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Just weeks before the California Supreme Court was to issue an opinion on a crucial trade secrets question, Cadence Design Systems Inc. agreed Wednesday to accept $265 million to settle its civil suit against technology rival Avant, which was acquired by Synopsys Inc. The settlement ends a long and ugly two-front battle for Avant, which, along with its former CEO and a handful of other ex-officers, pleaded no contest to a variety of trade secret theft, conspiracy and securities fraud charges in May 2001 and agreed to pay $195 million in restitution to victim Cadence. Cadence General Counsel R.L. Smith McKeithen, who last year valued Cadence’s damages at upwards of $1 billion, said the amount recovered through the settlement and through restitution is unprecedented in an intellectual property dispute. “We don’t know of a larger restitution, and we don’t know many larger IP settlements than the one that we recovered today,” he said. Steven Shevick, the general counsel of Synopsys, which finalized its purchase of Avant in June, said the looming release of the state supreme court’s opinion in the case was a “compelling” event in settling the case. The justices heard oral arguments in September over whether each misuse of a trade secret creates a cause of action under the state’s trade secrets law. The state court agreed to answer the question at the request of the 9th U.S. Circuit Court of Appeals, which has been reviewing the case, and was expected to rule by Dec. 3. McKeithen, meanwhile, said Mountain View, Calif.-based Cadence wanted to put an end to the long-running matter, and pointed out that “if we had waited for the supreme court, it would have gone back to the 9th Circuit and back to the trial court. We get to trial in 2004 at the earliest.” The settlement is being paid by Synopsys’ insurer. Synopsys said that when it announced the acquisition of Avant it purchased up to $500 million in coverage to cover Avant’s liability. Shevick said Synopsys, which is also based in Mountain View, has been chipping away at Avant’s legal troubles since the acquisition closed. But Shevick and McKeithen agreed Synopsys’ entry into the case made it easier to get settlement talks restarted. “Most of the people who were bad actors left or were paid by Synopsys to leave the company,” said McKeithen. A team led by O’Melveny & Myers’ Daniel Bookin has long represented Avant in the case, but Shevick said he brought in a team from Cleary, Gottlieb, Steen & Hamilton for the settlement talks. “We brought a new team to the table to give a different angle,” said Shevick. “I think there was a sense on the part of the O’Melveny litigators that maybe their presence would only lead to sparks” in what had become an emotional case. “For the purpose of settlement it was best to check those on both sides.” Cadence was represented throughout the litigation by a team at San Francisco-based Keker & Van Nest that included John Keker, Michael Page, Ragesh Tangri and Jeffrey Chanin. Cadence and Synopsys produce software for designing computer chips. As part of the settlement, the two companies reached a licensing deal. Both sides said Wednesday it’s unclear if the state supreme court will issue its ruling on the trade secrets question. Ironically, a 1996 trade secrets case, People v. Eubanks, 14 Cal.4th 580, which played a big role in the Avant criminal case, was also resolved shortly after oral argument. In that case, the justices issued an opinion anyway.

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