Qualcomm wins architecture breach verdict against Arm but gets just $2 — judge could still suspend royalty fees for five years

Following its win against Arm in its licensing dispute around CPU cores developed by Nuvia, Qualcomm sued Arm in the U.S. early this year, accusing its partner of breaching the terms of their contract and causing damages to the company. This week a federal jury in Delaware has ruled that Arm indeed breached its contractual obligations with Qualcomm and intentionally interfered with the chipmaker’s business relationship with Meta. However, the jury awarded Qualcomm only $2 in nominal damages and rejected several other claims against Arm. As a result, both companies declared victory in the latest round of their legal dispute, which could still have massive financial consequences.

The verdict followed a five-day trial in Wilmington, Delaware, during which Qualcomm accused Arm of violating the Architecture License Agreement (ALA), withholding software patches and processor verification tools, and refusing to offer commercially reasonable licensing terms. In particular, Qualcomm alleged that Arm deliberately withheld Arm Compliance Kit (ACK) verification materials and software patches necessary to validate its custom CPUs. Qualcomm also claimed that Arm refused to renew licenses for Cortex-A720, Cortex-A520, and Cortex-M55 processor cores under its Technology License Agreement (TLA).

Qualcomm further alleged that Arm deliberately undermined its relationships with customers by threatening to terminate its architecture license and leaking the corresponding notice to the media in October 2024. The company said that Arm’s actions disrupted its negotiations with Meta and other customers, which caused financial losses as the company failed to land contracts with certain clients. Arm denied any wrongdoing and argued that Qualcomm had failed to demonstrate substantial financial losses. The company also indicated that Qualcomm intended to use the litigation to obtain more favorable licensing terms and avoid billions of dollars in royalty payments.

Latest Videos FromTom’s Hardware

The jury sided with Qualcomm on two issues. First, it determined that Arm had breached its longstanding ALA, which allows Qualcomm to develop and sell custom processors compatible with Arm’s instruction set architecture. Second, it found that Arm had intentionally interfered with Qualcomm’s business relationship with Meta. Qualcomm welcomed the verdict and maintained that it exposed Arm’s efforts to undermine its business and eventually become a Meta supplier.

“We are gratified that the jury found Arm breached its long-standing Architectural License Agreement (ALA) with Qualcomm, failed to honor its commitments, and intentionally acted to disrupt Qualcomm’s businesses,” a statement by Qualcomm reads. “Together with Qualcomm’s prior court victory, this outcome further exposes Arm’s broader intentions to harm Qualcomm and its ecosystem. This outcome is a victory for innovation and competition, and we remain focused on developing and delivering industry-leading semiconductor products including our Oryon CPUs to customers and consumers worldwide.”

However, Arm prevailed on four of Qualcomm’s six claims submitted to the jury and was ordered to pay just $1 in damages on each of the aforementioned two. The original complaint included allegations of breaches of the ALA and TLA, violations of the implied covenant of good faith and fair dealing, intentional and negligent interference with prospective economic advantage, and unfair competition. The precise findings on the individual allegations have yet to be revealed, as at press time the jury rulings were not available. Arm claims that the outcome supports its position that it had acted in good faith under its technology license agreement.

You may like

“We are pleased with the jury’s decision today finding for Arm on four claims and awarding only one dollar in damages on each of Qualcomm’s other two claims,” a spokesperson for Arm said. “Despite Qualcomm’s pursuit of this case in an attempt to deprive Arm of billions of dollars under our license agreements, the jury’s verdict confirms that Arm operated in good faith under its technology license agreement and its award of only two dollars confirms the merit of Arm’s arguments in the case.”

Swipe to scroll horizontally

Row 0 – Cell 0

Qualcomm’s complaint

Details of the allegation

Outcome

I

Breach of the Architecture License Agreement (ALA)

Arm allegedly violated provisions of Qualcomm’s ALA, including its obligations concerning the agreement’s validity and Qualcomm’s licensing rights.

Not separately confirmed

II

Breach of the ALA — failure to deliver technical resources

Arm allegedly withheld Arm Compliance Kit (ACK) verification materials, out-of-band (OOB) test lists, and software patches needed to validate Qualcomm’s custom processors.

Qualcomm prevailed on an ALA breach claim, but the exact count requires confirmation.

III

Breach of the implied covenant of good faith and fair dealing

Arm allegedly acted in bad faith by withholding technical resources, threatening license termination, interfering with customers, and refusing to negotiate future licensing terms.

Exact disposition unconfirmed. A related good-faith negotiation issue was considered separately by the judge.

IV

Intentional interference with prospective economic advantage

Arm allegedly deliberately disrupted Qualcomm’s relationships with customers, including Meta, through its license-termination threats and communications.

Qualcomm prevailed on intentional interference concerning Meta.

V

Negligent interference with prospective economic advantage

Arm allegedly failed to exercise reasonable care when its actions disrupted Qualcomm’s existing and prospective customer relationships.

Not separately confirmed

VI

Violation of California’s Unfair Competition Law

Arm allegedly engaged in unfair business practices intended to prevent Qualcomm from competing with Arm’s processor designs.

Not separately confirmed

VII

Breach of the Technology License Agreement (TLA)

Arm allegedly failed to offer commercially reasonable licensing terms for processor IP, including Cortex-A720, Cortex-A520, and Cortex-M55.

Arm prevailed on TLA-related claims, but the exact count requires confirmation.

VIII

Breach of another TLA provision

Arm allegedly violated additional contractual protections concerning the terms offered for processor IP.

Arm prevailed on TLA-related claims, but the exact count requires confirmation.

Despite the nominal $2 damages award, the legal battle between Qualcomm and Arm is not over. U.S. District Judge Maryellen Noreika must still determine whether Arm’s breach of its Architecture License Agreement entitles Qualcomm to suspend royalty payments for five years, potentially costing Arm hundreds of millions, or even billions, in revenue. The judge must also decide whether Arm violated its obligation to negotiate future architecture licensing terms in good faith. Both decisions could have substantially greater financial and commercial consequences than the jury’s verdict, and either company could appeal an unfavorable ruling.

Get Tom’s Hardware’s best news and in-depth reviews, straight to your inbox.

Follow Tom’s Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

Source link