Jury Ruling Leaves Arm-Qualcomm Dispute Open, With Billions of Dollars at Stake
Key Facts
Arm and Qualcomm did not reach a settlement on October 28; the most significant legal development was a verdict issued by a Delaware jury on October 13, finding that Arm breached a licensing agreement with Qualcomm and intentionally interfered with its business relationship with Meta. Reuters reported that the verdict did not end the dispute, but left Qualcomm’s claims open for a later stage of the case. At that stage, U.S. District Judge Maryellen Noreika must resolve disputes the jury did not decide. That means the trial’s outcome has not yet settled the fate of payments Arm receives under the licensing agreement. Qualcomm shares closed at $182.97 on October 28, according to EL7 data, which does not establish Arm’s share-price movement or any connection to the verdict.
The trial’s outcome included a specific breach attributed to Arm and other findings in the company’s favor. Reuters said jurors found that Arm breached its obligation to provide software updates and design tools to Qualcomm, while ruling for Arm on five other breach claims. Arm offered an account focused on the claims it won, saying the jury found in its favor on four claims and awarded Qualcomm $1 for each of two other claims. Qualcomm, by contrast, said the jury concluded that Arm breached the long-term architectural license agreement, failed to meet its obligations and acted intentionally to harm its business. The companies’ differing statements reflect each side’s focus on one part of a multi-part verdict, while other claims remain before the court.
The potential financial stakes concern the royalties Qualcomm pays Arm. Reuters said the verdict left open the possibility that the court could allow Qualcomm to stop paying those royalties for up to five years, potentially worth billions of dollars. The jury did not decide that question; Reuters listed it among the matters the court could decide in the next stage. The dispute matters to both companies because Qualcomm’s agreement with Arm runs through 2033, according to a separate Reuters report on the case. The dispute therefore concerns not only liability for an earlier contractual breach, but also the terms governing the continuation of the companies’ financial relationship under the existing agreement.
The case stems from disputes over licensing obligations and chip-design tools. Reuters said Arm filed its original lawsuit in 2022, accusing Qualcomm of violating contracts after its $1.4 billion acquisition of startup Nuvia. In its coverage of the trial’s opening, Reuters reported Qualcomm’s accusation that Arm withheld chip-testing tools Qualcomm said it was entitled to under the contract. Qualcomm also said Arm’s 2024 threat to terminate a key license harmed talks on a deal with Meta. Reuters reported that Qualcomm claimed the potential deal’s value fell by $170 million by the time it closed, an allegation the company presented during the trial. These allegations provide commercial context for the dispute, but remain claims attributed to Qualcomm rather than an additional finding established by the jury’s verdict.
The verdict followed a trial Reuters described as the second between the companies in two years, amid a deterioration in their business relationship after SoftBank Group took control of Arm in 2016. Alongside the claims heard by the jury, the judge heard arguments in a separate proceeding over whether Arm negotiated in good faith with Qualcomm on the next version of Arm chip technology. Reuters said that separate judicial review could continue after the jury trial ended. The next defined step in the dispute is for Maryellen Noreika to resolve several outstanding disputes and claims, including matters related to royalties and negotiations. Until that ruling is issued, the possibility that Qualcomm could stop paying for up to five years remains a question for the court, while the announced licensing agreement runs through 2033.