Legal Dispute Over Processor Licenses Qualcomm Wins Lawsuit Against ARM—Two Dollars in Damages

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In the most recent legal dispute between Qualcomm and Arm, the jury upheld Qualcomm's allegation that Arm had breached its contract with the fabless chipmaker and engaged in intentional conduct designed to disrupt its business. The total amount of damages: two dollars! However, some decisions are still pending.

In the legal dispute between chip companies Qualcomm and Arm, a jury in the U.S. state of Delaware ruled partially in favor of Qualcomm. After a five-day trial, the court found that Arm had violated an existing architecture license agreement and had intentionally interfered with the business relationship between Qualcomm and Meta. However, the jury awarded Qualcomm only symbolic damages totaling two U.S. dollars. Both companies subsequently characterized the verdict as a success.

At the center of the proceedings was the so-called Architecture License Agreement (ALA), which allows Qualcomm to develop and market its own processors based on the ARM instruction set architecture. The agreement is particularly significant for Qualcomm’s in-house Oryon processor cores. The two companies had previously over the licensing terms for processor technologies from Nuvia, the chip developer acquired by Qualcomm. Qualcomm had also achieved a significant victory in this case.

In the current dispute, Qualcomm accused its licensing partner of breaching contractual obligations and hindering the development of its own processors. Specifically, Arm is alleged to have withheld necessary software fixes and testing tools from the Arm Compliance Kit (ACK) that are required to test and validate the processors. Furthermore, Arm allegedly refused to renew licenses for the Cortex-A720, Cortex-A520, and Cortex-M55 processor cores and failed to offer commercially reasonable licensing terms.

Dispute Over Meta Business and Damages

Another point of contention concerned Qualcomm’s business relationships with potential customers. According to the company, Arm had threatened to terminate an architecture license in October 2024 and had deliberately leaked that information to the media. This, among other things, had disrupted negotiations with Meta. Qualcomm estimated the resulting financial loss at approximately $170 million. The jury concluded that Arm had intentionally interfered in the business relationship between Qualcomm and Meta.

Despite these findings, the damages awarded remained extremely low. Of a total of six claims at issue, the jury ruled in favor of Arm on four. For the two successful claims, Qualcomm was awarded one U.S. dollar each as nominal damages. Arm had argued that Qualcomm could not prove any directly demonstrable and quantifiable financial loss resulting from the alleged actions. The low award thus reflects the lack of recognition of a correspondingly high claim for damages.

The companies’ reactions varied accordingly. Qualcomm welcomed the finding of a breach of contract and viewed the ruling as confirmation of its allegations that ARM had deliberately sought to hinder the company’s business. ARM, on the other hand, pointed to the four dismissed claims and the merely symbolic damages. In the British chip designer’s view, the outcome confirms its position that it acted in good faith under the technology licensing agreements.

Future Rulings Could Involve Sums in the Billions

However, the legal dispute is not yet over with the jury’s verdict. U.S. District Judge Maryellen Noreika has yet to decide whether the found violation of the architecture license agreement entitles Qualcomm to suspend royalty payments to Arm for a period of five years. Based on the figures cited during the proceedings, Arm could lose more than two billion U.S. dollars in revenue as a result. The economic consequences of such a decision would thus be significantly greater than the two dollars in damages awarded so far.

In addition, a decision is still pending on whether Arm has fulfilled its obligation to act in good faith during negotiations regarding future architecture licenses. Among other things, this involves the licensing terms for the Arm v10 technology. This issue, too, could have far-reaching implications for future cooperation between the two companies. Furthermore, both sides generally have the option to appeal any unfavorable court rulings. The long-standing licensing dispute between Qualcomm and Arm could therefore continue to occupy the chip industry for some time to come.