Gerald Hsu, a vice president at Cadence Design Systems, a maker of integrated circuit design software, resigned

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Gerald Hsu, a vice president at Cadence Design Systems, a maker of integrated circuit design software, resigned to work for Avant!, a direct competitor. Cadence told Hsu that because of its concern that he would share proprietary information and trade secrets with Avant!, it was planning to sue him and Avant! for trade secret misappropriation. Hsu was able to negotiate a mutual general release with Cadence that released all parties from claims against each other concerning any trade secret misappropriation or other unfair competition at the time of the settlement. One year later, a Cadence engineer discovered line-by-line copying of Cadence code in an Avant! software product. It turned out the copying occurred four years earlier— three years before the general release—and was continuing through the present day. Cadence argued that it could still bring a trade secret misappropriation against Avant! because the misappropriation continued to occur after the general release. Hsu and Avant! argued that the general release precluded any suit for misappropriation occurring before the date of the release. Who should prevail? [Cadence Design Systems v. Avant! Corp., 253 F.3d 1147 (9th Cir. 2001).]

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