The ARM vs Qualcomm lawsuit over the Nuvia acquisition has finally reached court. SemiAccurate has a clear view of what the outcome will be, modified by the uncertainties of the legal system.
Update December 23, 2024: Well we got this prediction dead wrong, pending potential retrials on deadlocked counts. On the decided count, Qualcomm basically won everything and won it quickly. Both sides issued terse statements posted in full below.
Qualcomm’s Statement: We are pleased with today’s decision. The jury has vindicated Qualcomm’s right to innovate and affirmed that all the Qualcomm products at issue in the case are protected by Qualcomm’s contract with ARM. We will continue to develop performance-leading, world class products that benefit consumers worldwide, with our incredible Oryon ARM-compliant custom CPUs.
ARM’s Statement: We are disappointed that the jury was unable to reach consensus across the claims. We intend to seek a retrial due to the jury’s deadlock. From the outset, our top priority has been to protect Arm’s IP and the unparalleled ecosystem we have built with our valued partners over more than 30 years. As always, we are committed to fostering innovation in our rapidly evolving market and serving our partners while advancing the future of computing.
SemiAccurate’s Statement: For now, Qualcomm wins pretty decisively. The remaining counts that deadlocked are unlikely to change the landscape in a substantial way but way result in a few dollars going one way or another. The one certain thing we can say at this point is that there will be appeals and they will take a long time to work through the legal system.
It has literally been years of back and forth of arguing this case in the court of public opinion, but as of this week, things just got real. Yes the case has finally hit the courtroom without much if any fanfare. By that we mean the case, massive as it is, didn’t merit a single line on the ARM or Qualcomm press pages. The only decent rundown of the first day of trial is by the always excellent Jim McGregor of Tirias who doesn’t seem to be on Bluesky so we can’t link to him directly.
To recap a bit, the first time this simmering but testy negotiation went nuclear with a threatened cancellation of contracts and talk of lawsuits was a little over two years ago. Here we will have to ding ARM a bit for taking inflammatory shots during a Qualcomm press event, something they have repeated in subsequent years. While it is a very effective way to suck up executive bandwidth and annoy said people, it just feels, well, childish. Luckily that first shot had a very useful side effect.
Of course SemiAccurate did the obvious and asked contacts at both sides about the tiff. Neither side commented on the record but friends did. While significant information came out of contacts at both sides in the following months, the only quasi-official word came out of Qualcomm via analysts at the 2022 Hawaii event. When asked, they universally pointed out that ARM was going to lose and lose badly. Why? By the time it went to court, and through inevitable appeals, any of the IP that was in question would be long off the market for starters. Similarly what are the remedies? Stopping production? Take away someone’s birthday? Invalidate the license of ARM’s largest customer at what cost again?
On the surface these statements, and several related ones, all had some validity as long as you don’t think about them too hard. They sounded good to the layman but didn’t pass muster when you asked someone with actual legal experience. But this is all irrelevant, the data points were not the actual information. Why? Because all of the analysts used the same Qualcomm talking points, every single one. Since they were all at a Qualcomm event, you could rightly presume they all have some sort of financial agreement with Qualcomm too, directly or indirectly, disclosed or not. Nothing wrong with this practice, just that realizing what is actually being said is key.
And that was the problem. The echo chamber was being fed by one side and it did make waves in the media. If you dug deeper, the claims were mostly hollow. This was SemiAccurate’s first clue that Qualcomm didn’t have any real arguments to make, or at least didn’t have one they would publicly put their name on. Then again ARM didn’t really say anything directly or through proxies so, well, it was time to dig ever deeper.
That lead to several weeks of calls, emails, and meetings in which two things became clear. The first was that Qualcomm claimed that the Nuvia IP was deleted and everything was started from scratch with the same engineering team. This meant the cores in question didn’t have any infringing IP, they were clean sheet designs covered by Qualcomm’s existing license agreements. ARM claimed that the IP wasn’t clean sheet and was covered by Nuvia’s license terms.
Neither side could come to an agreement and a few years later things are in court. Did Qualcomm start over? SemiAccurate found a lot of interesting evidence on that front. On top of it, we found a precedent that is both directly applicable and will be, in our non-lawyerly opinion, be very tough for Qualcomm to argue around.
In short our view is that ARM is going to win this battle and win it decisively. In medium, this is a court battle and those are about as logical and predictable as political campaigns coupled with random number generators and crystal energy based stock prediction schemes, so our logic is not necessarily applicable. In long, ask again in three years after the ninth appeal. That said on with the show.
Note: The following is analysis for professional level subscribers only.
Disclosures: Charlie Demerjian and Stone Arch Networking Services, Inc. have no consulting relationships, investment relationships, or hold any investment positions with any of the companies mentioned in this report.
Charlie Demerjian
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