For Altera (San Jose, Calif.), in what is a turning out to be a catastrophic year for the semiconductor industy, it seems the $20 million settlement is an acceptable price to pay to avoid continuing legal costs and to allow it to focus on developing and selling chips. For Xilinx (San Jose), the deal has the same effect but with the added benefit of bringing in much-needed cash.

"For both companies it helps. There was far too much litigation between us," commented Tom Lavelle, vice president and general counsel for Xilinx. "There are a lot of other companies which could be a threat to us. We need to be protecting Xilinx from other companies than Altera," he said.

Xilinx filed its original patent infringement case against Altera in 1993, and the case finally went to trial Oct. 5, 2000, in the U.S. District Court in San Jose, Calif. The federal jury found Nov. 17, 2000, that Altera had been infringing two patents owned by Xilinx. Altera claimed a victory this May when a U.S. District Court judge overturned the November jury ruling and deemed one of the patents invalid. Meanwhile, Altera had patent-infringement lawsuits of its own pending against Xilinx.

"It's time for both companies to bury the hatchet and declare a meaningful patent peace that is in the best interest of our customers, shareholders, partners and employees," said Wim Roelandts, president and chief executive officer of Xilinx. "This agreement enables both companies to focus their energies on technological innovation and the competition that matters most — in the marketplace."

"This agreement recognizes both companies' contributions and innovations and establishes a genuine patent peace," said John Daane, president and chief executive officer of Altera. "Our collective talents now may be directed exclusively at delivering innovation to our customers and expanding the market opportunities for programmable logic."