Several class actions have been filed against software provider Nassda Corporation (Nasdaq:NSDA) and certain of its officers and directors by stockholders who purchased the company's common stock between December 13, 2001, and June 11, 2004, including those who acquired their shares pursuant to its initial public offering. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.

The lawsuit alleges that Nassda’s financial troubles have their foundation in a decision to infringe on another company's patent. Nassda’s founders are all former employees of Synopsys Corporation, the world’s second-largest maker of electronic design automation software. Synopsys filed two suits against Nassda, one in state court that alleges misappropriation of trade secrets and one in federal court charging patent infringement.

Synopsys is the owner of United States Patent No. 5,878,053, entitled “Hierarchical Power Network Simulation and Analysis Tool for Reliability Testing of Deep Submicron Designs.” The securities lawsuit mirrors the patent lawsuits, and that it alleges that Nassda infringed on the Synopsys ‘053 patent by making, using, selling, distributing, advertising, marketing and creating source code for products, including Nassda’s Hierarchical Storage and Isomorphic Matching (“HSIM”) software product. Synopsys has alleged that Nassda has actively induced infringement of, or contributed to the infringement of, the ‘053 patent by making infringing products and creating source code for infringing products and then selling, distributing, advertising and marketing those infringing products to others. Synopsys gave Nassda actual notice of the ‘053 patent and sought from Nassda information that would assist Synopsys in further investigating the extent to which Nassda’s products are within the scope of each claim of the ‘053 patent. Nassda refused to provide substantive information in response to this request. Synopsys informed Nassda that it was infringing the ‘053 patent, but Nassda has allegedly continued to pursue its infringing activities.

On January 10, 2003, the judge in the federal patent infringement case ruled that some of Nassda’s founders copied proprietary source code from Synopsys to help develop their software. The judge found that certain former Synopsys employees viewed Synopsys products days before leaving Synopsys and then used those products to develop Nassda’s programs used in semiconductor design. Upon news of the ruling, Nassda’s stock declined by 50% to less than $6 per share before closing at $7.10 per share on January 10, 2003, on volume of more than 5.7 million shares.

On June 14, 2004, Nassda announced that the California state court had issued orders against Nassda and individual defendants named in the state litigation with Synopsys. These orders limited Nassda’s defenses regarding the timing and the development of its HSIM source code and the evidence that the company could present at trial. The court’s orders established as fact that the first 60,000 lines of source code of HSIM and all ideas and concepts reflected therein were derived from Synopsys’s source code or other Synopsys materials while the individual defendants were employed by Synopsys. The court also ruled that Nassda and the individual defendants acted in concert to intentionally alter, destroy, lose or misplace items requested in discovery and conceal evidence. The company’s shares plummeted to below $4.00 per share on this news.

If you purchased securities issued by Nassda during the applicable period, you may request appointment by the court as a lead plaintiff if you do so by September 20, 2004. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that your claim is typical of the claims of other class members, and that you will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiffs. Your ability to share in any recovery is not affected by the decision whether or not to serve as a lead plaintiff. You may retain any counsel of your choice to serve you in this action, or you may choose to do nothing, and remain in the class as a silent member.