Qualcomm-Arm Contract Clash Nears Pivotal Jury Decision

Key Moments

Escalating Legal Battle Heads to Jury

WILMINGTON, Delaware, Oct 9 (Reuters) – A contract dispute between Qualcomm and Arm Holdings is moving to a critical phase, with a jury scheduled on Friday to begin weighing claims that Arm violated licensing agreements and deliberately undermined Qualcomm’s business dealings with Meta Platforms.

The case, set for five days of proceedings, marks the second courtroom confrontation between the two companies in as many years. It underscores the strain in their relationship following SoftBank Group Corp’s acquisition of control of Arm in 2016 and Arm’s shift from primarily licensing chip technology to also selling its own chips.

The outcome could affect whether Qualcomm – whose existing license to Arm’s computing architecture extends through 2033 – can ultimately secure mutually acceptable terms for future generations of Arm designs.

Qualcomm’s Allegations Against Arm

Qualcomm is asking the jury to find that Arm breached its contractual obligations in several ways. The chipmaker contends that Arm withheld software patches and tools associated with its designs, in violation of Qualcomm’s licensing rights.

Qualcomm also argues that Arm failed to honor a pricing-related provision designed to ensure Qualcomm paid no more than 10% above the lowest price Arm charged for its processor designs. According to Qualcomm, that clause was intended to protect it from being disadvantaged relative to other Arm customers.

Beyond the licensing terms, Qualcomm alleges that Arm sought to disrupt its dealings with Meta Platforms. Qualcomm claims Arm attempted to damage that relationship by providing Bloomberg with a copy of an Arm letter sent in 2024, in which Arm told Qualcomm it was purportedly in breach of a key license agreement.

Arm’s Response and Focus on Damages

Arm’s legal team has tried to steer the jury’s attention toward the question of whether Qualcomm has actually suffered any injury. Arm has characterized the lawsuit as a strategic effort by Qualcomm to gain leverage during contentious negotiations over licensing terms.

In parallel with the jury trial, a related bench trial was held this week on whether Arm is engaging in good-faith negotiations on future licensing arrangements. That proceeding has concluded, but the court’s decision on that issue is expected to come sometime after the jury returns its verdict.

Repeat Players, Familiar Issues

The current trial in federal court in Wilmington, Delaware, has revolved around many of the same factual disputes examined in a 2024 trial. In that earlier case, Arm failed to persuade a jury that Qualcomm had breached its license agreement with Arm.

Both trials have featured testimony from Arm CEO Rene Haas and Qualcomm CEO Cristiano Amon. US District Judge Maryellen Noreika has presided over both matters.

Key Arguments in Court

Qualcomm’s counsel, Karen Dunn, emphasized during her opening remarks how central the dispute is to the company’s operations.

“It’s really bad because Qualcomm’s entire chip business depends on Arm and on Arm honoring its contract and honoring its promises,” she said on Monday.

Qualcomm had sought a pretrial ruling from Judge Noreika on a contractual clause that, according to Qualcomm, would permit it to suspend royalty payments for five years if Arm were found to have breached the agreement. The judge has not yet ruled on that question. Arm, for its part, maintains that the proposed royalty suspension is unenforceable.

Arm’s attorney, Gregg LoCascio, argued to the jury that Qualcomm has not been economically damaged by the conduct it complains of.

“They were not harmed in the least,” Arm’s attorney Gregg LoCascio told the jury on Monday.

Core Issues at Stake