If you've landed on this page, chances are you just got a Cadence Design Systems software demand letter and might be wondering what you should do about it.

Cadence is a powerhouse in the tech world. Their electronic design automation (EDA) tools are used to build the chips and circuit boards that run our phones, cars, and just about every modern device. These programs do not come cheap and when Cadence believes their software is being used without a proper license, they do not hesitate to take legal action.

In this post we explain who Cadence is, what they sell, and what you need to know if you have been contacted by their legal team.

WHO IS CADENCE SOFTWARE?

Cadence Design Systems, Inc. is a global technology company and one of the leading providers of electronic design automation (EDA) software. In simple terms, Cadence makes the programs that engineers, and technology companies use to design, test, and perfect the chips and circuit boards that power today's electronics. They are located in San Jose, California.

Their tools help bring to life everything from smartphones and laptops to cars, medical devices, and data centers. Companies rely on Cadence software to model how circuits will behave before they ever hit the factory floor, saving millions of dollars in development costs.

If you've ever used names like Allegro, Virtuoso, or Spectre, you've encountered Cadence.

WHAT PRODUCTS DO THEY SELL?

Cadence offers a broad suite of design and simulation tools, including:

• Allegro (PCB design and packaging)
• Virtuoso (custom IC design and simulation)
• Spectre (circuit simulation)
• Clarity (3D electromagnetic solver)
• Celsius (thermal and power integrity)
• Modus (design-for-test)
• Tensilica DSP IP (digital signal processing cores)

These are high-value, high-price tools, which explains why the company is very vigilant about protecting them.

DO CADENCE TOOLS "PHONE HOME"?

Yes. Like many other software companies, Cadence includes license-control mechanisms in its software. Their own license terms make clear that some products use time-based or cloud-based licensing, which requires customers to maintain a port open to a Cadence server. This lets Cadence verify license compliance and transmit device identifiers such as MAC addresses, IP addresses, and hostnames.

Sample Language from Cadence Terms

Cadence's own license terms make clear how seriously they treat unauthorized use.

The following excerpts from Cadence's Time-Based License Agreement highlight some of the key restrictions, including limitations on use, audit rights, and the “phone-home” license control provisions.

For users running unlicensed or cracked software, this “phone-home” telemetry is often the source of detection.

DO THEY FILE LAWSUITS?

Yes. Cadence has a history of going to court to enforce its rights. While many cases involve competitors, patents or trade secrets, the company has also pursued end users and organizations for software piracy and unlicensed use. Their reputation in the industry is clear: they will litigate if necessary.

Sample Allegations from a Cadence Lawsuit

Cadence v. Syntronic (N.D. Cal., 2021)

When Cadence files a lawsuit, the allegations usually look something like this:

• Cadence is a worldwide leader in Electronic Design Automation (EDA) software and engineering services, as well as semiconductor intellectual property. Cadence's custom and analog tools help engineers design the transistors, standard cells, and IP blocks that make up systems on chips. Cadence's offerings allow engineers to design integrated circuits and printed circuit boards, and test and simulate their designs to verify the builds of their circuits. 39. Cadence's design platforms include Allegro, OrCAD, PSpice, Sigrity, and other related software and tools (collectively, the “Cadence Software”). The Cadence Software provides engineers with the ability to design, test, and simulate printed circuit boards customized for their specific needs. Since its founding, Cadence has expended considerable resources further developing and refining this technology to remain at the forefront of the EDA industry.
• To protect its software and intellectual property against any unauthorized use, Cadence also has made significant investments in technological measures designed to track unauthorized use. These measures transmit data to Cadence whenever they detect unauthorized alterations or uses of the product, such as when a user bypasses a technological measure by using counterfeit license files or when a user alters the Cadence Software by circumventing the license mechanism. The Cadence Software also includes other technological measures to verify that the Cadence Software is used according to an appropriate license.
• By using the Cadence Software without authorization and by circumventing Cadence technological measures, Syntronic has also violated Cadence's registered copyright and avoided paying Cadence at least $8.3 million dollars in license fees. Through the use of its technological measures, Cadence compiled a list of over 64 machines that were using Cadence Software without having a valid License issued by Cadence. These technological measures identified multiple instances where these machines installed, uninstalled, or used Cadence Software.
• The information these machines transmitted to Cadence indicate that Syntronic devices and accounts were responsible for a significant number of unauthorized uses of the Cadence Software. For example, the domain “syntronic.net,” among others, are linked to the machines bypassing technological measures in the Cadence Software.
• On multiple occasions Syntronic has downloaded, modified, used, and/or otherwise copied and installed Cadence Software without permission or authorization from Cadence, including copies of Cadence's Copyrighted Works registered under the '386 Registration, the '840 Registration, '031 Registration, '236 Registration, '010 Registration, '016 Registration, '041 Registration, '040 Registration, ʼ154 Registration, and ʼ132 Registration. 115. Syntronic's unauthorized use and/or duplication of Cadence's copyrighted software constitutes direct and contributory copyright infringement under 17 U.S.C. § 501. 116.
• Syntronic is also liable for vicarious infringement. The individuals who downloaded, modified, used, and/or otherwise copied and installed Cadence Software without permission or authorization from Cadence are subject to the control of Syntronic, and Syntronic directly benefits from their direct infringement. Individuals who downloaded, modified, used and/or otherwise copied and installed Cadence Software without permission or authorization from Cadence have “@syntronic.com” email addresses and certain infringing machines have the name “Syntronic” in their name.
• On information and belief, Syntronic has modified the Cadence License Manager and/or Cadence Software and/or knowingly used copies of Cadence Software that had been tampered and or “cracked” to circumvent Cadence's License Manager and other access control mechanisms. Syntronic made these modifications to the Cadence License Manager and/or Cadence Software, and/or knowingly used copies of Cadence Software or Cadence's License Manager that had been tampered or “cracked,” in order to bypass the required entry and/or use of a valid license file and to circumvent the technological measures controlling access to Cadence Software, enabling Syntronic to bypass Cadence's security access mechanisms and copyright protections in the Cadence Software in violation of 17 U.S.C. §1201(a)(1).

These excerpts show the types of allegations you can expect if matters escalate beyond the demand letter stage.

WHAT DO CADENCE DEMAND LETTERS LOOK LIKE?

When Cadence believes its software is being used without the proper license, they typically send out a formal demand letter. These letters are meant to put you on notice and push you toward a quick settlement. A typical Cadence demand letter may include:

• Allegations of unlicensed use: For example, that Cadence tools were installed or accessed without a valid license.
• References to the Cadence End User License Agreement (EULA): Highlighting restrictions on unlicensed use, reverse engineering, third-party hosting, and other prohibited conduct.
• A large settlement demand: Often calculated using list prices for the software, multiplied by the number of seats and the length of alleged use. These numbers can be shockingly high.
• A request for a self-audit: Asking you to inventory your systems and provide screenshots, purchase orders, or other documentation.
• Tight response deadlines: Typically only a couple of weeks, designed to increase pressure and reduce your leverage.

The tone is usually stern and may imply litigation if you do not comply.

WHAT TO DO IF YOU RECEIVE A CADENCE DEMAND LETTER?

The worst thing you can do is ignore the letter or panic and pick up the phone. Here are some practical first steps:

• Do NOT ignore it! These cases don't disappear, and Cadence has a history of escalating to lawsuits if left unaddressed.
• Do not call Cadence directly. Anything you say could be used against you later in negotiations or court.
• Preserve evidence. Keep your systems and license files intact. Deleting or reinstalling could look like spoliation.
• Collect your paperwork. Gather license keys, purchase orders, reseller communications, and invoices. These documents often shape the outcome of your case.
• Get a legal evaluation; An attorney experienced in software-audit matters can spot when Cadence's calculations are inflated or based on shaky assumptions.
• Explore settlement strategies. Options can include purchasing licenses, paying back-maintenance, or negotiating reduced penalties. A lawyer can often cut down inflated numbers significantly.

But why are the numbers so high? Cadence's settlement demands are often tied to the remedies available under copyright law. In court, a plaintiff can pursue actual damages and profits under 17 U.S.C. §504(b), or statutory damages of up to $150,000 per work for willful copyright infringement under § 504(c). This explains why the initial figures in demand letters often seem extreme. Watch my video on copyright piracy penalties here.

DEFENSES AND STRATEGIES

Just because Cadence sends a demand letter doesn't mean their claims are ironclad. In many cases, there are valid defenses or at least leverage points that can help reduce the settlement amount. Some common strategies include:

• Valid licenses already in place: Sometimes the software was properly licensed, but Cadence's records don't reflect upgrades, reseller agreements, or legacy contracts. Producing this paperwork can change the entire case.
• Misattributed installations: We often see situations where software was installed on contractor or vendor machines, but Cadence incorrectly attributes that use to your company.
• Telemetry and tracking errors: Cadence relies heavily on “phone-home” license checks. These systems are not infallible. A wrong IP address, duplicate MAC address, or virtual machine relocation can create false positives.
• Inflated damages calculations: Demands are often based on full list pricing, multiplied by multiple users and long time periods. In practice, negotiated settlements rarely track those inflated numbers.
• Legal and negotiation leverage: Having experienced counsel matters. A software-audit attorney knows how to spot weaknesses in the claim, push back on aggressive terms, and steer the matter toward a fair resolution.

Remember: Cadence's first number is rarely the final number. With the right strategy, these cases can often be resolved on much more reasonable terms.