{"id":4571,"date":"2022-12-22T13:42:23","date_gmt":"2022-12-22T13:42:23","guid":{"rendered":"https:\/\/www.tantraanalyst.com\/ta\/?p=4571"},"modified":"2023-04-13T09:46:04","modified_gmt":"2023-04-13T09:46:04","slug":"qualcomm-vs-arm-court-dates-announced-who-has-the-luxury-of-time-will-win","status":"publish","type":"post","link":"https:\/\/www.tantraanalyst.com\/ta\/qualcomm-vs-arm-court-dates-announced-who-has-the-luxury-of-time-will-win\/","title":{"rendered":"Qualcomm vs. Arm: Court dates announced\u2014who has the luxury of time will win"},"content":{"rendered":"<figure id=\"attachment_4572\" aria-describedby=\"caption-attachment-4572\" style=\"width: 702px\" class=\"wp-caption alignright\"><a href=\"https:\/\/bit.ly\/3jsxSI7\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-4572 size-full\" src=\"https:\/\/www.tantraanalyst.com\/ta\/wp-content\/uploads\/2022\/12\/221222_Qualcomm_vs_Arm_Court_dates_announced.jpg\" alt=\"Qualcomm\" width=\"702\" height=\"336\" srcset=\"https:\/\/www.tantraanalyst.com\/ta\/wp-content\/uploads\/2022\/12\/221222_Qualcomm_vs_Arm_Court_dates_announced.jpg 702w, https:\/\/www.tantraanalyst.com\/ta\/wp-content\/uploads\/2022\/12\/221222_Qualcomm_vs_Arm_Court_dates_announced-300x144.jpg 300w, https:\/\/www.tantraanalyst.com\/ta\/wp-content\/uploads\/2022\/12\/221222_Qualcomm_vs_Arm_Court_dates_announced-700x336.jpg 700w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/a><figcaption id=\"caption-attachment-4572\" class=\"wp-caption-text\">RCR Wireless News, December 22, 2022<\/figcaption><\/figure>\n<h6><span style=\"color: #808080;\">In the ongoing\u00a0<span style=\"color: #800000;\"><a style=\"color: #800000;\" href=\"https:\/\/bit.ly\/3Gafs7U\" target=\"_blank\" rel=\"noopener\">Qualcomm vs. Arm saga<\/a>,<\/span> the US District Court of Delaware recently released the<span style=\"color: #800000;\">\u00a0<a style=\"color: #800000;\" href=\"https:\/\/bit.ly\/3veHFEg\" target=\"_blank\" rel=\"noopener\">case schedule<\/a>,<\/span> setting the stage for the battle. It reveals two critical dates. The first is for the discovery process, during which early settlements often occur. Second is the trial date, which lays out how long the litigants have to wait for a legal resolution. Usually, litigants, which can wait longer, have the upper hand, especially if the opposing party can\u2019t handle the uncertainty and is pressed for time.\u00a0<\/span><\/h6>\n<h6><span style=\"color: #808080;\">Unless either party realizes that their case is weak during discovery, we are on for a long battle. In such a case, Qualcomm has the luxury of time, which might push Arm for a quicker and unfavorable settlement.\u00a0<\/span><\/h6>\n<h6><span style=\"color: #808080;\"><em>Note: If you would like to know the chronology of this battle, what the issues are, and what is at stake, check out my earlier article, <span style=\"color: #800000;\">\u201c<\/span><\/em><span style=\"color: #800000;\"><a style=\"color: #800000;\" href=\"https:\/\/bit.ly\/3Gafs7U\" target=\"_blank\" rel=\"noopener\"><em>Qualcomm, Arm legal spat regarding Nuvia becomes more bitter<\/em><\/a><em>\u201c<\/em><\/span><\/span><\/h6>\n<h3><span style=\"color: #000000;\"><strong>It\u2019s a game of chicken<\/strong><\/span><\/h3>\n<h6><span style=\"color: #808080;\">Typically, litigation between large companies, such as this, is a \u201cgame of chicken.\u201d It\u2019s a matter of who gives up first. There are a couple of stages where this \u201cgiving up\u201d can happen.<\/span><\/h6>\n<h6><span style=\"color: #808080;\">The first is during the discovery phase, when both parties closely examine the other party\u2019s evidence and other details. A good legal team can assess their case\u2019s merits and, if weak, settle quickly.<\/span><\/h6>\n<h6><span style=\"color: #808080;\">If the discovery is inconclusive, the next thing both companies try to avoid is a long-drawn jury trial, which brings all the dirty laundry into the open. So, most such cases get settled before the jury trial begins. Even if the case goes to trial and is decided in the lower courts, litigants with the luxury of time can keep appealing to higher courts and delay the final verdict. So, it all boils down to who has the time advantage and can stay longer without succumbing to market, business, and other pressures.\u00a0<\/span><\/h6>\n<h3><span style=\"color: #000000;\"><strong>Time in on Qualcomm\u2019s side<\/strong><\/span><\/h3>\n<h6><span style=\"color: #808080;\">In the Qualcomm vs. Arm case, discovery is set to start on January 13<sup>th<\/sup>, 2023, and the trial on September 23<sup>rd<\/sup>, 2024. The actual trial is almost two years away. In such a case, I think Qualcomm has the time-advantage, for a few reasons:<\/span><\/h6>\n<ul>\n<li>\n<h6><span style=\"color: #808080;\">Qualcomm can keep using Nuvia IP without any issues till the matter is resolved<\/span><\/h6>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<h6><span style=\"color: #808080;\">Based on<span style=\"color: #800000;\">\u00a0<a style=\"color: #800000;\" href=\"https:\/\/herit.ag\/3hKMeTS\" target=\"_blank\" rel=\"noopener\">precedent<\/a><\/span>, it is highly unlikely that Arm will get an injunction against Qualcomm. And probably realizing this, Arm has not yet even asked for a preliminary one. This means Qualcomm can keep making and selling chips based on the disputed IP while the case drags on.\u00a0<\/span><\/h6>\n<\/li>\n<li>\n<h6><span style=\"color: #808080;\">No matter who wins, the other party will most likely appeal, which might extend the case to 2025 or even 2026.\u00a0<\/span><\/h6>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<h6><span style=\"color: #808080;\">Qualcomm can indemnify and mitigate the risks of OEMs using the disputed IP<\/span><\/h6>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<h6><span style=\"color: #808080;\">Qualcomm is initially targeting the laptop\/compute market with Nuvia IP through its newly announced\u00a0<span style=\"color: #800000;\"><a style=\"color: #800000;\" href=\"https:\/\/bit.ly\/3WgOIbF\" target=\"_blank\" rel=\"noopener\">Oryon CPU core<\/a><\/span>. Arm might be thinking because of the litigation, OEMs will be discouraged from developing products based on Oryon. However, Qualcomm can easily address that by indemnifying any investment risks OEMs face.\u00a0<\/span><\/h6>\n<\/li>\n<li>\n<h6><span style=\"color: #808080;\">Since OEMs will initially utilize Oryon for fewer models, the overall shipments will be relatively small. Hence Indemnification is quite feasible for Qualcomm.\u00a0<\/span><\/h6>\n<\/li>\n<li>\n<h6><span style=\"color: #808080;\">This will be an easy decision for OEMs \u2013 their limited initial investments for experimenting with the new platform are protected, while the possible future upside is enormous.<\/span><\/h6>\n<\/li>\n<li>\n<h6><span style=\"color: #808080;\">Qualcomm\u2019s litigation prowess and recent successes against giants like Apple and FTC will give a lot of confidence to OEMs.<\/span><\/h6>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<h6><span style=\"color: #808080;\">SoftBank would like to IPO Arm as soon as it can. However, the uncertainty of this case will significantly depress its valuation.\u00a0<\/span><\/h6>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<h6><span style=\"color: #808080;\">This case puts Arm\u2019s future revenue from Qualcomm at risk. If Arm loses, its revenue from Qualcomm will be reduced to a paltry architecture license fee of 2 to 3 cents per device (estimated), magnitudes lower than the current rate.<\/span><\/h6>\n<\/li>\n<li>\n<h6><span style=\"color: #808080;\">If Arm wins, there is a considerable upside. That might attract some risky investors, but they will demand a discount from SoftBank\/Arm for that risk.<\/span><\/h6>\n<\/li>\n<li>\n<h6><span style=\"color: #808080;\">Qualcomm\u2019s strong track record in litigation will also affect investor sentiment.<\/span><\/h6>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<h6><span style=\"color: #808080;\">SoftBank may not want to wait till the case is over for IPO<\/span><\/h6>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<h6><span style=\"color: #808080;\">If the case drags on till 2026, that is a long time in the tech industry. A lot of things can change. For example, competing architectures like RISC-V might become more prominent. Qualcomm recently said it has already\u00a0<span style=\"color: #800000;\"><a style=\"color: #800000;\" href=\"https:\/\/bit.ly\/3BTOcIe\" target=\"_blank\" rel=\"noopener\">shipped 650 million<\/a><\/span>\u00a0RISC-V-based microcontrollers. Many major companies, including Google, Intel, and AMD, are members of the\u00a0<span style=\"color: #800000;\"><a style=\"color: #800000;\" href=\"https:\/\/bit.ly\/3VlgMJw\" target=\"_blank\" rel=\"noopener\">RISC-V group<\/a><\/span>. This might reduce Arm\u2019s valuation if SoftBank waits longer for IPO.<\/span><\/h6>\n<\/li>\n<li>\n<h6><span style=\"color: #808080;\">SoftBank\u2019s other bets are also not doing\u00a0<a style=\"color: #808080;\" href=\"https:\/\/on.ft.com\/3YIgO0V\" target=\"_blank\" rel=\"noopener\"><span style=\"color: #800000;\">so great<\/span><\/a>. The upcoming slowdown in the tech industry might push it to dispose of Arm sooner than later.<\/span><\/h6>\n<\/li>\n<\/ul>\n<h6><span style=\"color: #808080;\">Arguably, the prolonged litigation will also have some adverse impact on Qualcomm. As indicated many times by its CEO Cristiano Amon and other executives, Qualcomm plans to build on Nuvia IP and use it across its portfolio, from smartphones to automotive and IoT. The uncertainty might affect its long-term strategy, roadmap planning, and R&amp;D investments. This might incentivize an early settlement but is not significant enough to compel them to do it.<\/span><\/h6>\n<h3><strong><span style=\"color: #000000;\">Closing thoughts<\/span><\/strong><\/h3>\n<h6><span style=\"color: #808080;\">The Qualcomm vs. Arm case has become a game of chicken. There might be a settlement based on discovery. If not, SoftBank\/Arm can\u2019t afford prolonged litigation, but Qualcomm can. This might push Arm to settle sooner and at terms more favorable to Qualcomm.\u00a0<\/span><\/h6>\n<h6><span style=\"color: #808080;\">There are some other considerations as well, such as the worst- and best-case scenarios, how the\u00a0<span style=\"color: #800000;\"><a style=\"color: #800000;\" href=\"https:\/\/bit.ly\/3BVDfGp\" target=\"_blank\" rel=\"noopener\">recent appointment<\/a><\/span>\u00a0of Qualcomm veteran and previous CEO Paul Jacobs to the Arm board affect the dynamics of the case, and so on. Those will be the subject of my future article. So, be on the lookout.\u00a0<\/span><\/h6>\n<h6><span style=\"color: #808080;\">Meanwhile, If you want to read more articles like this and get an up-to-date analysis of the latest mobile and tech industry news, sign-up for our monthly newsletter at<span style=\"color: #800000;\">\u00a0<a style=\"color: #800000;\" href=\"https:\/\/bit.ly\/TA-Newsletter\" target=\"_blank\" rel=\"noopener\">TantraAnalyst.com\/Newsletter<\/a><\/span>, or listen to our\u00a0<span style=\"color: #800000;\"><a style=\"color: #800000;\" href=\"https:\/\/www.tantraanalyst.com\/ta\/podcast\/\" target=\"_blank\" rel=\"noopener\">Tantra\u2019s Mantra podcast<\/a>.<\/span><\/span><\/h6>\n","protected":false},"excerpt":{"rendered":"<p>In the ongoing\u00a0Qualcomm vs. Arm saga, the US District Court of Delaware recently released the\u00a0case schedule, setting the stage for the battle. It reveals two critical dates. The first is for the discovery process, during which early settlements often occur. Second is the trial date, which lays out how long the litigants have to wait [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":4572,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"image","meta":{"footnotes":""},"categories":[6,58,7],"tags":[],"class_list":["post-4571","post","type-post","status-publish","format-image","has-post-thumbnail","hentry","category-5g","category-ai-compute-iot","category-ipr","post_format-post-format-image"],"aioseo_notices":[],"aioseo_head":"\n\t\t<!-- All in One SEO 5.0.0.1 - aioseo.com -->\n\t<meta name=\"description\" content=\"Unless either party realizes that their case is weak during discovery, we are on for a long battle. 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