ARM loses out in Qualcomm court case, wants a re-trial

A jury in Wilmington, Delaware, has found that Qualcomm’s latest AI-PC processors – based on the ARM instruction set – are properly licensed, say Reuters and Bloomberg reports.

The court thereby rejected ARM’s call that the intellectual property should be destroyed or that Qualcomm should be prepared to renegotiate the terms of its license with the implication of a higher royalty rate on the processors in question.

However, the jury was also deadlocked on whether Nuvia Inc., the startup acquired by Qualcomm in 2021 for US$1.4 billion, and the source of an original prototype processor design, had breached its licensing agreement with Arm.

The week-long trial therefore resulted in a mistrial that allows Qualcomm to continue selling its Snapdragon X processors based on the Oryon core but also leaves the way open for Arm to seek a re-trial, something it said it would do.

Qualcomm’s defence was that a processor circuit design created by Nuvia was not shown to be compliant and therefore remained Nuvia’s intellectual property and could be transferred to Qualcomm as part of the acquisition without reference to ARM.

Where the jury could not agree was whether Nuvia had breached its license agreement with ARM in not seeking approval for the acquisition.

Judge says settle

The presiding judge, Maryellen Noreika, encouraged ARM and Qualcomm to settle their differences out of court and was quoted by Reuters saying: “I don’t think either side had a clear victory or would have a clear victory if this case is tried again.”

Nuvia was cofounded by Gerard Williams, previously a senior processor architect at Apple. The acquisition of Nuvia was part of Qualcomm’s strategy to enhance its CPU design capabilities and compete more effectively with other tech giants like Apple

The Snapdragon X processors derived from that acquisition are a key part of Qualcomm’s plan to expand into AI-PCs using the ARM architecture Several major computer companies are incorporating Snapdragon X processors into their computers including: Acer, Dell, HP, Honor, Lenovo, Microsoft Surface, Samsung and Xiaomi.

Uncertainty remains

The unresolved court case, while apparently favoring Qualcomm, still leaves a cloud of uncertainty over Snapdragon X because of the potential for a renewed legal assault from ARM. An out-of-court settlement could resolve that. However, for ARM, the court case has cast doubt on its business model, which may mean it feels obliged to double down.

ARM licenses both fixed circuit designs, and architectural licenses that cover customers’ circuit designs that are compliant with the architecture. The court case has exposed the uncertainty around where the architectural license does and does not apply.

Qualcomm has filed a countersuit against Arm as it asserted its right to use intellectual property transferred as part of the Nuvia acquisition. Another complication is that Arm issued a 60-day contract termination notice to Qualcomm on October 23 that will come into force on or about December 23.