Arm sues Qualcomm, wants it to “destroy” Nuvia’s pre-acquisition CPU designs

Arm says Qualcomm's Nuvia acquisition is a breach of its license terms.

With its recent Nuvia acquisition, Qualcomm has a real shot at dramatically expanding Arm's market share in the world of servers and Windows laptops. Before Qualcomm can go after Intel, though, the company will have to deal with a lawsuit from... Arm?!

That's right, as Reuters was first to report (case PDF here), Arm is suing Qualcomm over its $1.4 billion acquisition of Nuvia. Arm says that Qualcomm's purchase of Nuvia "caused Nuvia to breach its Arm licenses, leading Arm to terminate those licenses, in turn requiring Qualcomm and Nuvia to stop using and destroy any Arm-based technology developed under the licenses. Undeterred, Qualcomm and Nuvia have continued working on Nuvia’s implementation of Arm architecture in violation of Arm’s rights as the creator and licensor of its technology." As a result of the license breach, Arm wants "Qualcomm and Nuvia to stop using and to destroy the relevant Nuvia technology."

Nuvia has never sold a product, but it is famously founded by lead engineers from Apple's SoC division. Nuvia's CEO (and now SVP of Qualcomm Engineering), Gerard Williams III, was Apple's chief CPU architect for nearly a decade, including for the M1 SoC. The Nuvia acquisition represents Qualcomm borrowing the Apple playbook and attempting to scale up Arm designs to bigger, typically x86 powered, devices.

According to the lawsuit, both Nuvia and Qualcomm held an "Architecture License Agreement (ALA)," the highest (and reportedly most expensive) tier of Arm licensing. Arm doesn't make chips itself—the company's entire business model is designed around licensing its IP to manufacturers. Often that's a license for an "off-the-shelf" Arm-made CPU design that uses the "Cortex" branding. A handful of really big Arm customers have an ALA license, though, which, rather than use an Arm design, lets you design your own Arm chip from scratch. This is the license Apple uses to make all its custom Arm-based SoCs.

So Nuvia and Qualcomm both had a license to make custom Arm chips, but having one company buy the other still leads to licensing problems. Arm's complaints are about the scope and transference of the work done under Nuvia's ALA license. The lawsuit says that "Nuvia’s licensing fees and royalty rates reflected the anticipated scope and nature of Nuvia’s use of the Arm architecture. The licenses safeguarded Arm’s rights and expectations by prohibiting assignment without Arm’s consent, regardless of whether a contemplated assignee had its own Arm licenses." Nuvia was originally a server CPU company, but Qualcomm is adding to that mission with chips for laptops, smartphones, cars, and AR/VR headsets.

Arm says: "Neither Qualcomm nor Nuvia provided prior notice of this transaction to Arm. Nor did they obtain Arm’s consent to the transfer or assignment of the Nuvia licenses." Arm continues: "Soon after the announcement of the merger, Arm informed Qualcomm in writing that Nuvia could not assign its licenses and that Qualcomm could not use Nuvia’s in-process designs developed under the Nuvia ALA without Arm’s consent. For more than a year, Arm negotiated with Qualcomm, through Qualcomm Inc. and Qualcomm Technologies, Inc., in an effort to reach an agreement regarding Qualcomm’s unauthorized  acquisition of Nuvia’s 'in-process technologies' and license." Apparently the talks broke down at some point, and now it's time to break out the lawyers.

Qualcomm gave its side of the story to The Verge, with general counsel Ann Chaplin saying, “Arm has no right, contractual or otherwise, to attempt to interfere with Qualcomm’s or NUVIA’s innovations.” She continued, “Arm’s complaint ignores the fact that Qualcomm has broad, well-established license rights covering its custom-designed CPUs, and we are confident those rights will be affirmed.”

From a big-picture perspective, it's hard to see much sense in Arm going after Qualcomm. Qualcomm and Nuvia represent Arm's biggest shot at near-term market growth, which means more royalties for Arm. Qualcomm has stated it wants to use Nuvia's Arm designs to go after the laptop and server markets, two areas where Intel and AMD are dominant. Arm has 100 percent of the smartphone market and 100 percent of the Apple hardware market, including bigger devices like laptops and PCs. You would think Arm would be thrilled that Qualcomm would want to go after Intel like this.

It's also wild that things got to this point. There is a ton of Arm experience between Qualcomm and Nuvia's Apple pedigree. You would think everyone would know how to navigate the Arm licensing rights by now.

Source: Ars Technica

https://arstechnica.com/gadgets/2022/09/arm-sues-qualcomm-over-its-1-4-billion-nuvia-acquisition/