News Arm vs. Qualcomm trial begins — Arm demands that the patent-infringing Nuvia designs be destroyed

[Admin]

Arm claims Qualcomm's infringements of license payments have cost it $50 million, and wants the company to destroy the Nuvia designs. Qualcomm counters that Arm is trying to compete with its own customers and that its current license already covers the Nuvia portfolio.

Arm vs. Qualcomm trial begins — Arm demands that the patent-infringing Nuvia designs be destroyed : Read more

 

[hotaru251]

Qualcomm, however, argues that its architecture license agreement (ALA) fully covers Nuvia's designs.

this likely be the deciding factor if a judge rules it true or not.

 

[ezst036]

I'm looking forward to the day when Qualcomm throws its considerable weight behind RISC-V.

 

[SunMaster]

I wonder if this might forever alter the relation between Qualcomm and Arm to the extent that Qualcomm would have problems creating leading edge Arm based SoCs.

 

[Notton]

I'm looking at Qualcomm yearly profits, and they don't seem to be in such financial troubles that an additional $50 million per year in costs would have hurt them at all.

Qualcomm had an average $40 Billion net profit per year for 20-24
(50000000 / 40000000000 = 0.00125%)

But I guess it's cheaper to fight it out in court?

 

[thestryker]

So about that $50 million let's be accurate here:

At the trial in U.S. federal court in Delaware on Monday, jurors were shown documents that indicated Nuvia's royalty rates were "many multiples" more than Qualcomm's, and allowing Qualcomm to pay the lower rates would have damaged Arm's business model.

Qualcomm's acquisition of Nuvia potentially trimmed $50 million from Arm revenue, according to estimates in internal documents that were shown to the jury.

So this sounds more like $50 million based on the low volume high cost enterprise parts Nuvia was making. The cost to Qualcomm would have been significant and if the $300 million figure is accurate that would put it in the billions. Of course Qualcomm has also been using Arm designs lately which also carry higher cost to them. If $50 million really is the "many multiples" value then Qualcomm has some sort of super sweetheart architecture license deal.

As much as I'm not a fan of Qualcomm's business practices as they've dominated the mobile market Arm has certainly come across as the bully here. Arm canceling Qualcomm's license when they did is tantamount to blackmail so I can't imagine that will go over well in court either.

 

[Pierce2623]

this likely be the deciding factor if a judge rules it true or not.

Well yeah. Thing is Nuvia’s license was a special license only available to startups and applicable to server chips rather than client systems.

 

[JamesJones44]

Qualcomm had an average $40 Billion net profit per year for 20-24

Their 2024 EPS was $8.97 a share. Qualcomm has 1.1 billion shares. Their profit can't be 40 billion. Simple calculation is 8.95 x 1.1 billion which is 10 billion rounded up (9.867 billion). Their revenue was 42.4 billion however.

 

[bit_user]

Well yeah. Thing is Nuvia’s license was a special license only available to startups and applicable to server chips rather than client systems.

Qualcomm doesn't dispute that Nuvia's license was voided by the acquisition, as the license clearly stated as much. Qualcomm's argument is that they should be able to use their existing architecture license (back from when Qualcomm used to design their own client & server CPU cores) to sell chips containing Nuvia's designs.

 

[toyotabedzrock]

I don't see how ARM has a case unless their Nuvia license says any developed IP has to be licensed separately for eternity and even then they would have needed to have themselves listed on the patents.

Nuvia didn't make any profit yet so they basically drained them until it had to be sold.

They should get more royalties from Qualcomm if the core is successful in laptops and servers. But they seem determined to self sabotage.

 

[bit_user]

I don't see how ARM has a case ...

ARM filed this well before their re-IPO. One possibility is that they wanted to dangle the prospect of greater revenues in front of investors, who might've indexed the value of the case according to the probability of a favorable outcome (for ARM). This is just pure speculation, on my part.

Another thought I had is that ARM is genuinely worried about the rise of RISC-V and sees a shrinking window of opportunity in which to maximize their AArch64 revenue. So, even though this could hasten the transition away from ARM, they might've judged a successful outcome as worth the risk.

 

[jlake3]

I don't see how ARM has a case unless their Nuvia license says any developed IP has to be licensed separately for eternity and even then they would have needed to have themselves listed on the patents.

Nuvia didn't make any profit yet so they basically drained them until it had to be sold.

They should get more royalties from Qualcomm if the core is successful in laptops and servers. But they seem determined to self sabotage.

If I recall other reporting correctly, ARM has stated both Nuvia and Qualcomm had a license to develop derivative designs based ARM's IP (with different terms and different royalty rates), but they did not have a license to transfer their derivative designs or produce derivative designs that had been developed under a different license by a third party.

Qualcomm has taken the stance that there are actually no transfer restrictions, and thus there's actually nothing against designs being moved between different ALAs with different terms and royalty rates as long as you have an ALA.

I'm not a fan of either of them, but based on the broad-strokes descriptions of the license it sounds like ARM has a reasonably decent case, and Qualcomm's requires some improbable loopholes or oversights?

And I feel like this whole mess could have been avoided if both sides were willing to work out a deal on a transfer fee, but Qualcomm didn't want to pay anything and ARM wanted to keep getting the full licensed core royalty, and neither one was willing to accept less than all of the possible money.

 

[newtechldtech]

in the meanwhile , Apple pays ARM only 30 cents per CPU/APU ... and their contract extends until 2040...

Leave Qualcumm alone ARM !

 

[SonoraTechnical]

greed.... selfish rich rat bastards.... all of them...

 

[bit_user]

greed.... selfish rich rat bastards.... all of them...

The genius of capitalism is to harness the power of greed in ways that can benefit society. Greed will always exist and capitalism not only recognizes, but embraces this fact. Of course, it needs guard rails so that the market participants' interests align with those of consumers and society. Otherwise, it just degenerates into a feeding frenzy and a race to the bottom.

Unlike Gordon Gekko, I don't see greed in moral terms any more than something like fire. Greed and competition are basic facts of life and fundamental to the process of evolution. Furthermore, we should not pretend that companies or investors are moral actors - they are not. Therefore, the challenge is how to channel that energy to deliver the greatest good to the most people, and do the least harm.

Capitalism is only one possible system for allocating resources. There are others. For those who prefer capitalism, it's ultimately in your interest to try and make it work for the benefit of society. Otherwise, the disenfranchised masses will be easily lured into exploring alternatives.

 

[bit_user]

I feel like this whole mess could have been avoided if both sides were willing to work out a deal on a transfer fee, but Qualcomm didn't want to pay anything and ARM wanted to keep getting the full licensed core royalty, and neither one was willing to accept less than all of the possible money.

I've previously read that ARM offered Qualcomm a license under the terms that basically meant Qualcomm's customers would pay a royalty to ARM, which would disadvantage Qualcomm's chips containing their own cores vs. ones designed by ARM, themselves (or maybe put them on more of an even ground, nullifying most of the financial benefits of doing your own design).

If that's true, then it's definitely not the case that ARM was being reasonable and things only went south because Qualcomm was obstinate. It definitely sounded to me like ARM walked into these discussions ready to play hardball.

 

[michaelmantion]

If I recall other reporting correctly, ARM has stated both Nuvia and Qualcomm had a license to develop derivative designs based ARM's IP (with different terms and different royalty rates), but they did not have a license to transfer their derivative designs or produce derivative designs that had been developed under a different license by a third party.

Qualcomm has taken the stance that there are actually no transfer restrictions, and thus there's actually nothing against designs being moved between different ALAs with different terms and royalty rates as long as you have an ALA.

I'm not a fan of either of them, but based on the broad-strokes descriptions of the license it sounds like ARM has a reasonably decent case, and Qualcomm's requires some improbable loopholes or oversights?

And I feel like this whole mess could have been avoided if both sides were willing to work out a deal on a transfer fee, but Qualcomm didn't want to pay anything and ARM wanted to keep getting the full licensed core royalty, and neither one was willing to accept less than all of the possible money.

Based on the trial it seems like $ARM didn't want an extra $50 million, they wanted Qualcomm to destroy all the designs they bought and designs Qualcomm developed that were related to Nuvia. That seems insane. I am certain $QCOM would have gladly paid $ARM 50 million to settle the issue.

IF I were on the jury I would need to know if company A buys all of company B why wouldn't ALL the IP transfer.

If Company A bought the designs of company B then the contract would matter.

To me it seemed like ownership of Nuvia changed.

Not a legal expert but neither is the jury. Arm needs to prove that a reasonable person thinks the change in ownership means the new owner has to re-negotiate the contract for all the designs made before. From what I can tell Qualcomm license allowed them to design chips. So old designs came with the purchase and new designs covered by Qualcomm license.

Regardless ARM needs to go extinct, RISCV must be the future.

 

[suryasans]

I wish Qualcomm will lose this litigation. It doesn't have scores to win this legal hurdle because most of processors design patents have been expired.

 

[jlake3]

in the meanwhile , Apple pays ARM only 30 cents per CPU/APU ... and their contract extends until 2040...

Leave Qualcumm alone ARM !

Apple was helping Acorn develop the ARM architecture before ARM Ltd. even existed as a company, and was a significant investor in the early days of ARM. Supposedly ARM hates it and wants Apple to pay more, but Apple is grandfathered in on a deal that

Based on the trial it seems like $ARM didn't want an extra $50 million, they wanted Qualcomm to destroy all the designs they bought and designs Qualcomm developed that were related to Nuvia. That seems insane. I am certain $QCOM would have gladly paid $ARM 50 million to settle the issue.

IF I were on the jury I would need to know if company A buys all of company B why wouldn't ALL the IP transfer.

If Company A bought the designs of company B then the contract would matter.

To me it seemed like ownership of Nuvia changed.

Not a legal expert but neither is the jury. Arm needs to prove that a reasonable person thinks the change in ownership means the new owner has to re-negotiate the contract for all the designs made before. From what I can tell Qualcomm license allowed them to design chips. So old designs came with the purchase and new designs covered by Qualcomm license.

Regardless ARM needs to go extinct, RISCV must be the future.

The thing is that Nuvia’s IP had contractual terms and conditions attached to it, including royalties. Qualcomm seems to believe then in purchasing the company they inherit the IP and can move it under their more preferential terms, while extinguishing the purchased company’s agreements attached to that IP. If you buy a company you usually get it all, the good (IP) and the bad (contract obligations), so Qualcomm needs to have a really good loophole up their sleeve to explain how they get one without the other.

Asking to destroy everything seems like ARM playing hardball, but Qualcomm offering a one-time $50m seems like it may be seen by ARM as a lowball based on how game-changing this core was talked up to be and the potential loss of the licensed core business. ARM is definitely attempting to shake down Qualcomm, but Qualcomm seems to have put themselves in a vulnerable position by acquiring a company with non-transferable licensing and putting that IP into all their products before the legal disputes cleared.

 

[jlake3]

in the meanwhile , Apple pays ARM only 30 cents per CPU/APU ... and their contract extends until 2040...

Leave Qualcumm alone ARM !

Apple helped with development of the ARM architecture before ARM Ltd. was even spun out of Acorn as a separate company, so they managed to secure themselves a very preferential deal in the early days. ARM supposedly hates it and has tried to get more money out of Apple, who pointed to the terms of their special grandfathered architecture license and told them to go pound sand.

 

[P.Amini]

Qualcomm is doing whatever it can to promote Windows on ARM while ARM is doing whatever it can to stop Qualcomm!

 

[bit_user]

Qualcomm is doing whatever it can to promote Windows on ARM while ARM is doing whatever it can to stop Qualcomm!

Good point, except that ARM doesn't really want to stop Qualcomm, it just wants to squeeze more money out of Qualcomm. That's accomplished either by convincing Qualcomm to ditch the Nuvia cores and revert back to licensing ARM-designed ones (which also takes a competitive threat off the table), or by at least extracting substantial royalties out of Qualcomm.

Keep in mind that the better those Nuvia cores get, the more potential they have to edge out the licensees of ARM's own-designed cores, like MediaTek. If MediaTek sells fewer chips, ARM makes less money. The same could even happen in the realm of server CPUs, if Qualcomm decides to get back into that business. So, the Nuvia cores represent a double-threat to ARM as they hold the potential for ARM to get less money from both Qualcomm and its competitors!

 

[thestryker]

The thing is that Nuvia’s IP had contractual terms and conditions attached to it, including royalties. Qualcomm seems to believe then in purchasing the company they inherit the IP and can move it under their more preferential terms, while extinguishing the purchased company’s agreements attached to that IP. If you buy a company you usually get it all, the good (IP) and the bad (contract obligations), so Qualcomm needs to have a really good loophole up their sleeve to explain how they get one without the other.

If I'm remembering correctly Arm had a poison pill in the Nuvia architecture license where they got to decide whether or not it transfers upon acquisition. Qualcomm has an existing architecture license which covers everything Nuvia was doing so they didn't care. Arm's stance here seems to be that they helped Nuvia with development so the IP has to die with the license.

 

[thestryker]

The trial is now over and I suppose questions about Arm canceling Qualcomm's license become real loud:

After more than nine hours of deliberations over two days, the eight-person jury could not reach a unanimous verdict on the question of whether startup Nuvia breached the terms of its license with Arm.

But the jury found that Qualcomm - which purchased Nuvia for $1.4 billion in 2021 - did not breach that license.

The jury also found that Qualcomm's chips, created using Nuvia technology and central to Qualcomm's push into the personal computer market, are properly licensed under its own agreement with Arm, clearing the way for Qualcomm to continue selling them.

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www.reuters.com

 

[bit_user]

The trial is now over and I suppose questions about Arm canceling Qualcomm's license become real loud:

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www.reuters.com

Thanks for the summary! What happens when the jury fails to reach a verdict on one of the claims? Does it trigger a retrial for just that claim (if ARM wants to pursue the matter)?