15
Oct

The Judgment Day: Qualcomm wins ALA and Interference / Unfair Competition Claims, Arm Prevails in TLA Claim

Coverage of the trail:
Day 1: Opening Statements, CEOs take the stand
Day 2: ALA Commitments and Bloomberg leak in focus
Day 3: Focus on License Rates, Judge’s Questions on Remedy, and XXXXXX
Day 4: More XXXXX, Companies Rest Their Case, and Other Considerations
Day 5: Case in Jury’s Hands, Arguments Conclude in Bench Trial, My Final Take

Despite the case’s complexity and the even more complex verdict form, the jury made a quick decision. Unlike the last case, they were also decisive. Qualcomm won on its two most important claims, which its lawyer said were crucial to the company’s future: breach of the ALA and interference and unfair competition. As their lawyer Karen Dunn put it in the closing argument, this was a case of principles and, if nothing else, the jury should side with Qualcomm and award nominal monetary compensation. And that’s exactly what they did.
Arm prevailed on the TLA claim, which is extremely important to them, because the vast majority of their customers have TLAs. They also felt vindicated with the mere $2 of total damages. All along, their lawyers had argued that there was no significant material harm.
Not to gloat, but this is exactly what I had predicted in my last day’s blog (Check Day 5 link above):
“…Here is my take on the jury trials, FWIW:
  1. On the ALA breach case, Qualcomm has made a strong case, except for Arm’s last-minute “customization” argument…
  2. On the TLA breach, …Arm has brought some interesting questions on motivation, etc., to sow doubt in the jury’s mind…
  3. On the interference claim, Qualcomm has an airtight case, with solid arguments and proof…”
Possible reasons for Jury’s decision:
Well, it is impossible to know about the jury deliberations. In the handful of jury trials I’ve attended, juries seem to relate more to and believe the non-legalese testimony of folks on the ground doing the hard work than the polished, sometimes brash, words of top executives. Here are a few things that might have tipped the jury one way or the other: Arm’s internal documents about “unwinding” ALA, and views of Qualcomm’s Nuvia acquisition; Arm’s coordinated “PR play,” which might look normal for marketing/business folks, but did not seem so to the jury; In the same vein, testimony of some of Qualcomm’s engineers with no plan for using the TLA cores, etc. The damages calculations claims (done behind closed doors) didn’t convince the jury either.
What’s next?
Well, jury trial is only the first part of the case. It sets the tone and stage for what comes next. Other equally significant court contests and decisions lie ahead. Qualcomm’s win on ALA and tortious claims jury factual finding will be on the judge’s mind.
Bench Trials:
The closing arguments in the bench trial are scheduled for Oct 20th. The judge, not the jury, will decide this trial. The arguments for this trial happened every day after the jury retired. The judge will rule on two things:
  1. Did Arm refuse to negotiate with Qualcomm for a license for the latest version of the Arm ISA (v10)?
  • This is part of the ALA. Not only the decision, but the remedy also seems complex. The judge has indicated her unwillingness to arbitrate the “fair” licensing rate
  1. Did Arm violate the California Unfair Competition Law (UCL)?
  • For this determination, the jury has decided that Arm should be considered both a supplier and competitor to Qualcomm. There are nuances, but both considerations strengthen Qualcomm’s case. The judge will also consider interference with other customers (jury only considered Meta).
These rulings will take several weeks or months, and the jury’s factual findings will be on the judge’s mind during the decision.
Liquidated Damages Case:
Before this trial, there was another bench trial in which Arm claimed that the damages clause in the ALA (5 years of free license) was illegal under California law. The judge has indicated that she intends to rule in Arm’s favor but has not yet done so. After Qualcomm won the ALA claim at jury trial, this case is now relevant.
Appeal of the Arm case (first case):
This saga began when Arm sued Qualcomm, claiming its acquisition of Nuvia voided ALA. Arm lost that case but appealed. That will be heard in the United States Court of Appeals for the Third Circuit on Oct 21st, 2026.
Future Appeal of all cases:
Given the complexity and business interests involved in both cases, there is a strong possibility that, regardless of who wins, the losing party will appeal to the higher courts. To say the least, the legal tussles between the companies will go on for a very long time, perhaps years.
Closing thoughts
Almost the entire semiconductor industry has been watching these battles between Qualcomm and Arm. That includes a handful (around ten) of ALA holders, more than 600 TLA licensees, more than 22 million Arm developers, and even the entire RISC-V ecosystem. The outcomes of these cases will affect not only the companies, but also the ecosystem in one way or another.
From Qualcomm’s perspective, ALA win is a major deal. From Arm’s perspective, a verdict that its TLA offer was made in good faith will give it confidence in its dealings with other TLA licensees.
From Arm ecosystem’ perspective, the bench-trial ruling on the UCL is the most consequential. But that discussion is for another day.