ARM versus Qualcomm court case opens

News | December 17, 2024

By Peter Clarke

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The ARM versus Qualcomm court hearing began Monday with opening statements as the licensor-licensee partners argue over Qualcomm’s right to use acquired IP.

Qualcomm obtained chip designs that are now key to its AI-smartphone and AI-PC ambitions through the purchase of startup Nuvia Inc. for US$1.4 billion in 2021.

The court case is set to last a week – or 22 hours of trial time. Jurors’ deliberations could start as soon as Thursday although there may yet be a settlement before a final judgement.

ARM’s argument is that it granted a special architectural license agreement (ALA) to Nuvia Inc. with a reduced initial payment and higher royalty rate to help it as a startup. ARM said that included in that license was the requirement to inform ARM and gain approval of any acquisition, with the understanding that the acquirer would negotiate terms around any IP transfered under the acquisition.

ARM reportedly said in the court that it was not informed of the acquisition and Qualcomm has refused to negotiate the terms or accept the higher royalty contained in the Nuvia ALA. As restitution ARM is not asking for a monetary sum but the destruction of the Nuvia chip designs. This could be crippling to Qualcomm’s business but also cost ARM a lot of revenue.

Qualcomm, is reportedly responsible for about 11 percent of ARM’s revenue and has its own ALA with ARM and claims that the chip designs transferred into the company from Nuvia are covered by that license. It has added that ARM is trying to increase the royalty rate on these designs unfairly.

Reportedly jurors were shown documents that indicated Nuvia’s royalty rate was many multiples of that enjoyed by Qualcomm.

Negotiations between the company’s continued for about eight months during 2024 but eventually broke down. ARM has subsequently sent a license termination notice to Qualcomm with the license due to end soon after the trial’s proposed ending.

Rene Haas, CEO of ARM, was called as a witness and played down the idea that ARM was preparing to set up in competition with Qualcomm.

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Jurors were showed a document in which Haas outlined a strategy for Arm to start designing its own chips. Reportedly Haas responded by saying it has not happened and that as CEO it is his job to consider various possible strategies for the company.

Other witnesses that may be called to give evidence include Cristiano Amon, CEO of Qualcomm, and Gerard Williams, who is a senior vice president at Qualcomm and was CEO of Nuvia.