Earlier this month Synopsys announced it would acquire Nassda following a long legal battle. Synopsys alleged that Nassda's HSIM circuit simulator is based on "trade secrets" gleaned while Nassda's founders worked at Synopsys. In June, a discovery referee ruled that HSIM incorporates 60,000 lines of code that were "copied or derived" from Synopsys code.

The meaning of "copied" is very clear, but the meaning of "derived" is not. If I get an idea while employed by company A and turn it into a working product at company B, have I "derived" that product from my former employer?

What constitutes a "trade secret" in technical software is open to interpretation as well. For example, a company may claim to own some variation of an algorithm or methodology that's already in widespread use. What constitutes "misappropriation" may also have different shades of meaning. The outcome may come down to who has the best lawyers.

Some fear the Nassda development will have a chilling effect on EDA startups, discouraging the development of competitive products. Others note that very few startups have actually been sued, and that Synopsys, which is not a particularly litigious company, has a right to protect its intellectual property.

To protect IP without squelching innovation, large EDA vendors can make sure that new employees clearly understand the ground rules, and that the company's IP is well-defined and documented.

People launching or funding startups need to take responsibility as well, making sure that supposedly new technology is really new. It's not too much to ask where the founders got their technology, and to ask for engineering logs that can back up their claims. Investors do not fare well when lawsuits start flying.

We do need to find the right balance, because the EDA industry will suffer if startups are inhibited. It will also suffer if IP isn't protected. We need a solution that can reduce the number of lawsuits while allowing both protection and innovation.

Richard Goering is managing editor of Design Automation for EE Times.