The U.S. Supreme Court has just rendered an opinion that is likely to directly impact the net worth of most, if not all, EDA companies. In his article found at: http://www.edadesignline.com/news/199203469 Chris Murphy writes: "Patent attorneys are predicting it will be harder to protect inventions after the ruling in KSR vs. Teleflex, that there will be more litigation to contest patents, and that even existing patents could become less valuable. "It's going to be much harder to get patent protection on everything, including software," said Steven Rubin, an intellectual property attorney with the firm WolfBlock, in an interview." Since most of the patents held by EDA companies involve software, that is the implementation of specific algorithms that sole electronics design problems, these patents, as well as some other patents dealing with both hardware acceleration and emulation, may be challenged in court and deemed invalid.
In order to be granted a patent an individual, be it a person or a corporation, must prove that there does not exist any "prior art" on the method or device being patented. Until this recent Supreme Court decision the existence of prior art was determined by the Patent office and once the determination had been made it could only be challenged on grounds of negligence or incompetence by the patent examiners, since disclosure of the existence of prior art during a patent challenge trial was not a guarantee for reconsideration.
The new ruling has changed all that by stating that a patent cannot be granted if an invention is obvious, and therefore not deserving of protection. All rest with the definition of the term "obvious". The Supreme Court has chosen to use a very wide definition, stating that if an average person can understand the problem addressed and can think of a possible solution then the solution was obvious and any patent on a flavor of the solution is invalid. The Court used as an example of "average" person a judge or members of s jury. Such example really does not help, since both judges and juries vary significantly in their mental ability for both induction and deduction, especially when it comes to technical issues. EDA is dealing with issues that are fundamental concepts in physics, a subject not well studied in all high school and in most colleges and university, except for those persons that choose it or closely related fields as their professions.
Take for example the present situation in the Low Power Format domain. A group within Si2 developed a standard based, in part, on patents owned by Cadence. This is the Common Power Format (CPF). Another group within Accellera developed a standard based in part on technology owned by other companies, including Synopsys, Mentor, and Magma. This is the Unified Power Format (UPF). The two standard are very similar and provide almost equivalent service to designers. So if any of the underlying patents were to be challenged in court, would the existence of substantially same implementations derived by said patent be ground for invalidating the patent? it seems "obvious" to me!
Often, after seeing a solution to a given problem, the solution seems obvious to me, yet it may not have been at all "obvious" before. The fundamental problem is that the patent system has been abused lately with companies applying for patent for practically everything they develop, leaving the burden to prove it a "derivative" work to an overworked and understaffed patent office. One cannot even get an audience with a Silicon Valley VC lately unless one has filed a patent claim on the algorithms at the base of the company proposed product! And companies go as far as to patent "business methods" like the "buy it now" method on eBay which was patented by MercExchange.
In its ruling, the Supreme Court frequently refers to "common sense," something too often missing from ordinary life, but unfortunately difficult to define precisely. paraphrasing many people before me I would say: Common sense is like pornography. I cannot define it but I recognize it when I see it. The question is how much book value do EDA company have that is based on patents that are not "common sense'?