It wouldn't impact Apple because Apple isn't acquiring Nuvia.
The article doesn't do a good job of talking about the case. I will try to summarize what is at issue (IANAL nor an expert on this case). I'm going to start by telling ARM's side of the story (since they're the ones suing).
Nuvia got a license from ARM. Part of that license was a requirement that any transfer of Nuvia's tech developed under these licenses required ARM approval. Nuvia agreed to this, presumably to get more favorable rates. Qualcomm bought Nuvia to jumpstart their custom-core business. ARM didn't consent to the transfer. Therefore, Qualcomm must destroy the Nuvia tech or reach an agreement with ARM.
Why would ARM want to do this? Let's say you're ARM. You're the king of mobile, but you have very little presence in the datacenter. Nuvia comes along and says, "we think ARM can conquer the datacenter." Awesome, you now have a company that will start rolling some sweet datacenter money your way. But what if Nuvia is just a trojan horse? What if they're just a smokescreen to create some custom cores and then have one of the companies that licenses your cores switch to only licensing your architecture? That would be terrible for your revenue. That's not Nuvia's strategy: they genuinely want to do their stated mission. Nuvia and ARM agree that ARM will have veto power over transfer of their IP. Fast forward a few years and it turns out that chip startups are hard and Qualcomm has lots of cash and the potential to bring your dreams to life - and more. Qualcomm's lawyers believe they will be able to get around the agreement - they've been able to bead back FRAND patent claims for decades, even against Apple.
Why would Nuvia agree to this? Possibly because they had no other choice. If ARM won't give you an architecture license without this, you have to agree to it. Or maybe it was a way of getting a lot of cost savings. Or maybe ARM would give you the kind of support and service that would cut years off the development of your custom cores because ARM felt safe knowing that you couldn't just sell that on to Qualcomm or MediaTek.
Ultimately, this doesn't impact Apple because Apple isn't buying Nuvia.
ARM says, "The licenses safeguarded Arm's rights and expectations by prohibiting assignment without Arm's consent, regardless of whether a contemplated assignee had its own Arm licenses."
For ARM, the potential issue here is that Qualcomm (one of their largest licensees) stops buying ARM-designed cores because they have their own designs. That is fair insofar as Qualcomm has an architecture license. However, it isn't fair if they do that by buying a company that explicitly agreed that their tech wouldn't be transferred without ARM's consent.
Let's say that ARM licensed Nuvia and the restriction was explicit: you can never sell your company to Qualcomm. Then they sell the company to Qualcomm. Not allowed, right? In this case, Qualcomm is arguing that Qualcomm has its own architecture license so it should be allowed to use its architecture license with Nuvia's designs.
Now, I don't have access to the Nuvia/ARM contract so I can't really say if ARM's complaint is valid. Did Nuvia's license require the destruction of any technology created under such license when the license terminates as ARM alleges?
Qualcomm says that the requirement to destroy information only applies to ARM-provided information and not anything developed under the license.
It's really hard to tell without actually having access to the license agreements who is right. Qualcomm's filing seems to fall back on the idea that it would be ridiculous to give ARM this kind of power over what Nuvia had created. However, companies seem to make these types of agreements all the time. ARM wanted to give Nuvia an opportunity to succeed, but also wanted to prevent Nuvia from just selling itself to Qualcomm, MediaTek, etc. So it inserted a clause to prevent that without ARM's agreement. Nuvia could be an independent company and sell all its chips and become the next big chip designer. If they wanted to be bought by Qualcomm or someone, they could negotiate with ARM for ARM's consent.
To me, this op-ed reads like Qualcomm propaganda. To me, it sounds like ARM has Qualcomm dead-to-rights and Qualcomm is trying to allege something unrelated to the case: that ARM wants to cease its architecture licenses because it sees that companies will be able to stop paying them for ARM-designed cores. That would certainly be problematic, but many ARM licensees have perpetual architecture licenses (like Apple and presumably Qualcomm as well) so it wouldn't actually impact them if ARM pivoted their business model in this way. It's also just speculation on ARM's future business model.
I definitely understand the position of those who would hate ARM in this case. ARM isn't an open-source company. They're open...to companies paying them royalties. ARM wants to protect their current revenue while also being open enough that they can enter new markets - like the datacenter. That's a hard line to balance, but it sounds like they tried to do that with Nuvia: giving them a license on good terms in exchange for a guarantee that they weren't just a trojan horse to undercut revenue from Qualcomm, MediaTek, or others.
I'm not trying to argue that's good for consumers or the market in general. As a consumer, if we eliminated all existing patents while pinky-swearing "we won't do that again" it would mean we'd continue to get all the future benefits of patents (since inventors would feel safe that their future inventions would get paid back) while not suffering the monopoly of current patents (since once the invention has been made, we no longer need to incentivize that invention). Likewise, if we just eliminated ARM's IP, it would be great - as long as we didn't make other companies worry that we'd be eliminating their IP as well. While we're eliminating IP, eliminating Qualcomm's patents might have some of the biggest impact - Qualcomm literally wants more royalties from a device if it includes a better screen or camera despite using the same LTE/5G.
I'd love to actually see the architecture license with Nuvia, but instead I guess I'll just read the sniping that Qualcomm and ARM make in their filings.
100% this. Source: previously worked at Arm. No inside knowledge of this case but this explanation fits background perfectly, whereas the article’s suggestions are incoherent.
Sounds like a change of control type clause. Such clauses are common enough that I‘ve seen some and I‘m not a lawyer. There should be enough case law that Qualcomm needs to come up with really good reasons. The strategy to complicate matters might help against a less Arm‘ed opponent but is not convincing.
I think the complication here, and the case for Qualcomm, is that Qualcomm doesn't want to transfer the Nuvia architecture license to Qualcomm. Qualcomm wants to transfer what was created by Nuvia with that license.
Qualcomm argues that it would be unreasonable to allow a company like ARM to control what Nuvia created entirely on its own with the license from ARM and that a reasonable reading of the agreement would mean that Nuvia would need to destroy only the confidential IP ARM provided. I find that argument compelling, but if Nuvia agreed that restriction it becomes a bit less compelling. Imagine an ARM negotiator saying, "We'll give you an architecture license for $X, but we'll cut that rate by 75% if you agree that you can't transfer the stuff you create." It probably wasn't explicit like that (and may not exist at all according to Qualcomm), but one can see how that restriction might occur.
It's also hard to completely say where confidential ARM IP would end. For example, let's say I work at Nuvia and you work at ARM and the agreement between our companies includes a lot of access to ARM engineers. I shoot you an email, "We're having problems with X. Can you offer any guidance?" You reply, "Oh yea, this happens a lot. We suggest you do Y." Wonderful! Then two years later my cores all do Y and I designed a way to make them do Y...but it was based off the confidential help that you/ARM provided me. It's a fundamental part of the chip based off that help.
I designed it, but I designed it based off confidential information covered by the no-transfer agreement. Is my design confidential ARM IP? Your email telling me to "do Y" needs to be destroyed. But then I built lots of stuff that clearly shows "do Y" that can't really be un-done without destroying what I built. Let's say we destroy all the confidential ARM information that Nuvia got. Now Qualcomm engineers are learning "do Y" from me and my design rather than from ARM - but I only learned it from ARM. Even if I don't tell them "Oh yea, ARM said X doesn't work so don't try it," they're still learning from my design that only exists the way it does because of that confidential ARM information.
Note that in your case of "do Y" being embedded in the Nuvia design, "do Y" would likely be protected by trade secret law if it is covered by Arm's confidentiality and licensing agreement, and Qualcomm would likely not be allowed to use knowledge acquired in this way. Proving how they acquired that trade secret would keep a lot of lawyers busy though. https://www.wipo.int/tradesecrets/en/
Thank you for this reply. I really appreciate you took the time to write this. It’s definitely a difficult thing to understand but the article made it sound like ARM was making changes that would essentially kill off ARM completely. (Atleast to me)
The article doesn't do a good job of talking about the case. I will try to summarize what is at issue (IANAL nor an expert on this case). I'm going to start by telling ARM's side of the story (since they're the ones suing).
Nuvia got a license from ARM. Part of that license was a requirement that any transfer of Nuvia's tech developed under these licenses required ARM approval. Nuvia agreed to this, presumably to get more favorable rates. Qualcomm bought Nuvia to jumpstart their custom-core business. ARM didn't consent to the transfer. Therefore, Qualcomm must destroy the Nuvia tech or reach an agreement with ARM.
Why would ARM want to do this? Let's say you're ARM. You're the king of mobile, but you have very little presence in the datacenter. Nuvia comes along and says, "we think ARM can conquer the datacenter." Awesome, you now have a company that will start rolling some sweet datacenter money your way. But what if Nuvia is just a trojan horse? What if they're just a smokescreen to create some custom cores and then have one of the companies that licenses your cores switch to only licensing your architecture? That would be terrible for your revenue. That's not Nuvia's strategy: they genuinely want to do their stated mission. Nuvia and ARM agree that ARM will have veto power over transfer of their IP. Fast forward a few years and it turns out that chip startups are hard and Qualcomm has lots of cash and the potential to bring your dreams to life - and more. Qualcomm's lawyers believe they will be able to get around the agreement - they've been able to bead back FRAND patent claims for decades, even against Apple.
Why would Nuvia agree to this? Possibly because they had no other choice. If ARM won't give you an architecture license without this, you have to agree to it. Or maybe it was a way of getting a lot of cost savings. Or maybe ARM would give you the kind of support and service that would cut years off the development of your custom cores because ARM felt safe knowing that you couldn't just sell that on to Qualcomm or MediaTek.
Ultimately, this doesn't impact Apple because Apple isn't buying Nuvia.
ARM says, "The licenses safeguarded Arm's rights and expectations by prohibiting assignment without Arm's consent, regardless of whether a contemplated assignee had its own Arm licenses."
For ARM, the potential issue here is that Qualcomm (one of their largest licensees) stops buying ARM-designed cores because they have their own designs. That is fair insofar as Qualcomm has an architecture license. However, it isn't fair if they do that by buying a company that explicitly agreed that their tech wouldn't be transferred without ARM's consent.
Let's say that ARM licensed Nuvia and the restriction was explicit: you can never sell your company to Qualcomm. Then they sell the company to Qualcomm. Not allowed, right? In this case, Qualcomm is arguing that Qualcomm has its own architecture license so it should be allowed to use its architecture license with Nuvia's designs.
ARM's complaint: https://regmedia.co.uk/2022/08/31/pacer_arm_qualcomm.pdf
Now, I don't have access to the Nuvia/ARM contract so I can't really say if ARM's complaint is valid. Did Nuvia's license require the destruction of any technology created under such license when the license terminates as ARM alleges?
Qualcomm says that the requirement to destroy information only applies to ARM-provided information and not anything developed under the license.
https://regmedia.co.uk/2022/11/01/pacer_qualcomm_arm_filing....
It's really hard to tell without actually having access to the license agreements who is right. Qualcomm's filing seems to fall back on the idea that it would be ridiculous to give ARM this kind of power over what Nuvia had created. However, companies seem to make these types of agreements all the time. ARM wanted to give Nuvia an opportunity to succeed, but also wanted to prevent Nuvia from just selling itself to Qualcomm, MediaTek, etc. So it inserted a clause to prevent that without ARM's agreement. Nuvia could be an independent company and sell all its chips and become the next big chip designer. If they wanted to be bought by Qualcomm or someone, they could negotiate with ARM for ARM's consent.
To me, this op-ed reads like Qualcomm propaganda. To me, it sounds like ARM has Qualcomm dead-to-rights and Qualcomm is trying to allege something unrelated to the case: that ARM wants to cease its architecture licenses because it sees that companies will be able to stop paying them for ARM-designed cores. That would certainly be problematic, but many ARM licensees have perpetual architecture licenses (like Apple and presumably Qualcomm as well) so it wouldn't actually impact them if ARM pivoted their business model in this way. It's also just speculation on ARM's future business model.
I definitely understand the position of those who would hate ARM in this case. ARM isn't an open-source company. They're open...to companies paying them royalties. ARM wants to protect their current revenue while also being open enough that they can enter new markets - like the datacenter. That's a hard line to balance, but it sounds like they tried to do that with Nuvia: giving them a license on good terms in exchange for a guarantee that they weren't just a trojan horse to undercut revenue from Qualcomm, MediaTek, or others.
I'm not trying to argue that's good for consumers or the market in general. As a consumer, if we eliminated all existing patents while pinky-swearing "we won't do that again" it would mean we'd continue to get all the future benefits of patents (since inventors would feel safe that their future inventions would get paid back) while not suffering the monopoly of current patents (since once the invention has been made, we no longer need to incentivize that invention). Likewise, if we just eliminated ARM's IP, it would be great - as long as we didn't make other companies worry that we'd be eliminating their IP as well. While we're eliminating IP, eliminating Qualcomm's patents might have some of the biggest impact - Qualcomm literally wants more royalties from a device if it includes a better screen or camera despite using the same LTE/5G.
I'd love to actually see the architecture license with Nuvia, but instead I guess I'll just read the sniping that Qualcomm and ARM make in their filings.