Synopsys and Magma are design automation companies that author software to automate the design and verification of semiconductor chips as well as software for circuit simulation routines that are critical to the success of a semiconductor chip before it is subjected to an expensive fabrication process. Synopsys and Magma are fierce competitors in the IC implementation market, and some observers believe Magma is gaining market share at Synopsys' expense. On September 17 2004, Synopsys filed a patent infringement lawsuit against Magma Design Automation. The lawsuit, which seeks damages and injunctive relief, was a response to a patent assertion letter sent earlier by Magma.
Magma had earlier claimed and filed a lawsuit that Synopsys had infringed upon 3 of its patents. Synopsys after an internal review determined that there was no infringement as claimed by Magma. On the contrary, one of the cofounders of Magma, who used to be an employee of Synopsys before cofounding Magma, had taken his software code along with him when he quit Synopsys. This software code was bound by 3 patents that this employee, Lukas van Ginneken, had filed while employed at Synopsys. This made the code and the patents associated with it a property of Synopsys upon which Magma had infringed. The plagiarism was so blatant, that they found evidences and traces of Synopsys?s signature in Magma?s code base. For example, some of the compile errors messages from Magma?s Blast Fusion IC Physical Design Suite suggested looking at the Synopsys User manuals for further troubleshooting details.
In a lawsuit filed in federal court in San Jose, Calif., Synopsys asked for damages, fees and costs, and injunctive relief.
I find this case rather intriguing because of the lack of due diligence that was performed by Magma before filing a lawsuit on Synopsys. It is rather evident that the co-founder who had initiated the patents was made aware of this situation before any legal proceedings. He very well knew the origin of these patents. Was it that he never realized that his blatant plagiarism would go eventually be traced back to his work at Synopsys? Or was it a moral dilemma that prevented him from admitting the facts to his fellow co-founders and the legal bodies hired by Magma.
In any case, three or more years of patent lawsuits between Magma and Synopsys ended with the firms agreeing to cross-license eight patents. Magma took the hit with a $12.6m one-off fee to Synopsys. Magma executives agreed that the legal fees were costing Magma that much each year, and limiting what the company could do. As quoted by Richard Goerring, editor of EE Times ?This lawsuit was so confusing and convoluted that I won't even attempt a history here. When you realize that Magma and Synopsys each cross-licensed four disputed patents to each other, you can see how complex it got.? Rajeev Madhavan, chairman and CEO of Magma, succinctly summed up the costs side of this: "This unfortunate episode involved significant expense to both sides."?
However, the settlement seemingly favored Magma, as Synopsys was originally seeking an injunction against Magma's first-generation place-and-route system and hundreds of millions of dollars in damages.
The confusion doesn?t end here. It was later discovered that much of the plagiarized code base had been authored when van Ginneken was employeed at Avanti Design Systems that was acquired by Synopsys before Magma was even co-founded.
Would the outcome be any different if both companies were not over-burdened by legal expenses? Synopsys being the bigger of the two companies, could have continued its legal proceedings pushing Magma into bankruptcy and killing the competition. Why did it agree to settle for a small dollar amount when it could have extracted more from Magma? Can?t blatant patent infringement, that can be easily proved by looking closely at some of the software logs ? already installed across thousands of licensees, be considered as enough evidence to point a finger of initial infringement rather than battle cross-license disputes that took 4 years to eventually tire both parties. We need to take into account the fact that Magma would never have been founded in the first place had van Ginneken not attempted the plagiarism. Authoring design automation tools takes years of development effort and customer experiences and feedback.
In Feb 2012 Synopsys finally acquired Magma Design Automation for $523 million in cash.
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Resources:
http://www.edn.com/electronics-news/4315450/Synopsys-and-Magma-settle-all-pending-litigation-Magma-pays-12-5-million
http://www.eetimes.com/electronics-news/4050187/Synopsys-sues-Magma-for-patent-infringement
http://www.electronicsweekly.com/blogs/electronics-weekly-blog/2007/04/magma-and-synopsys-growing-up.html
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