In a recent article about Nanometrics (NASDAQ:NANO), I suggested that the maker of specialized semiconductor measuring instruments may be worth keeping an eye on for signs of a potential turnaround. It appears to have taken a step in the right direction with an announcement that it has ended litigation with smallish competitor Nova Measuring Instruments (NASDAQ:NVMI).

The pair locked horns back in March of 2005, when Nova filed a lawsuit claiming that Nanometrics was infringing on certain integrated-metrology patents. A year later, Nanometrics countered with its own suit against Nova and then followed up with a second suit in October of 2006. Metrology equipment, which is used to measure critical parameters on semiconductor wafers during manufacturing, is a field in which a creative solution can give a company a unique advantage over its competition. While I don't know the merit of any of these lawsuits, I do know that small companies such as these have to be creative, given that KLA-Tencor (NASDAQ:KLAC) plays the role of the 800-pound gorilla.

Both companies announced on April 12 that they have reconciled -- or will at least stay on opposite sides of the playground for now. The companies ended the litigation "without prejudice," meaning that either company can change its mind, although they have agreed not to sue each other for at least one year.

My guess is that both realized that the size of the checks they were writing to their law firms was hurting their chances to run successful businesses. Nanometrics is a bit low on cash and certainly doesn't need to help young lawyers pay off their law-school debt -- or finance the good life for older lawyers. By ending the squabble, it expects a significant reduction in expenses. Nova should benefit at least as much, given that it is the smaller company.

Nanometrics' litigation with Nova Measuring, as well as its tangles with KLA, cost it $2.3 million last year. If you deduct a big chunk of that amount from its expenses, you'll see that the firm still has work to do in improving its operations. Nevertheless, getting rid of the distraction for its new temporary CEO may be as beneficial as the cost savings.

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Fool contributor Dan Bloom owns shares in KLA-Tencor. He welcomes your comments. The Fool has a disclosure policy.