In a strange twist of reality I learned of the proposed acquisition of EVE by Synopsys because of a legal maneuver by Synopsys. It is not possible for a party to sue another party unless the first party has a material reason for the legal action. Thus the fact that Synopsys filed a Complaint for Declaratory and Injunctive Relief against Mentor Graphics on the subject of the legal proceedings that Mentor initiated months ago against EVE is an indication that Synopsys now would be materially damaged by the legal battle in the emulation business.
I have written more than once that the emulation market is plagued with legal wrangling going back to the times of Intergraph, IKOS, and Quickturn. The problem is simple: emulation requires fundamental techniques that cannot be "paraphrased" and still achieve emulation. This fact is one of the clear indications that our patent law has stopped growing with the invention of the spokes of the wheel.
Mentor started the legal activity by protecting only the Japanese market at first, and later expanded the proceedings to cover more patents and the entire world market. Given the patent situation, it would not be accurate to define the Mentor legal activity as simply a way to create disturbance in the emulation market and inject doubts in present and potential EVE customers. Clearly, as I just stated, the emulation technology patent field is immersed in fog. But it is also clear that the legal suit was putting financial pressure on EVE, a company that is about 16 times smaller than Mentor in annual revenue.
Overnight Mentor now finds itself on the defense from a highly skilled, extremely well financed legal team who is accustomed to winning cases, no matter how long it takes. This is something Mentor really did not need. The company has been focused on fixing its financial problems with good success. But to continue to do so the company needs its executives t be focused on new products and new markets, not defending what is a relatively small emulation market.
To be sure, the growing complexities of SoC would indicate a potential growth in the emulation market. This fact has not gone unnoticed by Synopsys evidently. The problem for Mentor is that a legal action against EVE might have costs a bit over $10M, while the same suit with Synopsys will cost many tens of millions. Synopsys has the wherewithal to expand and morph a simple patent infringement suit into a full blown turf war. This is very dangerous for Mentor who in the last twelve months has seen a focused effort by Synopsys to erode the market share of its simulation products.
One thing is for sure. No matter how this legal battle ends, Mentor just gained a more powerful competitor in the emulation market; and Cadence should be paying attention as well.