Arm Ltd. vs. Qualcomm Inc. et al

Case Background

On August 31, 2022, Plaintiff Arm Ltd. filed a Trademark Infringement lawsuit in the United States District Court, Delaware (Case number: 1:22cv1146). Judge Maryellen Noreika presided over this case.

Cause

Arm Ltd. is a global leader in microprocessor intellectual property. The company has consistently pioneered innovative processor architectures, known for their performance and energy efficiency. Over the years, Arm has established a robust licensing framework. This framework grants companies access to its cutting-edge technology through Technology License Agreements (TLAs) and Architecture License Agreements (ALAs).

In 2019, Nuvia, Inc., a start-up founded by former engineers from major tech companies, entered into agreements with Arm. The goal was to develop custom processors based on Arm’s advanced architecture. These agreements explicitly prohibited any assignment or transfer without Arm’s consent.

In 2021, Qualcomm, Inc., a leading semiconductor company, acquired Nuvia for $1.4 billion. However, Qualcomm failed to obtain Arm’s mandatory approval for the license transfer. This acquisition resulted in a breach of Nuvia’s agreements with Arm. Despite Arm’s subsequent termination of Nuvia’s licenses, Qualcomm and Nuvia allegedly continued using Arm-based technology. They designed and developed semiconductor chips for high-profile products, including Qualcomm’s Snapdragon processors. Qualcomm also publicly promoted its plans to integrate Nuvia’s Arm-based designs into laptops, smartphones, and other devices. This indicated unauthorized use of Arm’s intellectual property.

Injuries

Qualcomm and Nuvia’s actions inflicted significant injuries on Arm’s business model, reputation, and relationships with existing and prospective licensees. By continuing to use and market technology derived from Arm’s architecture without authorization, Qualcomm undermined Arm’s ability to control its intellectual property. This misuse jeopardized the integrity of Arm’s licensing agreements and created confusion in the semiconductor industry about the legitimacy of products featuring Arm-based designs. Arm faced the risk of diminished trust among its partners and customers, threatening its standing as a reliable licensor of microprocessor technology.

Damages

The breach of contract and continued misuse of Arm’s intellectual property caused extensive damages to Arm. Qualcomm’s unauthorized actions deprived Arm of significant licensing fees and royalties, disrupting its expected revenue stream from the terminated agreements. The improper use of Arm’s trademarks and technology diluted the value of Arm’s brand and created market confusion, potentially harming its competitive edge. Additionally, Arm incurred substantial legal and enforcement costs to protect its rights and mitigate the damage caused by Qualcomm’s and Nuvia’s noncompliance. The unauthorized development of semiconductor chips based on Arm’s designs also threatened future opportunities for licensing and partnerships.

Key Arguments and Proceedings

Legal representation

  • Plaintiff(s): Arm Ltd., a U.K. corporation
    • Counsel for Plaintiff: Anne Shea Gaza | Daniel P. Muino | Erik J. Olson | Fahd H. Patel | Henry Huttinger | Joyce Liou | Kyle D. Friedland | Kyle W.K. Mooney | Laura Gilbert Remus | Meet Yatin Mehta | Nicholas R. Fung | Robert M. Vrana | Samantha G. Wilson | Scott F. Llewellyn | Sydney K. Cooper | Zach B. Quinlan
  • Defendant(s):Qualcomm Inc., a Delaware corporation | Qualcomm Technologies, Inc., a Delaware corporation | NuVia, Inc., a Delaware corporation
    • Counsel for Defendants:Jack B. Blumenfeld | Jennifer Ying | Catherine Nyarady | Isaac B. Zaur | Jacob A. Braly | Karen L. Dunn | Melissa F. Zappala | Nora Niedzielski-Eichner | William A. Isaacson

Claims

Arm asserted multiple claims against Qualcomm and Nuvia, emphasizing their breach of contract and trademark infringement under the Lanham Act. They demanded specific performance to enforce the termination provisions of the agreements, requiring Qualcomm and Nuvia to cease all use of Arm-based technology and destroy any related developments. Additionally, Arm sought injunctive relief to prevent further unauthorized use of its intellectual property, arguing that these actions caused irreparable harm to its reputation and business interests. Furthermore, Arm pursued declaratory relief to affirm that Qualcomm’s actions infringed its trademarks, creating confusion about the origin and authenticity of products featuring Arm-based designs. Finally, Arm demanded monetary compensation for damages, including lost profits, harm to its reputation, and the costs incurred to enforce its rights.

Defense

Qualcomm, Inc. and its subsidiary Nuvia, Inc. vigorously defended their actions, asserting that their development and use of semiconductor chip designs were fully compliant with applicable license agreements. Further, Qualcomm claimed that, under its separate, broad licensing agreement with Arm Ltd., it retained independent rights to use Arm technology, including any intellectual property previously licensed by Nuvia. They argued that these preexisting licenses extended to all relevant designs, ensuring the legality of their continued work on custom CPUs and semiconductor chips

Additionally, Qualcomm contended that Arm’s attempt to demand the destruction of Nuvia’s technology was unjustified, as the disputed designs incorporated significant original work and innovation by Nuvia and Qualcomm engineers, independent of Arm’s confidential information.

Qualcomm highlighted that Arm’s publicly available architecture manuals and design frameworks were not subject to confidentiality restrictions. This further invalidated Arm’s claims of unauthorized use.

The defense also criticized Arm for acting opportunistically. It was alleged that Arm terminated Nuvia’s agreements only after Qualcomm had invested significant resources into further developing the Phoenix CPU and other advanced technologies. Qualcomm argued that Arm’s true motive was to extract higher royalties. Additionally, Arm wanted to hinder Qualcomm’s competitive advancements in custom CPU design, which posed a potential threat to Arm’s own commercial interests.

Moreover, Qualcomm asserted that its limited use of Arm trademarks in marketing materials adhered to fair use principles. This use was aimed solely at accurately conveying compatibility with Arm architecture. Qualcomm maintained that these references were lawful and truthful, rebutting allegations of trademark misuse.

By emphasizing its rights under overlapping agreements, Qualcomm highlighted the innovative value of its work. Qualcomm also pointed out the lack of contractual basis for Arm’s demands. In this way, Qualcomm sought to refute all claims of breach, trademark infringement, and misuse of intellectual property. Qualcomm portrayed Arm’s actions as a deliberate effort to stifle innovation and competition in the semiconductor industry.

Jury Verdict

On December 20, 2024, the jury delivered a decisive verdict in favor of Qualcomm, concluding that the company did not violate Arm’s licensing agreement when it acquired the chip design startup Nuvia for $1.4 billion. The jury determined that Qualcomm acted within its rights under its existing architecture license with Arm, which covered the continued development of custom CPU cores obtained through the Nuvia acquisition. This verdict affirmed Qualcomm’s position that its actions adhered to the terms of its licensing agreements and that the company was entitled to utilize Nuvia’s designs without breaching contractual obligations.

While the jury sided with Qualcomm on two key issues, it deadlocked on whether Nuvia itself breached its original licensing agreement with Arm. This impasse prompted U.S. District Court Judge Maryellen Noreika to suggest mediation between the two tech giants to resolve the remaining disputes.

Court Documents:

Documents Available for Purchase upon Request