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Patent infringement suits are as common these days as out-of-work semiconductor engineers. But perhaps nowhere have litigators raked in as many fees as in the electronic design automation, or EDA, sector. Intellectual property is the lifeblood of EDA companies, which develop software used to design complex chips, and when one player thinks the other is using its IP, lawsuits fly. The latest action on this front could represent some payback for Mentor Graphics Corp., the world’s third-largest EDA company. On Tuesday, the Wilsonville, Ore.-based company announced that it had filed suit in a Delaware Federal District Court that a product developed by Cadence Design Systems Inc., the top EDA player, infringes on a patent Mentor holds via its Ikos subsidiary, which it acquired in March for about $100 million. The action is only the latest skirmish in a convoluted war between Mentor and Cadence that has stretched on for several years. “I read the news and thought, ‘Here we go again,’” said RBC Capital Markets analyst Garo Toomajanian. “There has been a constant back and forth between these guys on this front.” The battle began in the mid-1990s, when San Jose, Calif.-based Cadence launched an infringement suit against Mentor. The end result was a ruling that barred Mentor from selling emulation systems in the United States. That was a slap in the face for Mentor. Emulation, a process of verifying the design of semiconductors and other electronic systems, was a hot business, and the company was facing stiff competition already from rising stars Cadence and Mountain View, Calif.-based Synopsys Inc., now the world’s second-largest EDA concern. Mentor was already smarting from losing its spot as the largest EDA developer, the victim of a shift in technology preferences by semiconductor designers. Licking its wounds, Mentor relied on its successes in several niche businesses that didn’t compete directly with Cadence and Synopsys. But Mentor wasn’t satisfied just selling its emulation products in Europe, and it sought a way to once again sell emulation technology on its home turf. Its recent acquisition of Ikos Systems Inc. was its way of doing just that. The San Jose-based EDA company was a leader in emulation, and the deal cast aside the ITC restriction. Now, with Ikos nestled inside Mentor, the company is exacting some payback. The suit against Cadence alleges that a piece of its competitor’s new emulation product is based upon a patent Ikos was awarded in 1998. “It’s a tit for a tat,” said Wells Fargo securities analyst Jennifer Jordan. “For the first time in this series of actions it looks like Mentor has the upper hand in its legal exercises.” Copyright �2002 TDD, LLC. All rights reserved.

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