Pleas force Avanti tool users onto shaky ground

Pleas force Avanti tool users onto shaky ground
FREMONT, Calif. — By pleading "no contest" to charges of trade-secret theft, Avanti Corp. executives have placed thousands of users in an awkward position. Users may question the ethics of buying tools from a company that apparently got its start with stolen intellectual property. But no one wants to compromise competitiveness by switching to tools that may, in some cases, be inferior.

Prior to this week, it was fairly simple. Court orders banned two obsolete Avanti products, ArcCell and Aquarius, that were found to contain Cadence Design Systems source code. Those civil court rulings made no determination of criminal activity, leaving users free to ignore the question of how the disputed code got there.

This week, however, top Avanti executives pleaded no contest to charges of conspiracy, trade-secret theft, concealing stolen property and securities fraud. While no one explicitly admitted guilt, the pleas and jail sentences strongly imply that there was, in fact, a high-level conspiracy to steal Cadence trade secrets in order to launch Avanti's first products.

But Avanti didn't just duplicate Cadence technology. In the eyes of many chip designers, Avanti offered substantially better products that made it possible to get very complex chips out the door. That, in turn, spurred Cadence to innovate and ushered in an era of tools that can handle very deep-submicron designs, many users believe.

At the same time, Avanti expanded through acquisitions, picking up a large portfolio of widely used EDA tools that are not tainted by suspicion of intellectual-property theft.

Given the delicateness of the situation, it's perhaps not surprising that few Avanti users were willing to speak publicly about the conclusion of the company's criminal case. But the situation may prove deeply troubling to many, said EDA activist John Cooley, moderator of the e-mail Synopsys users' group.

"Half of all place-and-route users are Avanti customers, and the reason is that Avanti sells damn good tools," Cooley said. "If they get a $400 million judgement against them, it will obviously bankrupt the company, and then we'll go back to the bad old days of a Cadence monopoly in placement and routing. Having competition go away is not good.

"What's morally right may be irrelevant," Cooley added. "You need to produce chips that are the fastest, smallest and best."

An EDA manager at one large Avanti user, who declined to be identified, said the criminal case raises huge questions — but he did not expect his company to stop using Avanti software. "It is hard to know how much you can trust someone's tools for accurate timing and models when you don't know how much you can trust their executives," said the engineer. "But at the end of the day, if their tools continue to work, we use them. We are not going to make ourselves work twice as hard because of what [Avanti] may have done."

Business first

Indeed, users would have to scrap significant existing and planned products — an unacceptable consequence — if they were to expunge Avanti tools from their workstations in reaction to the court settlement, he noted. "It takes six months to a year to qualify a new tool," he said.

Another large-company EDA manager, speaking on condition of anonymity, said his company uses Avanti tools but not place-and-route products. He said he didn't know if his company would continue to buy Avanti tools. Its decision would depend on the "business risk" that might be involved.

That risk may be considerable. While the $35 million in fines levied against Avanti won't seriously impede the company, Cadence plans to seek hundreds of millions of dollars in an upcoming restitution hearing. And if that doesn't bankrupt or cripple Avanti, Cadence is relaunching a civil case against Avanti that potentially could.

According to John McGehee, chief technical officer of design services provider Voom Inc. and head of the Avanti Aurora users conference, there's very little concern among Avanti users about the legal situation — and no apparent reaction to the latest ruling.

"I think the issue has died down in the past few years," McGehee said. "People don't worry about the stuff that's in the current code. I'm confident it's clean." Asked whether he had ethical concerns about working with Avanti, McGehee replied, "No, I don't."

But Apollo user David Gregory, chief executive officer of design services provider ReShape, acknowledged some mixed feelings. "ReShape is an IP [intellectual-property] provider, so I believe very strongly in protecting IP rights," he said. "But as a purchaser of EDA tools, I believe very strongly in being able to buy the best tools out there.

"If all things were equal I would probably not buy tools from Avanti. But I think we will continue buying based on the merits of tools. Unless some court says Avanti can't sell tools, we would be handicapping ourselves by not buying what we think are the best tools," Gregory said.

There can be little argument that Avanti's image is badly tarnished. To survive, the company must continue to offer stellar technology in the face of increasing competition from Cadence, Synopsys, Magma and Monterey. Avanti must also convince the court to levy restitution it can afford to pay.

These may be the toughest challenges that Avanti has faced in its difficult and controversial history.

Rick Merritt contributed to this story.