Wednesday was all about the plaintiff’s (Qualcomm) opportunity to make its case. Looking to put some focus on the deluge of details arising throughout the previous two days of testimony, Qualcomm honed in on two areas: defining what is Arm IP versus what is Nuvia IP and the intent of the Nuvia and Qualcomm ALA licenses.
Disclosure: My company, Tirias Research, has consulted for Arm, Qualcomm and other companies mentioned in this article.
As a reminder, the plaintiff, Arm, was claiming that Arm had the right to approve any acquisition of Nuvia and all materials related to a Nuvia design were to be destroyed upon termination of the agreement, according to Arm’s interpretation of the Nuvia ALA license. In addition, Arm claimed that Qualcomm was bound by the Nuvia ALA license and that the Nuvia Phoenix CPU was an Arm-compliant derivative.
In addition to its attorney that testified on Tuesday, Qualcomm called two additional expert witnesses: Dr. Murali Annavaram, Professor at USC, and Cristiano Amon, Qualcomm CEO. Qualcomm supplemented this with video testimony of Arm depositions that appeared to show contradictions in previous Arm testimony and documentation from the first two days.
Determining Who Owns The IP
Throughout expert testimony, Arm has been asserting that all Arm-compliant CPUs are derivatives of the Arm instruction set architecture (ISA). Dr. Annavaran provided a tutorial on designing a CPU and SoC to demonstrate that the ISA does not drive a CPU design. According to Dr. Annavaran, you cannot develop a CPU from an ISA. As he put it, the ISA is the “handshake” between the software and the hardware.
According to Dr. Annavaran, there are thousands of decisions that need to be made in designing a 15 billion transistor chip, but there are common requirements for a CPU no matter what ISA is being used. Only the design of the decoder files used for processing the opcodes and the register definition files are directly tied to the selected ISA. According to Dr. Annavaran, while it was the intent of Nuvia to design an Arm-compliant processor, Nuvia had not completed its design and it was his contention that the design of the Nuvia Phoenix CPU was the property of Nuvia, not Arm.
Arm countered with an examination of the similarities in the register-transfer language (RTL) code, which is used in the design of integrated circuits, of the latest Qualcomm Snapdragon Elite processors, the pre-acquisition Nuvia Phoenix processor, and the Arm ISA (commonly referred to as the Arm Arm). Arm argued that similarities to the Arm ISA designate the CPU designs as Arm derivatives, but according to Dr. Annavaran’s testimony, the hardware is still developed independently of the ISA.
The Nuvia Acquisition
This was followed by testimony from Cristiano Amon on what led to the acquisition of Nuvia and how Qualcomm proceeded after the acquisition. According to Mr. Amon, Qualcomm pursued designing its own CPU cores more than a decade ago because it was struggling with the off-the-shelf Arm CPUs to remain competitive against Apple’s custom CPUs. According to his testimony, Apple CPUs were increasing in performance by 20% per generation while the Arm CPUs were increasing by only 10%. After a few generations of Qualcomm developing its own CPUs, Arm proposed a deal that would provide Qualcomm with competitive CPUs at competitive royalty rates. However, according to Mr. Amon, Arm failed to deliver on the performance but increased the royalty rate.
Still struggling to compete with Apple in smartphones and desiring to enter the PC market, Qualcomm approached Nuvia, a startup, to design new CPU cores for Qualcomm. Nuvia, which was working on CPU designs for servers at the time, declined. Despite the high cost of acquiring Nuvia, Qualcomm finally proceeded with the acquisition after estimating that the cost of the acquisition could be offset with lower royalty rates from moving from the off-the-shelf Arm CPUs under the TLA license to a custom Nuvia CPU design under the Qualcomm ALA license agreement. The savings was estimated at $1.4B per year, which ended up being the negotiated cost of the acquisition.
Through cross-examination of Mr. Amon, Arm once again tried to tie the Nuvia core to the Arm ISA to indicate that it was an Arm derivative CPU, but like Dr. Annavaran, Mr. Amon refuted that connection. Mr. Amon, who had little knowledge of the details of the Nuvia ALA License agreement, also indicated that it was under the assumption that Qualcomm could acquire Nuvia without approval from Arm without consent and without disruption of work based on the Qualcomm ALA license.
Other Supporting Testimony
In addition to the two witnesses, Qualcomm used recorded testimony of Arm personnel to support its case. In the recorded depositions, Arm staff acknowledged the following points:
- The Arm Arm (ISA) does not provide info on how to build a CPU or write instructions
- The Arm Arm does not provide any info on the microarchitecture
- Arm had raised royalty rates on its CPUs by 300% to 400%
- Arm did certify the Qualcomm Phoenix CPU, the continuation of the Nuvia design, as Arm-compliant in 2020.
- Qualcomm asked for a 20% improvement in CPU performance to compete with Apple at a time when the Arm CPUs were only providing a 10% performance improvement.
- Qualcomm will have the right to use Nuvia CPU to replace Arm cores under its ALA license
- The Nuvia ALA contains unusual terminology for an ALA in reference to the ability to approve an acquisition of a licensee
The Case Goes To The Jury
Toward the end of the day, the defense, Qualcomm, rested its case. After dismissing the jury, the judge worked with the parties to determine the instructions for the jury. The final decision was that the jury will determine two items:
- Was Qualcomm required to destroy the material related to the Nuvia design, the Nuvia ALA agreement, once the Nuvia ALA license was canceled? This is at the request of Arm.
- Does the Qualcomm ALA cover all the work Qualcomm has performed to develop its own custom cores? This is at the request of Qualcomm.
The request by Arm seems rather limited after spending two years in litigation. Not even the question of whether there was a breach of the Nuvia ALA by the acquisition of Nuvia, which seemed to be the key point of the litigation, will be addressed to the jury. In addition, per the judge’s determination, Arm is not allowed to ask for damages because it had not done so in prior proceedings. The issue did come up prior to the start of the trial, but the judge refused to allow it.
At first glance, Qualcomm’s question seems to be somewhat self-evident, however, it appears that Qualcomm wants a judicial ruling to prevent any further litigation for its CPU designs, which, given the completed Nuvia acquisition, includes efforts by Nuvia engineers now and moving forward.
Thursday morning, both sides will make their closing arguments before the jury is given its instructions. The other case, Qualcomm/Nuvia’s countersuit regarding the use of Nuvia suggestions in the design of the Arm coherent managed networks (CMN) products, will be decided by the judge later in the week as well.
Coming up next is coverage of the closing arguments and the jury’s verdict, as well as a deep dive into the long history of this dispute and all that has led these two partners to this contentious state.