By Tom Hals and Max A. Cherney
WILMINGTON, Delaware (Reuters) -A legal battle between Arm and Qualcomm (NASDAQ:) that could disrupt a wave of artificial intelligence PCs began on Monday, as the chipmakers laid out contrasting versions of a contract dispute, describing it as a matter of corporate deception or an attempt to stifle competition.
The crux of the litigation is a clash over Qualcomm’s license agreement for the use of Arm’s intellectual property and Qualcomm’s 2021 $1.4 billion acquisition of chip startup Nuvia.
Qualcomm used Nuvia’s designs to create new low-powered AI PC chips launched earlier this year that Microsoft (NASDAQ:) and others expect will help the Windows operating system regain ground lost to laptops made by Apple (NASDAQ:).
During opening arguments, attorneys for both companies displayed on a screen for jurors images of contracts, emails and internal corporate chats.
“We are here asking you to assist us with enforcing our rights,” Daralyn Durie, an attorney for Arm, told the jury.
She walked the jury through the basics of license and royalty agreements, and showed them emails that she said would prove Qualcomm knew it was using Arm technology without permission.
Qualcomm’s attorney told jurors the evidence would show that Arm was under pressure to raise royalty rates, while at the same time its technology was falling further and further behind.
“It’s very sad actually,” said Karen Dunn, an attorney for Qualcomm. “They are here because they want to own the future and they don’t want Qualcomm to compete with them.”
Expected witnesses at the one-week trial include Arm Chief Executive Rene Haas, Qualcomm CEO Cristiano Amon and Nuvia founder Gerard Williams, who was a senior executive in Apple’s chip unit and is currently a Qualcomm vice president.
Nuvia and Qualcomm each had licensing agreements with Arm but with different financial terms. To use the designs based on Nuvia technology, Arm has said Qualcomm must renegotiate the Nuvia contract terms.
Qualcomm has said that its “well-established license rights” cover any custom-designed central processing units (CPUs) and is “confident those rights will be affirmed.”
William Abbey, Arm’s chief marketing officer, was the first witness. He told jurors Arm had terminated the Nuvia agreement rather than consent to transfer it to Qualcomm and that Arm was justified in doing so.
Qualcomm’s attorney, Bill Isaacson, tried to show the jury that Abbey’s testimony had shifted since he was questioned under oath in a deposition in 2023, when Abbey testified that Nuvia, not Arm, terminated the licensing agreement.
“You say things you don’t fully recollect,” he told the eight jurors, referring to the 2023 testimony. “I made a mistake.”
Arm has argued that Qualcomm should be required to destroy the Nuvia designs and has not asked for monetary damages.
According to Bernstein analyst Stacy Rasgon, Qualcomm pays Arm roughly $300 million a year in fees.
Britain-based Arm is owned by SoftBank (TYO:) Group, which listed Arm in the U.S. in 2023.
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