Avanti Corporation - Legal Issues

Legal Issues

Avanti was a defendant in a long running legal battle with Cadence Design Systems, of which BusinessWeek said "The Avant! case is probably the most dramatic tale of white-collar crime in the history of Silicon Valley." In this case, Cadence and the district attorney claimed that Avanti was founded on stolen Cadence code, and Avanti denied it.

The case started when a Cadence engineer noticed that the Avanti code exactly reproduced a particular bug that Cadence code exhibited earlier. After finding more similarities, Cadence called the district attorney, Julius Finkelstein. Finkelstein, who was a computer science major and interested in white collar crime, got a warrant. A search revealed considerable Cadence code on Avanti computers and those of consultants it had hired.

The ensuing legal battle lasted for more than six years. Cadence would get an injunction against a particular Avanti product, and Avanti would promptly replace it with one with a new name. Cadence would claim this new product was still tainted, and the battle continued.

However, this was also a criminal case as well as a civil case, and eventually it came to trial. At this point the Avanti executives (Gerald Hsu and six others) pled no contest to charges of trade secret theft, conspiracy to commit trade secret theft, receiving stolen property, and securities fraud. Avanti and the executives paid at this point about $195 million in restitution to Cadence with an additional $40+ million in fines personally to the State. Of the six defendants,

• One was completely exonerated with no criminal record.
• One served a three month probation, with a misdemeanor record.
• Three served some time in a minimal security facility, working half the time outside, and receiving a criminal record.
• One served time in San Quentin, then transferred to a minimal security facility, with a criminal record.

This cleared the way for the civil suit to proceed. During this litigation, Avanti was bought by Synopsys, which paid Cadence about $265 million dollars more to end all litigation. Soon after the settlement, in Cadence Design Systems, Inc. v. Avant! Corp., 29 Cal. 4th 215, 57 P.3d 647, 127 Cal. Rptr. 2d 169 (2002), the California Supreme Court upheld the lower court's earlier decision.

Synopsys then paid an additional $26.1 million to Silvaco to settle two of three Silvaco's suits against Meta Software, earlier purchased by Avanti, and its president. The lawsuits were filed in 1995 and inherited by Avanti.