The ability of the electronics industry to continue to produce more powerful and cheaper products every two years or less, in accordance with Moore’s Law, depends on a strong and growing EDA sector. Many factors inhibit the growth of the EDA industry, including aggressive price cutting and lack of innovation. But in the last few years, the legal battles within EDA over intellectual property (IP) have also served to further cripple its growth. EDA customers are often confused by the litigation and use the EDA industry in-fighting in pricing negotiations.
While lawsuits that involve stolen code are necessary, many of the patent infringement lawsuits simply waste money that would be better spent on hiring more software engineers and developing innovative solutions that truly fill a need in the semiconductor industry. And in the fiercely competitive EDA industry, some companies use litigation to slow the progress of their competitors, which in the end slows the progress of their customers.
Current IP protection methods inadequate for EDA
Companies doing business in the United States can protect their IP in three ways: through patents, copyrights, or trademarks, depending on the nature of the property. A large part of the problem is that none of these IP protection methods is easily applied to software.
Patents are the most common legal tool used by EDA vendors to protect inventions and improvements to existing inventions. Specifically, utility patents protect how an object functions. Trademarks protect words, names, symbols or devices, or any combination thereof, used or intended to be used in commerce to identify and distinguish goods. Copyrights protect literary, artistic and musical works.
EDA companies almost never use trademarks to protect their products, although they use trademarks to protect brand names. A copyrighted work, which includes computer programs and most “compilations,” is protected for the author’s life plus an additional 70 years. Although a copyright protects the author from plagiarism, it does not protect the concept or idea behind the program.
Patents contribute to fragmentation of the EDA industry and design flow
Although the entire EDA industry only generated slightly more than $4 billion in 2004 revenues, research firm Dataquest identified over 50 unique market segments. Such fragmentation allows one company, especially one of the top four who together account for more than 75 percent of total revenues, to control one or more segments by patenting the fundamental algorithm addressing that particular design or analysis problem. Customers are hurt in two ways by this state of affairs: they most likely pay higher prices and the product does not improve as quickly as when it freely competes against similar tools.
The use of patents by EDA vendors also stifles innovation and competition. When a competitor enters a market segment, the patent owner often sues the newcomer for patent infringement. Another concern is that the U.S. Patent and Trademark Office (USPTO), which reviews the complaint, suffers both from a large volume of patent applications and a lack of personnel trained in specific technical details.