Green Hills charged Microtec with illegally using Green Hills trade secrets to develop its current generation of compilers. "We're glad that, after denying our charges for two years, Microtec finally decided to settle instead of facing our evidence in court," said Green Hills President Dan O'Dowd. "I think this $4.25 million payment, representing about two years of Microtec's net profits, speaks for itself."

The companies began their relationship in 1985, when Microtec approached Green Hills with a proposal to distribute Green Hills optimizing compilers. "Green Hills is the world leader in 32-bit compiler technology," said O'Dowd. "We were very pleased when we signed up Microtec as a distributor for our products, and hoped they would become a valuable business partner."

Green Hills alleged that instead, Microtec replaced all Green Hills trademarks and copyright notices on the compilers before reselling them. Microtec President Jerry Kirk admitted the relabeling, saying that it had been done to "enhance our reputation" in the market. Green Hills alleged that with the unauthorized labeling, a violation of Federal law, Microtec assumed for itself the Green Hills reputation for high-performance compilers.

As part of their agreement, Green Hills provided Microtec with source code and technical design information so that Microtec could port the compilers to various host computers and support their end users. When Microtec later decided to compete with Green Hills by producing its own compilers, it used many of the same programmers who had spent years studying and maintaining Green Hills compiler technology. During development, Microtec allowed these programmers unrestricted access to Green Hills trade secrets. Green Hills brought suit after recognizing its proprietary terminology in an article written by Microtec describing its new compilers.

The $4.25 million payment settled all eight allegations against Microtec, including product mislabeling, past due royalties, misappropriation of trade secrets, and fraud.

The lawsuit, entitled "Green Hills Software, Inc., Plaintiff, v. Microtec Research, Inc. and Jerry Kirk," was filed in the United States District Court for the Central District of California, as Case No. 91-1201-LGB(Ex). Trial was scheduled for August 25, 1993.

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