Delaware jury awards Qualcomm $2 in damages, finds Arm breached license agreement

By Tom Hals

WILMINGTON, Delaware, Oct 13 (Reuters) - Chip technology supplier Arm Holdings breached a licensing agreement with Qualcomm and intentionally interfered with the chipmaker's business relationship with Meta Platforms, a Delaware jury found on Tuesday, but awarded nominal damages of just $2.

The verdict followed a five-day trial last week, the second in two years between the companies, that highlighted the deterioration of their business relationship after SoftBank Group acquired control of Arm in 2016 and Arm shifted from licensing the technology needed to make chips to selling chips of its own.

Shares of Arm were down 1% following the verdict, while shares of Qualcomm rose 1%, although its stock was down slightly from gains of around 2.4% before the verdict.

Both companies welcomed aspects of the verdict, which leaves some key issues unresolved.

"We are gratified that the jury found Arm breached its long-standing Architectural License Agreement (ALA) with Qualcomm, failed to honor its commitments, and intentionally acted to disrupt Qualcomm's businesses," Qualcomm said in a statement.

Arm said that "despite Qualcomm’s pursuit of this case in an attempt to deprive Arm of billions of dollars under our license agreements, the jury’s verdict confirms that Arm operated in good faith under its technology license agreement and its award of only two dollars confirms the merit of Arm’s arguments in the case."

The jury found Arm breached its obligation to provide software patches and tools for its designs. The jury found for Arm on five other breach allegations.

The jury also found that Arm intentionally and negligently interfered with Qualcomm's relations with Meta. Qualcomm claimed it had been on the cusp of a deal with Meta in 2024 when Arm allegedly leaked to Bloomberg News that Qualcomm had breached a licensing agreement, delaying the Meta agreement.

While the jury awarded a nominal $1 for each of those claims, the findings also keep open Qualcomm's claims ahead of the lawsuit's next phase, in which US District Judge Maryellen Noreika must resolve several disputes.

The breach finding leaves open the possibility that Noreika could rule that as a result, Qualcomm can stop paying royalties to Arm for five years, potentially worth billions of dollars. Arm has argued the five-year royalty penalty, which is contained in a clause in the licensing agreement, is unenforceable.

The business interference finding by the jury could be used by Qualcomm to support its narrative that Arm refused to negotiate in good faith for Arm's next version of its technology, which the judge also must resolve. 

The losing side in those decisions would likely appeal. 

(Reporting by Anhata Rooprai in Bengaluru; Editing by Jonathan Ananda, Franklin Paul, David Gaffen and Christian Plumb)