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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.
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.
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"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."
Breach of the Architecture License Agreement (ALA)
Key considerations
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- Volatility remains possible near catalysts
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Reference reading
- https://www.tomshardware.com/pc-components/cpus/SPONSORED_LINK_URL
- https://www.tomshardware.com/pc-components/cpus/qualcomm-wins-architecture-breach-verdict-against-arm-but-gets-just-usd2-judge-could-still-suspend-royalty-fees-for-five-years#main
- https://www.tomshardware.com/membership
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