After pleading "no contest" to a number of criminal trade secret
theft charges Avanti, a leading provider of semiconductor design software, was
ordered this week to pay $182 million in damages to arch rival Cadence Design
Systems. Interest charges will push the damage award over $200 million.
It is the first in what is likely to be a series of potentially devastating
financial blows that may end up putting Avanti out of business.
The damage award was issued in the criminal case against Avanti by San Jose
Superior Court Judge Conrad Rushing.
Avanti had been accused of stealing Cadence computer code for the
development of the now-discontinued ArcCell product line on which Avanti built
itself into a chip design powerhouse.
At Cadence, executives said they were pleased with the ruling, which is
certain to boost its chances to win a $1 billion civil damage lawsuit against
Avanti. "This ruling is a clear sign that the court recognizes the
importance of protecting intellectual property and establishes that trade
secret theft will not be tolerated in Silicon Valley," said Cadence CEO
Ray Bingham said.
In addition to the $182+ million damage award, seven current and former Avanti
employees were ordered to pay a total of $8 million in fines. Avanti President
and Chief Executive Gerry Hsu, a former Cadence employee, agreed to pay a $2.7
million fine after pleading no contest to conspiracy, failure to return stolen
property and securities fraud.
With so much legal uncertainty hanging over its head, analysts speculated that
the company's best chances for survival may be to work out some kind of
settlement with Cadence, one that may be financial very painful but would keep
the company in business and remove the lawsuits which is scaring away
investors.