IP Theft: Cheaters & Chuckles vs. Chalk & Cheese

Synopsys has a problem. Per Norm Kelly, speaking at the ESD Alliance panel on September 14th in Silicon Valley, Synopsys loses fully a third of the revenue they’re owed each year for their vast catalog of IP because it’s stolen by Cheaters and used without paying any licensing or royalty fees.

Kelly said Synopsys earns about $200 million per year selling IP, and loses another $100 million to theft. Cheaters are a real problem, he lamented, and as Director of License Compliance for Synopsys he should know. Kelly did not have the floor to share these laments, however, until Warren Savage, GM of IP at Silvaco, opened the meeting.

Speaking from the podium as moderator of the evening’s discussion, Savage said the real problem is the bumblers, those designers and companies who lose track of licensing obligations for IP that was either purchased some time ago, or was brought into the design effort on a data stick fished out of the pocket of someone who’s joined the organization through a poorly managed M&A.

In other words, when Chuckles the Clown uses IP, often as not he doesn’t realize some monies are owed to the third-party IP vendor who created it in the first place. Savage offered this statistic: On an average SoC today, there are 150 to 200 blocks of IP, but only a small percentage of those blocks are actually paid for.

Chuckles the Clown is indeed alive and well in the IP user community and to blame for most of the lost revenue owed to an increasingly agitated IP vendor community, per Savage. He drove home the point with the proverbial foot-on-banana-peel graphic.

Savage and Kelly weren’t the only two at the front of the room on Wednesday night, however.

Also perched on speaker stools were KPMG’s Rob Ballow and Pricewaterhouse-Cooper’s Eric Stein. These two guys are accountants-turned-IP-sleuths, who handle audits of IP use in semiconductor companies on behalf of the IP vendors who sell the stuff.

How is IP usage audited? Ballow and Stein were not quite clear on the process, but basically it’s an issue of body language, is what we were told.

If somebody in a user company starts to hem, haw, look away, or fidget in their chair when they’re asked by outside auditors if IP is being used on projects without adequate licensing or fees being paid, the auditors know they’ve got a live one, a cheater.

Despite the tell in their body language, however, cheaters are often reluctant to confess to their crimes. Ballow amused his audience with one particularly momentous story.

An IP vendor in Europe sent out a notice to all of their customers worldwide announcing that an audit team was going to call on each and every customer to determine if any of the vendor’s IP was being used without proper licensing.

One of the vendor’s customers – a large company in Asia, according to Ballow – responded to the letter with a $10 million check sent by return post. The company said they were sending the money as a courtesy, but would not be submitting to an audit of any of their people or projects. The $10 million was a just-in-case payment for violations in case there were any, which there weren’t.

Larger lesson here? Audits are only optional, and must be submitted to voluntarily by the companies that use IP.

So much for Cheaters and Chuckles, now for the Chalk and Cheese.

There are several methods for tagging and tracking IP usage. These methods were discussed throughout the 2-hour session on Wednesday night, by Savage, Kelly, Ballow and Stein, and also by many in the audience who participated in the lively back-and-forth.

For instance there’s a long-standing IP tagging standard, promoted by Accellera. Per several speakers in the audience, however, that standard is rarely used, it’s not robust enough and therefore of little value.

More recently, Warren Savage – while still CEO at IPextreme, before his company was acquired by Silvaco – oversaw the development of a fingerprinting scheme that puts identifying markers on a block of IP that can be used to track the block throughout its integration into a design and subsequent manufacturing into a chip.

“Nobody in the semiconductor companies really wants to cheat,” Savage said, “which is why they need these tracking tools to help monitor all of the IP floating around out there.”

The fingerprinting strategy was announced late last year [see blog here], and is now a project that Silvaco continues to promote, with Savage leading the effort via his involvement with ESD Alliance.

[Hence this Wednesday’s panel was held on the Silvaco campus in Santa Clara and all in attendance were gifted with a nifty Silvaco-branded wireless mouse upon exiting the meeting.]

The value of this fingerprinting strategy notwithstanding, some in the audience still expressed profound skepticism over any kind of IP tagging, fingerprinting, or tracking tools and strategies. All of them can be circumvented, was the consensus.

Norm Kelly acknowledged the optimism of Warren Savage and also agreed with the pessimism he heard from the audience: “Yeah, most don’t want to cheat, but many companies do want to cheat. Soft IP is configurable and hard to fingerprint, but even hard IP can have the tagging layer removed.”

In other words, all of these protocols, tags, tools, and so forth, are no better than the meter maid’s Chalk on your tire. If you’ve exceeded the time limit in that parking spot, just move your car forward so the chalk mark is in a different location relative to the street, or smudge it out completely with the heel of your hand.

As one audience member put it on Wednesday night, “Cheaters who steal IP are truly nefarious. They steal the IP, they change it, and then they sell it. What can fingerprinting do to stop that?”

Warren Savage acquiesced, “You’re right. We still can’t stop that [behavior] today.”

The chalk mark on IP is simply not powerful enough to stop the cheaters. So what strategy remains to those IP vendors who continue to insist they should be paid for the products they provide to an IP-hungry industry?

That’s where the Cheese comes in.

After the panel discussion was ended and the crowd began mingling, a very knowledgeable CEO approached me and offered the most defensive, and seemingly robust strategy to counter both Cheaters and Chuckles.

Issue a new version of your IP every 90 days, the new version is not backwards compatible, and ergo anybody looking for support for a piece of IP that’s older than 90 days is simply out of luck. The vendor company will know instantly that IP is being used without proper licensing and fees.

Old cheese is stinky cheese, and will not sit well if consumed. Eat it and suffer the consequences.

And there’s one more part to this very defensive stance, about which the knowledgeable CEO was absolutely blunt: “We don’t do business with people we do not trust.

“If we don’t trust them, it’s simply not worth our time. Period.”

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Addendum …

* You will be able to access the entirety of this extremely informative panel discussion very soon. It was taped and will be viewable shortly on the ESD Alliance website.

* The Core Store is an online repository, developed at IPextreme and now supported by Silvaco, where companies who chose to participate in the IP fingerprinting scheme can register their IP.

* The world of IP will be gathering for a debut conference in December 2016. Supported by the ESD Alliance, CAST, True Circuits, SoC Solutions, Certus, Silicon Creations and Silvaco, this one-day meeting will be held in Silicon Valley.

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Tags: Accellera, CAST, Certus, Eric Stein, ESD Alliance, IP fingerprinting, KPMG, PwC, Rob Ballow, Silicon Creations, Silvaco, SoC Solutiosn, Synopsys, The Core Store, True Circuits, Warren Savage

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