SAN JOSE, Calif. Attorneys presented closing arguments at the Avanti Corp. restitution hearing on Wednesday (July 11), and all sides now await Judge Conrad Rushing's decision on the payment Avanti must make for stealing database code from Cadence Design Systems Inc. in 1991.
Rushing could deliver his preliminary judgment at any time, which would be open to modification.
In their closing arguments, deputy district attorney Julius Finkelstein and the respective attorneys for Avanti and Cadence each gave their interpretation of the four weeks of testimony in an effort to influence Rushing's decision on restitution. Avanti and seven current and former employees pleaded no contest in May to charges of stealing Cadence code.
The award will likely fall somewhere between $37 million and $700 million, according to the summarizing debates on Wednesday.
Cadence's outside attorney John Keker told Judge Rushing that anything less than a large award to Cadence would demonstrate to Avanti and would-be code thieves that "crime does pay," and would allow them to "laugh at us all."
The Cadence legal team and Finkelstein said that Rushing should award Cadence for losses it sustained from 1991 to 1998 as a result of Avanti's theft of code from Cadence's Symbad database and Vsize utility and its use of that code to build a competitive franchise for place and route software.
Keker described how high-ranking Avanti officials stole the Cadence code, incorporated it into Avanti products that were sold commercially, then when "caught red handed" by the district attorney's office in December 1995, continued to sell the products while denying their use of stolen code. All this was done with the blessings of Avanti's board of directors, Keker said.
"[The board] promoted [the executives who perpetrated the crime], made them rich, are paying all their fines and legal fees," said Keker. If Rushing goes light on Avanti, Keker said, "the wrongdoers would actually be rewarded."
To ensure that Cadence is fully compensated, Keker and Finkelstein suggested that Rushing use an award method called "economic advantage" to determine the restitution Avanti will pay.
Cadence is seeking $700 million in compensation for "all lost gross profits," including place and route sales lost to Avanti by existing and future product releases, as well as other products and services it would have sold with those tools, plus interest and attorneys fees. "It is the law of restitution that every determined loss shall be compensated," said Keker.
Meanwhile, Avanti's attorneys urged Rushing to honor a release Cadence officials had signed in the early '90s that they said essentially releases Avanti from any liability or legal actions from Cadence. Failing that, they said Rushing should use either a "head start" or a "reasonable royalty" method, both used to determine damages in civil matters.
Avanti attorney George Riley said a "head start" method of determining restitution would compensate Cadence for the time-to-market boost Avanti received from the use of stolen code in its ArcCell product, which was released in 1993.
Alternatively, Riley outlined three ways that Rushing could determine a reasonable royalty based on the amount of stolen code that was used in Avanti's products and a limited amount of the sales of those products. The starting point for those damages is roughly $37 million, Riley said.
Cadence and Finkelstein argued at the hearing that "head start" and "reasonable royalty" are civil methods that do not apply to criminal restitution.
Earlier this week, Finkelstein challenged Avanti technology staff member Chi-Ping Hsu's attempt to downplay the importance of the database code Avanti stole from Cadence, and emphasized Avanti's continuous pattern of lying about the use of the Cadence code in its products.
During a break in the hearing on Wednesday, Hsu told EE Times why he had decided to testify at the hearing and face inevitable public scrutiny. Hsu said he felt that "the great people that work very very hard [at Avanti] to create great products . . . needed to be represented." The majority of Avanti's staff was upset to learn about the plea bargain in May, Hsu said. They were also upset by the fact that Avanti executives did indeed steal code from Cadence, after years of insistence by chairman Gerald Hsu and other executives the charges of Cadence and the district attorney were false.
Full coverage of the Avanti case can be found at www.eet.com/avanti.html.