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A U.S. jury on Friday largely ruled in Qualcomm’s favor in a long-running dispute over its 2021 acquisition of chip company Nuvia, with Qualcomm claiming victory over Arm.
However, Arm has vowed to seek a retrial because jurors failed to decide on one of three questions they were asked to answer, known as a “deadlock,” setting the stage for more litigation or a potential settlement.
After the jury delivered its partial verdict Friday, the Delaware federal judge overseeing the case told Arm and Qualcomm to talk to a mediator.
Arm’s case accuses Qualcomm of violating its chip design license when it acquired Nuvia. The company filed a lawsuit against one of its largest customers in 2022, saying it was a last resort to protect its intellectual property rights.
Jurors were asked to answer three questions: whether Nuvia violated its license with Arm, whether Qualcomm violated Nuvia’s license with Arm, and whether Qualcomm’s license covered Arm’s controversial chip technology.
Although Qualcomm prevailed on the second and third issues, the jury was unable to decide whether Nuvia violated Arm’s license.
Qualcomm said it was satisfied with the verdict. The jury stated that the jury “upheld Qualcomm’s right to innovate” and confirmed that the products involved in this case were protected by its existing contract with Arm.
Arm said it would seek a retrial based on the fact that the jury “could not agree on the charges.”
“From the beginning, our priority has been to protect Arm’s intellectual property and the unparalleled ecosystem we have built with valued partners for more than 30 years,” it added.
The world’s two largest chip companies surprised analysts by failing to reach a settlement before the case went to trial.
“It was clear that Qualcomm had the upper hand,” said Prakash Sangam, founder and principal analyst at technology consultancy Tantra Analyst, who was present throughout the trial. “Out of three questions Two unanimous decisions were made in their favour, with the judge making it clear she was not keen on a speedy retrial.”
The dispute could cause widespread disruption as a slew of new artificial intelligence consumer devices containing Qualcomm chips hit the market, including PCs from Microsoft and Dell and smartphones from Samsung. Arm has been seeking to destroy allegedly infringing products.
Arm and Qualcomm have historically been allies, with the British group providing the U.S. company with the structure to build chips. Their legal dispute began with Qualcomm’s $1.4 billion acquisition of chip startup Nuvia in 2021.
Arm accused Qualcomm of using intellectual property rights it licensed to Nuvia, saying it failed to meet its contractual obligations to secure its agreement to reassign Nuvia’s own Arm license.
Qualcomm argued that its license with Arm covered the controversial technology and that Arm was squeezing it for higher royalties. Arm CEO Rene Haas and Qualcomm CEO Cristoiano Amon both testified in the jury trial that began on Monday.
The trial draws back the curtain on long-running tensions between the two companies, as Qualcomm pays Arm millions of dollars a year to use its chip designs. This caused a serious breakdown in their relationship.
Arm provided evidence that Qualcomm calculated that it could save the British company hundreds of millions of dollars in annual licensing fees if it acquired Nuvia.
Qualcomm has been looking to design customized chip “cores” in-house to reduce its reliance on Arm’s prefabricated designs as it enters the PC market. That factored into the $1.4 billion Qualcomm was willing to pay for Nuvia, according to internal company documents shown to the jury.
Qualcomm also provided evidence of the close relationship between Haas and SoftBank CEO Masayoshi Son, as well as their discussions surrounding the company’s plans to increase royalty revenue after SoftBank acquired Arm in 2016.
