Meanwhile, Silvaco is threatening legal action against any CSI customers who continue to use DynaSpice.

While the judgment appears to be a severe blow for the 25-person Circuit Semantics, it's actually a positive step because it ends the litigation, according to Ewald Detjens, CSI president. He said DynaSpice was a free add-on to CSI's DynaCell and DynaCore characterization products and was not used by most of the company's customers.

The dispute came to public view in November 2002, as the companies headed for an apparent trial. Silvaco charged that two employees who left the company in 2000 — Aliaksandr Antonau and Nikolay Rubanov — stole trade secrets from Silvaco's SmartSpice product, which were then incorporated into CSI's DynaSpice.

At the time, a CSI spokesperson said the charges had no merit. In a judgment dated Aug. 19, 2003, which is displayed along with a company statement at the Silvaco Web site, the Santa Clara County Superior Court found otherwise.

In its "findings of fact," the judgment states that a former Silvaco employee incorporated Silvaco trade secrets into DynaSpice, without the knowledge or permission of current CSI management. "As a result of the theft of the Silvaco trade secrets and use thereof in DynaSpice, Silvaco has suffered significant financial losses," the document states.

The court ordered CSI to cease selling or licensing any product that contains or incorporates DynaSpice, or for providing maintenance to anyone with respect to DynaSpice. It also ordered CSI to give Silvaco source and executable code for DynaSpice. The document notes, however, that CSI's current management has taken "corrective action."

The accompanying Silvaco statement goes further, stating that CSI offered "explicit admission that SmartSpice was stolen, repackaged, and sold as DynaSpice." It states that CSI has agreed to pay an undisclosed amount of money to Silvaco and that Silvaco has obtained perpetual source code rights for "all" Circuit Semantics products.

Detjens would not confirm whether CSI had made an explicit admission of guilt, or agreed to provide source code for all its products to Silvaco. "As part of the settlement, I can't talk further about it," he said.

A terse statement from CSI notes that "Silvaco Data Systems and Circuit Semantics Inc. have agreed to settle the current litigation between them. CSI has agreed to immediately stop the sale of its DynaSpice product and pay an undisclosed amount of money to Silvaco."

Ivan Pesic, Silvaco president and CEO, talked freely about the settlement. "Justice has been served," he declared.

Through mediation, Pesic said, the two companies agreed that CSI would hand over source code for all of its products to Silvaco, as part of its payment to the company. "It's everything," Pesic said. "They just delivered it a couple of days ago." He said Silvaco has a non-exclusive license to CSI products and will sell them.

The move puts Silvaco, a provider of technology CAD and analog simulation tools, into the characterization business. "From this point forward they develop the code as they want, I develop it as I want, we don't share it any further," Pesic said.

"Source code is pretty valueless," Detjens said. "If you pick up a million lines of source code and try to do something with it, it's not an easy thing. The people in CSI are its most valuable resource."

Pesic also said his company was severely damaged by DynaSpice, because it meant that CSI customers didn't have to buy a third-party circuit simulator, such as SmartSpice. "They flooded the market with thousands of copies," he claimed. "That means I can't sell SmartSpice. I don't have a better product to offer because it is my product. They stole my product and sold it cheap."

"I'm very happy to stop selling DynaSpice," Detjens said. "It was never part of our core technology and most of our customers didn't even use it." He said CSI now plans to interface to third-party circuit simulators, and will resell a circuit simulator from a company he declined to identify.

DynaSpice not only incorporated Silvaco trade secrets, Pesic claimed — it was identical to SmartSpice. For that reason, he said, Silvaco will take legal action against anyone who continues to use DynaSpice.

"They have to stop using the code right away, and relicense it because DynaSpice is SmartSpice," he said. "If they refuse to do that I have to sue them. I have proven in a court of law that the property is mine."

Detjens declined to comment on the extent to which legal costs have affected his company. There's no lost revenue stream, he noted, because DynaSpice was not sold as a separate product. He also wouldn't comment on the "corrective measures" taken by CSI management, but he acknowledged that Antonau and Rubanov are still employed at CSI.

CSI announced this week that it has closed a third round of funding. Detjens said the funding has no connection with the settlement and is not earmarked for legal costs.

Silvaco has been involved in a number of lawsuits in the past, including legal battles with Technology Modeling Associates, MetaSoftware and Avanti. Silvaco won a $20 million judgment from Avanti just prior to its acquisition by Synopsys Inc.