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A false path is a path, which exists physically on the chip, but would never be sensitised in the operation of the cihp. For example :
A output sinal A_out and input signal B_in may be connected to on I/O buffer using tristate logic, to produce the I/O pin of the chip say a port called AB_IO. The I/O buffer acts as input when say a signal 'in_sel' is high and the same I/O buffer acts as an output when 'in_sel' is low.
Now there is a path physically from A_out to AB_IO to B_in, but it will never be sensitised, in chip operation as the I/O pin at a given time can only act either as input or output.
so the path from A_out to AB_IO to B_in is a 'false_path'.
in Design Compiler there is a set_false_path command which can be used to tell it the 'false_path's of your design. Some example commands can be seen at http://www.vlsiip.com/dc_shell