are still a few open issues, but they are irrelevant to our customers. Now we can continue to sell and support our current and older products. It is business as usual at Avant!"

Joseph Costello, president and CEO of Cadence, agreed. "It is business as usual at Avant!, with it distorting the truth and misrepresenting the facts as usual," he said. "We knew that preliminary injunctions in civil cases are very rarely granted. Most preliminary injunction motions are dismissed, but as the plaintiff, we were asking for a quick remedy so as not to have to wait for the court case. The judge has a tough standard to apply. There will eventually be a trial to give us relief. But the judge did clearly say it was clear the source code was stolen by Avant!, whose defense was only based on a 1994 release, and that Cadence will likely win in the end."

Avant!'s take on the decision was that the judge denied Cadence's motion to enjoin the sale and support of Avant!'s IC place-and-route software. Avant! said it will continue to sell its IC design automation (ICDA) place-and-route products, including Aquarius-BV and Aquarius-XO, as well as support its older products, ArcCell-BV and ArcCell-XO.

"I applaud the court's order issued today," said Gerald C. Hsu, Avant!'s chairman, president and CEO. "I have always had strong faith in our legal system, although it is costly. Cadence has used unfounded and distorted stories in the past 15 months as a marketing campaign against Avant!. We are pleased to see that the truth is coming out through the legal process. We firmly believe that justice has been served. We hope that both Avant! and Cadence will put the legal issues behind them and compete professionally in the open marketplace. We should both devote our precious time, money and resources to developing better technologies for our customers. Avant! thanks its customers, shareholders and employees for their confidence and support in Avant!'s business and its products."

Cadence viewed the ruling as the issuance of a preliminary injunction order finding Avant! had copied Cadence source code. It felt the decision paved the way for permanent removal of Avant! products from the market, as well as a multimillion-dollar damage award to Cadence based on Avant!'s sales of its ArcCell product line from June 1994 to the present.

"The court's ruling confirms our claims that Avant! is a company built and sustained on trade secrets and source code stolen from Cadence," said Mr. Costello.

The ruling, issued by U.S. District Court Judge Ronald M. Whyte, prohibits Avant! from further use of Cadence's trade secrets and copyrighted source code incorporated into Avant!'s ArcCell products. Cadence focused on the judge finding Avant!'s efforts to cleanroom its ArcCell code to remove Cadence's source code inadequate; and that a 1994 agreement did not constitute a license for Avant! to continue to use Cadence's trade secrets, or bar Cadence claims for misappropriation of trade secrets or copyright infringement.

The ruling indicated a strong likelihood of success for Cadence, but stopped short of pulling the current Avant! place-and-route products from the market. This, said the court, would seriously jeopardize Avant!'s survival, and Cadence could be compensated by a monetary settlement of damages resulting from any misappropriation.

The court order prevents Avant! from selling products containing Cadence's global router, GRoute; local router, FRoute; variable die size product, VSize; Design Framework II; and Qplace. Avant! also cannot sell products containing any Cadence source code or code derived from that found in the possession of Mitch Igusa, a former Cadence employee who faces criminal charges in the case; and Avant!'s DSO module or any similar product derived from Cadence's VSize product.