Synopsys, Inc. v. Real Intent, Inc. is a United States federal case in which Synopsys, a supplier of electronic design automation (EDA) software, sued Real Intent, a smaller EDA vendor that had been its licensee, for copyright infringement, patent infringement and breach of the licence agreements under which Real Intent used Synopsys tools.[1] On 2024-08-26 the court ruled on cross-motions for partial summary judgment. It held that Real Intent breached two restrictions in the licence agreements, that Real Intent’s use of Synopsys command syntax was a fair use, and that Synopsys could not obtain summary judgment on a third alleged breach.[1]
Background
The court described Synopsys as a publicly traded company offering a wide range of EDA tools and Real Intent as a 50-person private company focused on static verification tools such as Meridian CDC and Ascent Lint. Synopsys used Real Intent’s Meridian CDC tool from 2011 to 2015, and the parties entered into several licence agreements: the 2013, 2014, 2015 and 2016 in-Sync Agreements and a 2017 Synopsys Loan Agreement. Synopsys acquired Atrenta and its SpyGlass tools in 2015, and the parties agree they have competed since then.[1]
The dispute
Synopsys sued in 2020. It alleged that Real Intent’s tools copied command names and syntax from 20 registered works covering Design Compiler, IC Compiler, IC Compiler II, PrimeTime and VC SpyGlass, but not source code, and it added claims for breach of contract, breach of the implied covenant of good faith and fair dealing and patent infringement.[1] The contract claim rested on three theories: that Real Intent incorporated Synopsys material into its products, in breach of a clause forbidding it to modify, incorporate into or with other software, or create a derivative work of the licensed products; that it used the licensed products for competitive purposes; and that it accessed and used the DesignWare Foundation Library, which was not a licensed product.[1]
Decision or outcome
- Preemption. The court declined to find the contract claim preempted by the Copyright Act, reasoning that the right asserted was the use of the licensed products in violation of the agreements and not reproduction.[1]
- Incorporation. Synopsys won summary judgment on breach of the incorporation restriction. Witnesses testified that employees consulted Design Vision to determine command syntax that was then incorporated into Real Intent products, and Real Intent admitted incorporating six commands during the licence terms. The court rejected the argument that the agreements’ interoperability purpose permitted this, because the agreements also set the restrictions the parties had to follow in achieving interoperability.[1]
- Competitive purposes. Summary judgment was denied on the clause barring use of the licensed products for competitive purposes or to develop a competing product, because the evidence could support either side.[1]
- Unlicensed library. Synopsys won on breach of the clause on the DesignWare Foundation Library: the Design Vision installer contained a copy of it, it was not listed as a licensed product, and Real Intent employees testified that they used its files.[1]
- Damages. The court held that nominal damages can satisfy the damages element of a breach of contract claim.[1]
- Fair use and copyright. The court granted Real Intent summary judgment on fair use of the command syntax, so the copyright claims were denied as moot. It granted Real Intent summary judgment on the implied covenant claim as duplicative of the contract claim.[1]
The order does not record the final result of the case. Later stages were not reviewed for this article.
Significance for software licensing and SAM practice
The case shows the weight of ordinary use restrictions in a negotiated licence between companies that later became competitors. The court enforced the clause against incorporation literally and held that the stated purpose of the licence did not widen it, while it declined to infer a competitive-use breach from the same facts without more evidence.[1] It also treated a component that shipped in an installer but was missing from the schedule of licensed products as unlicensed.[1]
Lessons learned
- Read the schedule of licensed products. Using the DesignWare Foundation Library was a breach because the library was not listed as a licensed product, even though it came in the same installer.[1]
- Purpose clauses do not override restrictions. Interoperability was the stated aim of the agreements, but the restriction on incorporating licensed software into other software still applied.[1]
- Competitor status matters over time. The parties competed from 2015; restrictions on competitive use and on developing competing products were then at issue, and the court wanted evidence of actual use before finding breach.[1]
- Contract claims survive alongside copyright. The court held the contract claim not preempted, so a licensee can face contract liability even where its copyright defence succeeds.[1]