Arm Files a Lawsuit Against One of its Biggest Customers, Qualcomm

[AleksandarK]

The world of semiconductor IP licensing is complex by nature. If you use a company's IP, you must agree to its licensing terms. Today, it is precisely those terms that are being breached in the event of Arm Ltd. filing a lawsuit against one of its biggest customers, Qualcomm. When Qualcomm acquired Nuvia Inc., regarded as one of the best CPU design teams in the industry, it transferred Arm-Nuvia license agreements as its own. It continued the development of Arm IP under Qualcomm's name. This is a standard restriction, as Arm's licensing prohibits these sorts of IP transfers among companies to protect the IP.

As the UK-headquartered company reports: "Because Qualcomm attempted to transfer Nuvia licenses without Arm's consent, which is a standard restriction under Arm's license agreements, Nuvia's licenses terminated in March 2022. Before and after that date, Arm made multiple good faith efforts to seek a resolution. In contrast, Qualcomm has breached the terms of the Arm license agreement by continuing development under the terminated licenses. Arm was left with no choice other than to bring this claim against Qualcomm and Nuvia to protect our IP, our business, and to ensure customers are able to access valid Arm-based products."



Interestingly, Arm is now " seeking specific performance of the contractual obligation to destroy certain Nuvia designs, an injunction against trademark infringement as well as fair compensation for the trademark infringement." With this case now reaching the United States District Court for the District of Delaware, it is a matter of time before we see more information about the case. The two could settle; however, Arm has pointed out that it tried it off-court with Qualcomm, and it didn't work.

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[R0H1T]

This could turn out real ugly for QC if ARM wins this ~ on the face of it they should.

 

[maxfly]

Qualcomm knew this was coming. Their lawyers aren't dumb enough to advise them to move ahead with something like this if they didn't feel they we're on solid footing. Very confused about this.

 

[R0H1T]

You must've missed the thousands of other similar lawsuits like that where risk(of litigation) vs reward(profits?) is usually the deciding factor. Like Intel bribing OEM's, Nvidia with their woodscrew-gate or memory-gate(GTX 970) & Apple's antenna-gate, bend-gate, battery-gate among others? If QC feels they'll have to pay less in fines than what they'll make off this acquisition then it doesn't really matter whether it was illegal or not, this would hardly be the first time a billion dollar corporation has done "shady" stuff ~ it's actually what they're known for!

 

[maxfly]

You must've missed the thousands of other similar lawsuits like that where risk(of litigation) vs reward(profits?) is usually the deciding factor. Like Intel bribing OEM's, Nvidia with their woodscrew-gate or memory-gate(GTX 970) & Apple's antenna-gate, bend-gate, battery-gate among others? If QC feels they'll have to pay less in fines than what they'll make off this acquisition then it doesn't really matter whether it was illegal or not, this would hardly be the first time a billion dollar corporation has done "shady" stuff ~ it's actually what they're known for!

Nope, haven't missed any of it. If you read the article, there's a specific portion that mentions the destruction of that which is supposed to be worth gambling over, according to you. If they lose, their investment is lost along with the IP. How exactly does this scenario look like a win for Qualcomm if they drop the litigation?

Arm is now " seeking specific performance of the contractual obligation to destroy certain Nuvia designs, an injunction against trademark infringement as well as fair compensation for the trademark infringement."

If they are forced to destroy the ip... Poof.

 

[bonehead123]

On the surface, this appears to be somewhat tilted in Arm's favor, HOWEVER, there A TON of technicalities involved that we are not privy to, so unless someone has a copy of all the contracts, terms & conditions etc, then we may never know for sure what the real deal is....

As already stated, surely QC's legal team were/are aware of all of the details of the licensing agreements, and did a thorough costs vs. risk analysis of everything involved...but again on the surface, this looks BAD for them, even though it is not an uncommon thing that happens quite frequently in the mega-moolah mega-verse of gazzillion $$ businesses....

And yea, ARM says they tried to work it out without resorting to legal battle, but who really knows ? That could just be them trying to make themselves appear to be the injured, suffering party here and not the bad guys, which is also not uncommon in these situations

 

[DeathtoGnomes]

Who wants to bet ARM is out for a settlement payday here? I'm sure intent is not out to intentionally destroy anything as suggested, and is either an oversight assumption, ignorance, or telling ARM to f-off to blackmailing for more money for the revised licensing. The last would definitely result in a lawsuit like this.

 

[Punkenjoy]

By reading that, i assume that Nuvia and Qualcomm have different ARM license and i suppose that Nuvia license had things that Qualcomm license didn't had. That is the only thing i understand from this lawsuit.

Well that will push back quite a bit the ARM ISA advance if true. Other company will be more careful not to lose their license and that mean that every arm CPU vendor are less valuable as it might be difficult to buy them.

Not sure what is the goal of ARM there

 

[r9]

Ouch this gonna hurt for Qualcomm.
I'm no lawyer but not transferable statement is pretty straight forward.
I would love to see their lawyers trying to get out of it.

 

[lexluthermiester]

The world of semiconductor IP licensing is complex by nature. If you use a company's IP, you must agree to its licensing terms. Today, it is precisely those terms that are being breached in the event of ARM Ltd. filing a lawsuit against one of its biggest customers, Qualcomm. When Qualcomm acquired Nuvia Inc., regarded as one of the best CPU design teams in the industry, it transferred ARM-Nuvia license agreements as its own. It continued the development of ARM IP under Qualcomm's name. This is a standard restriction, as ARM's licensing prohibits these sorts of IP transfers among companies to protect the IP.

As the UK-headquartered company reports: "Because Qualcomm attempted to transfer Nuvia licenses without ARM's consent, which is a standard restriction under ARM's license agreements, Nuvia's licenses terminated in March 2022. Before and after that date, ARM made multiple good faith efforts to seek a resolution. In contrast, Qualcomm has breached the terms of the ARM license agreement by continuing development under the terminated licenses. ARM was left with no choice other than to bring this claim against Qualcomm and Nuvia to protect our IP, our business, and to ensure customers are able to access valid ARM-based products."



Interestingly, ARM is now " seeking specific performance of the contractual obligation to destroy certain Nuvia designs, an injunction against trademark infringement as well as fair compensation for the trademark infringement." With this case now reaching the United States District Court for the District of Delaware, it is a matter of time before we see more information about the case. The two could settle; however, ARM has pointed out that it tried it off-court with Qualcomm, and it didn't work.

It's ARM, not Arm.

Additionally, this article is written in a way that seems to assume Qualcomm's guilt without any regard for factual examination of information. This is not only poor reporting but it does a dis-service to the reader as it lacks objectivity and impartiality. ARM could very well be in the wrong in it's assertions and Qualcomm doing exactly what it's allowed to do. It is not for the press to decide, that's the purpose of a court, which is why they exist.

 

[R0H1T]

Nope, haven't missed any of it. If you read the article, there's a specific portion that mentions the destruction of that which is supposed to be worth gambling over, according to you. If they lose, their investment is lost along with the IP. How exactly does this scenario look like a win for Qualcomm if they drop the litigation?

Arm is now " seeking specific performance of the contractual obligation to destroy certain Nuvia designs, an injunction against trademark infringement as well as fair compensation for the trademark infringement."

If they are forced to destroy the ip... Poof.

I don't think they will, unless its "stolen" IP which some rumors say could also be from that fruit selling company. ARM would be wise to let Nuvia IP enter the market, whether they get exactly what they wanted from QC or slightly less.

 

[chodaboy19]

Money will fix this?



(New licensing agreement)

 

[The_Enigma]

Qualcomm already has their own license for developing custom ARM cores, so most likely they believe there is no license breach as Qualcomm is simply continuing what they have been doing under their license terms. Sure they bought some new engineers and new architecture design, but the CPU is now a Qualcomm design and Qualcomm has a license to develop it.



We all know ARM ARM's owner is hurting financially and trying to sell ARM as well as large portions of their other businesses to try and get their profits back up. Now that the sale fell through this seems like ARM went out and looked for anyone they could extort for a big cash grab to satisfy the financial situation, and the Qualcomm - Nuvia merger with it's bit murky licensing fits the bill perfectly.

 

[R0H1T]

QC hasn't done a custom core in over 5 years. Unless that license was basically free they stopped paying for it/relinquished it half a decade back. Any way you look at it ARM has the upper hand because ultimately they are the final boss/IP owner.

We all know ARM is hurting financially and trying to sell themselves.

No we don't.

Now that the sale fell through

They got a "free" billion dollars.

they could extort for a big cash grab to satisfy their financial situation

Among major chipmakers or IP owners ARM has by far the most stellar record, I've never seen them in the headlines wrt patents issues or licensing. QC on the other hand, they'd sue your Grandma for using that old Crickety CDMA handset

 

[Nanochip]

Qualcomm has its own Architectural License... how is ARM able to distinguish between the license given to Nuvia and that that Qualcomm already had?

 

[R0H1T]

The same way you have Amazon fulfilled or Merchant fulfilled orders, or verified sellers on Alibaba ~ this isn't that hard to understand each license has certain restrictions & they're laid out clearly by ARM. Whether ARM was asking too much from QC is the only real thing to determine by the courts.

 

[The_Enigma]

QC hasn't done a custom core in over 5 years. Unless that license was basically free they stopped paying for it/relinquished it half a decade back. Any way you look at it ARM has the upper hand because ultimately they are the final boss/IP owner.


No we don't.

They got a "free" billion dollars.

Among major chipmakers or IP owners ARM has by far the most stellar record, I've never seen them in the headlines wrt patents issues or licensing. QC on the other hand, they'd sue your Grandma for using that old Crickety CDMA handset

Um... Qualcomm has customized Kryo cores in the Snapdragon 8 Gen 1 and its + variant.

And the company who actually owns ARM has been posting big losses for quite a while now, in fact they just recently posted another quarterly loss of 22 billion.

Nvidia will also most likely be trying to get most of that 1 billion back, as the deal fell through from not getting regulatory approval and not because Nvidia simply decided not to move forward. Contract break up payment clauses can get a bit murky too when the breakup is from regulatory oversight. Either way, 1 billion gained is nothing when there is a quarterly loss of 22 billion already after that.

 

[R0H1T]

They aren't custom cores, the branding is Kryo the last custom core was SDM835 or maybe 810

Ok, looks like they call it "semi-custom" whatever that means. Which is still not the same as full custom cores from Apple or Samsung's Mongoose.

And the company who actually owns ARM has been posting big losses for quite a while now, in fact they just recently posted another quarterly loss of 22 billion.

Is that some accounting gimmick or more like a trend? This would bankrupt most companies if it were an annual loss, let alone just for a quarter. What were they doing in previous quarters btw similar losses amounting to tens of billions?

 

[mahirzukic2]

Um... Qualcomm has customized Kryo cores in the Snapdragon 8 Gen 1 and its + variant.

And the company who actually owns ARM has been posting big losses for quite a while now, in fact they just recently posted another quarterly loss of 22 billion.

Nvidia will also most likely be trying to get most of that 1 billion back, as the deal fell through from not getting regulatory approval and not because Nvidia simply decided not to move forward. Contract break up payment clauses can get a bit murky too when the breakup is from regulatory oversight. Either way, 1 billion gained is nothing when there is a quarterly loss of 22 billion already after that.

I think you have no idea what you are talking about.

As per these two links:
https://www.arm.com/company/news/2022/05/arm-delivers-record-revenues-and-record-profits-in-fy21
https://group.softbank/system/files/pdf/ir/financials/annual_reports/annual-report_fy2021_01_en.pdf

As per the first link

• 2021 total revenues were up 35% to $2.7Bn with strong growth in both royalty and non-royalty revenue.

So during the whole last year (2021) they had a revenue of 2.1 billion USD, not quarterly loss of 21 billions.
How big this company do you think is? ARM's total market capitalisation is about 24 billion US, so clearly (along the financial reports obviously) they can't be losing 22 billion US in a quarter. They'd be gone in just shy over one quarter, yet you haven't heard anything about their demise.

 

[The_Enigma]

I think you have no idea what you are talking about.

As per these two links:
https://www.arm.com/company/news/2022/05/arm-delivers-record-revenues-and-record-profits-in-fy21
https://group.softbank/system/files/pdf/ir/financials/annual_reports/annual-report_fy2021_01_en.pdf

As per the first link

So during the whole last year (2021) they had a revenue of 2.1 billion USD, not quarterly loss of 21 billions.
How big this company do you think is? ARM's total market capitalisation is about 24 billion US, so clearly (along the financial reports obviously) they can't be losing 22 billion US in a quarter. They'd be gone in just shy over one quarter, yet you haven't heard anything about their demise.

SoftBank Reports Record $23 Billion Quarterly Loss as Tech Downturn Hits

The Japanese technology investor suffered losses after holdings such as Uber lost value.

www.wsj.com

Your argument seems to be solely about ARM's profit and market cap, yet I clearly said the company who own ARM has been doing badly and trying to wring out quick profits everywhere they could.

 

[R0H1T]

That's from "Vision fund" investments, those aren't "total losses" ~ looks like you jumped the gun on pointing out how ARM is in a bleak financial position

Vision fund also has money from the Middle East, so they're also feeling the pinch of this hit.

 

[mahirzukic2]

SoftBank Reports Record $23 Billion Quarterly Loss as Tech Downturn Hits

The Japanese technology investor suffered losses after holdings such as Uber lost value.

www.wsj.com

Yes, you got it right

SoftBank​

as in not ARM itself, but rather the mother company as a whole.
So the ARM posted record revenues and record profits as per ARM's NEWSROOM article, while the other businesses within Softbank did poorly, so much so that the whole company lost about 23 billion dollars in just one quarter.

Hell even the first paragraph in that article you posted says it all:

Global tech investor SoftBank Group Corp. reported a record quarterly loss of more than $23 billion Monday after an investment spree that Chief Executive Masayoshi Son described as delirious turned sour.
The results for the three months through June brought a mea culpa from Mr. Son, who sprayed unprecedented levels of funding on startups across the world over the past half-decade, particularly just as prices crested last year.

Or for those who can't read between the lines, here's what happened.

The CEO of SoftBank group Mr. Masayoshi Son went on a buying spree acquiring tech companies left and right last year when tech (and other sectors for that matter) stocks were at their all time highest. After just one quarter the whole stock market crashed and with it valuations of all the companies in the stock market (10s of thousands of companies). Among those stock crashed companies were also the companies said Mr. Masayoshi Son had bought.
So in the process of buying those companies, the portfolio of SoftBank's assets has lost about 22 billion dollars.

See? This has nothing to do with bad ARM performance, but rather bad management performance from Mr. Masayoshi Son.
As already stated, ARM has had a record revenues and record profits in the 2021 year.

 

[First Strike]

This is the risk of a commercial ISA. The IP owner will always find a way.

It's just mindblowing that while the non-Apple ARM microarchitecture designs (especially those directly from ARM) have been in absolute backwater for years, ARM would still sue the only serious developer left for trying to develop a better u-arch.

I would not be surprised this would be one of the biggest RISC-V pushers. ARM is demonstatably incompetent in high-performance cores, and will scrutinize you for doing so, if not Apple you are.

 

[OC-Ghost]

You´re not allowed to make custom ARM cores with that license, because you´re making custom ARM cores with that license already

 

[DeathtoGnomes]

QC's Thought pattern?

QC: Hey lets buy a company that better at ARM tech than we are.
QC: Oh look there's Nuvia, and guess what!
QC: that have an ARM license too.
QC: lets buy it, but only for the ARM license!
QC: phew we dont need a new license !

ARM's empty wallet: Wait a minute here.. no no no. We want more money for the correct unified unused certified license renewal sticker ( just for your license plate!)!