Avant! Says Cadence Did Not Meet Burden of Proof for Preliminary Injunction in Trade Secrets Case.

SUNNYVALE, Calif.--(BUSINESS WIRE)--Sept. 16, 1996--At the first hearing in its long legal battle with Cadence Design Systems, Inc., Avant! Corporation (Nasdaq:AVNT) this week argued strongly that Judge Ronald Whyte should not enjoin its Aquarius software products because they do not misappropriate Cadence's trade secrets.

Judge Whyte said he could not make a decision until he had an opportunity to fully analyze all the papers that have been filed. He further suggested both parties should seek alternative dispute resolution (ADR).

Noting the numerous charges that have been traded between Avant! and Cadence, Avant! attorney Daniel Bookin from O'Melveny & Myers emphasized, "The issue for the Court is not which side can say worse things about the other, but whether a preliminary injunction should be issued."

Aquarius is Avant!'s family of place and route software products that integrated circuit (IC) designers use for the physical design of high-performance chips such as microprocessors and telecommunications ICs. "Cadence has asked you to deprive the worldwide semiconductor industry of this superior product, which is critical to the competitiveness and well-being of every significant company in the industry," Bookin said to Judge Whyte.

Avant! Bargained for Peace in 1994

Also at the hearing Bookin described the first dispute between Avant! (then ArcSys, Inc.) and Cadence, which arose in early 1994 when Gerald C. Hsu, Avant! chairman, president and CEO, left his position as president of the IC division at Cadence to join Avant! At that time, Cadence threatened to bring a lawsuit against Avant! for trade secrets misappropriation -- the same claim that Cadence brought against Avant! in December 1995 and which is the subject of the current litigation.

"That was the dispute that led to the June 1994 Settlement Agreement which contained a `General Release and Covenants Not to Sue,'" argued Bookin. The agreement stated "Cadence, ArcSys and Hsu ... forever release and discharge each other from ... any and all manner of action ... which they may have against each other at the time of the execution of this agreement, known or unknown, including but not limited to any claims arising out of ... unfair competition or trade secret misappropriation by ... ArcSys ..."

The agreement continued, "These releases extend to claims which the parties do not know or suspect to exist in their favor, which if known by them would have materially affected their decision to enter into this release."

"Avant! bargained for peace in the agreement," said Bookin. "Peace -- from a huge, litigious company." In exchange for signing the Release, Hsu stayed at home for two months and during that time was prohibited from contact with ArcSys and Cadence employees. He was also required to keep a log of any contact with other EDA people. In addition, he did not visit Japan for three months and did not hire any Cadence employees until January, 1995.

"No reasonable person would have entered into a settlement agreement of this nature if they thought the next day they could be sued on the dispute they had just settled," said Bookin. Avant! contends that the existence of the Release (which Cadence failed to mention in its initial court filings) covers any and all code that was in Avant!'s products at the time the agreement was signed and prevents Cadence from obtaining injunctive relief.

VSIZE vs. DSO is Irrelevant.

Cadence alleged that Avant!'s DSO (design size optimization) feature in Aquarius-XO was stolen from Cadence's VSIZE. "Nothing could be further from the truth," said Avant! attorney George Riley at the hearing, "Although the same author was involved in writing the code for Cadence's and Avant!'s products, they are completely different solutions for the same problem. Moreover, Avant!'s product no longer uses DSO because a new proprietary placement algorithm in Aquarius-XO has made it obsolete."

The Clean Room

Riley defended Avant!'s clean room and the code that came out of it. He also refuted Cadence's claim that the clean room was "tainted" because two of the clean room engineers were previous Cadence employees. Even Cadence's own experts agreed that having these two engineers in the clean room was proper, since they had been away from Cadence much longer than the requirements called for.

Much of the clean room code that Cadence's experts identified as being "leftover" Cadence code are simple, basic routines required to run Avant!'s software. Another portion of the code that Cadence claimed was proprietary was found in the CAD Framework Initiative specification. Another portion, that was used for drawing rectangles or "bounding boxes" on the computer screen, came from Magic, a public domain program from the University of California at Berkeley.

Avant!'s current product line of deep submicron IC design automation tools includes the Planet family of timing-driven floorplanning tools, Aquarius family of hierarchical timing-driven place and route tools, Solar family of synthesis-oriented layout refinement tools, Star family of simulation, timing, analysis, and RC extraction tools, and Hercules family of hierarchical verification tools.

The Star product line includes Star-ADM, a high-capacity, high-speed circuit simulation and analysis tool developed by Anagram, Inc., and the Star-HSPICE circuit simulator from Meta-Software, Inc. Avant! has recently announced its intention to merge with both Anagram and Meta-Software.

Avant! Corporation (Nasdaq:AVNT) develops, markets, and supports integrated circuit design automation (ICDA) software for deep submicron integrated circuits (ICs), micro-processors, microcontrollers, application-specific standard products (ASSPs), and complex application-specific integrated circuits (ASICs). Company headquarters are located in Sunnyvale, Calif., telephone [phone].

CONTACT: Avant!

Lois DuBois, 408/738-8881

[e-mail]