Qualcomm: Arm lawsuit motivated by greed, 'payback' for opposing Nvidia takeover

A contract is a contract, says Brit CPU designer

Qualcomm has painted Arm as a greedy, capricious bully that's fixated on extracting more and more licensing fees for its designs.

The Snapdragon giant hit out at the Softbank-owned CPU designer in a court filing responding to Arm's lawsuit against Qualcomm.

Late this summer, Arm sued Qualcomm, accusing the US chip titan of breaking the terms of its licenses from Arm, and demanded the destruction of Nuvia’s CPU designs.

Qualcomm, which acquired Nuvia early last year for $1.4 billion, planned to incorporate the startup’s CPU cores into future products, including those aimed at notebooks and servers.

Crucially, Nuvia had an Armv8 architectural license from Arm, allowing Nuvia to design its own fully custom Arm-compatible processors, which Nuvia intended to use in datacenter systems. Qualcomm also licensed chip blueprints from Arm to use in its Snapdragon family of chips: Qualcomm holds Armv8 and v9 licenses as well as licenses for off-the-shelf, pre-designed CPU cores from Arm.

And when Qualcomm took over Nuvia, Qualcomm started to use Nuvia's Arm-compatible CPU cores for its own chips.

Arm alleged Qualcomm failed to obtain Arm’s consent, as required by its licenses, to absorb and use that Nuvia-designed technology, which was produced under Nuvia's architectural license. Arm said Qualcomm had declined to negotiate new licensing terms after the Nuvia acquisition.

Arm basically argued that the license it gave Nuvia was for Nuvia's Armv8 server chips, and Qualcomm couldn't just start integrating those Nuvia designs even though it bought Nuvia: Qualcomm had to ask for Arm's permission as per the licensing agreements, it was claimed.

For one thing, it appears, Nuvia had a higher royalty rate with Arm than Qualcomm had with Arm, and Qualcomm had hoped to use Nuvia's designs on its lower rate. Arm would prefer Qualcomm pay the higher rate when it comes to using Nuvia's blueprints, something that Qualcomm is seemingly resisting.

"Qualcomm effectively seeks to circumvent Arm’s licensing model," by buying Nuvia and continuing to use the startup's licenses rather than get fresh license agreements, Arm's lawsuit stated.

Arm has no right to demand any destruction of Qualcomm’s CPU technology

In Qualcomm’s 77-page response [PDF] to the suit, Qualy denied the vast majority of complaints leveled against it. Qualcomm argued that its Armv8 architectural license with Arm was "broadly overlapping" with the one Nuvia had, with pretty much the same rights. That's broadly, not totally. In Qualcomm's mind, the license it had with Arm was the same as the one Nuvia had with Arm.

The Snapdragon designer also suggested that Arm’s efforts to prevent it from using the core designs acquired from Nuvia was “payback” for opposing Nvidia’s bid to buy the British biz.

Nvidia's takeover of Arm fell through earlier this year after Nvidia failed to garner regulatory support for the mega-merger amid complaints from Qualcomm, Google, and others.

“Arm has no right to demand any destruction of Qualcomm’s CPU technology because Qualcomm’s use of Arm technology and information is licensed under overlapping license agreements,” Qualcomm submitted to the court.

It's understood that Arm licenses are tailored to the customer use case and situation. As such, Arm argues Qualcomm really should have negotiated a suitable royalty rate and obtained permission to use Nuvia’s IP, as required by the paperwork.

Qualcomm's filing states that Qualcomm believed Arm would welcome the acquisition, but instead demanded Qualcomm pay higher royalty rates; restrict Qualcomm employees with access to Arm confidential information from working on any CPU design related to the Nuvia acquisition for three years; pay a design transfer fee for Nuvia’s CPU design; and agree to a separate license subject to additional fees.

“Arm’s demands were outrageous,” Qualcomm told the court. “Arm is claiming a right to control the transfer of Nuvia technology, when Nuvia’s ALA [architectural license agreement] provided no such rights to Arm.”

Failing to coax Qualcomm into paying higher fees and delaying development of Nuvia-derived CPUs, Arm's "alternative strategy was to seek to preclude Qualcomm from proceeding with developing its custom CPU, and in doing so, force the purchase of Arm’s off-the-shelf CPU," wrote Qualcomm.

Background

Arm offers a full suite of pre-built, off-the-shelf core designs under its Cortex and Neoverse portfolios, which chipmakers can license under a more restrictive technology license agreement. Qualcomm holds both architectural (ALA) and technology (TLA) license agreements with Arm and has long used its Cortex cores in its Snapdragon mobile processors.

Qualcomm appears to suggest that Arm may have been concerned that a shift to Nuvia’s core designs could negatively impact Arm's profit margins. Chips covered by ALAs usually have a lower royalty rate to Arm than those using TLA cores.

If Qualcomm uses CPU cores designed by Nuvia under the startup's architectural license, Qualcomm doesn't have to pay Arm as much in royalties per-chip than if Qualcomm licensed off-the-shelf Arm CPU cores. And Arm seems to be arguing that Qualcomm can't use its own ALAs from Arm to cover the Nuvia-designed cores, as those will have to be renegotiated.

“The TLA has a higher royalty rate than Qualcomm’s ALA,” Qualcomm’s response reads. “When Qualcomm successfully replaces Arm-designed CPUs with its own designs, Qualcomm will pay Arm lower royalties under the ALA.”

The Snapdragon giant believed the integration of Nuvia’s Phoenix cores into its products would allow it “to compete more effectively against not only rival Arm licensees and Arm, but also rival suppliers of CPUs compliant with other instruction set architectures — notably, Intel’s x86.”

The chipmaker has called on the Delaware federal court to dismiss Arm’s claims and declare Qualcomm and Nuvia’s conduct fully licensed.

“Unless this court rejects Arm’s arguments, Arm’s extreme position could be weaponized against all of its licensees, allowing Arm to claim ownership over all its licensees’ innovations,” reads Qualcomm’s response, which was very quietly filed on a Friday at the end of September.

Arm is seeking to enforce Qualcomm’s obligation to destroy and stop using the Nuvia designs that were derived from Arm’s technology

Arm, meanwhile, maintains that it is simply protecting its ecosystem and partners from those that would circumvent the rules.

“Arm’s claim against Qualcomm is aimed at protecting the Arm ecosystem and partners who rely on our intellectual property and innovative designs. Qualcomm has violated the terms of the Nuvia license agreement and yet it continues to use the technology, unlicensed,” Arm told The Register today in a statement.

“This is an egregious breach of our agreement and ignores the requirements related to IP license assignment that are standard in Arm licensing agreements.

"Arm is seeking to enforce Qualcomm’s obligation to destroy and stop using the Nuvia designs that were derived from Arm’s technology under the terminated Nuvia agreements. We believe our argument is clear, and we are confident the court will agree.”

From our point of view, the row seems to be this: Arm wants Qualcomm to stick to the letter of the license agreements, and Qualcomm thinks it hasn't done anything wrong, and if it has, it was at least sticking to the spirit of the text. Until the wording of the ALAs are public at trial, we'll perhaps never know for sure. ®

 

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