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Qualcomm-Arm Dispute Taken to Another Level

Qualcomm (NASDAQ:QCOM) wants a federal judge in Delaware to rule it didn’t trample on Arm’s licensing contracts as part of Qualcomm’s $1.4-billion buyout of chip startup Nuvia Inc. (NASDAQ:NVEI).
The dispute, documented in court filings released Wednesday, focuses on Arm’s licenses with Nuvia for technology used in chip designs. Arm, owned by SoftBank Group Corp., sued the San Diego-based Qualcomm for breach of contract and trademark infringement in September, accusing the firm of using the proprietary innovations without permission. In the past, Qualcomm had been one of Arm’s biggest customers.

Qualcomm’s lawyers allege Arm’s goal is to “strong-arm Qualcomm into renegotiating the financial terms of the parties’ longstanding license agreements, using this baseless lawsuit as leverage.”

The dispute has drawn wide attention in the tech industry. Qualcomm is the biggest maker of the processors and modems used in smartphones, and Arm is one of the world’s most-influential chip companies.

“Arm’s claim against Qualcomm is aimed at protecting the Arm ecosystem and partners who rely on our intellectual property and innovative designs,” said Arm spokesman Phil Hughes. “We believe our argument is clear, and we are confident the court will agree.”

Qualcomm acquired Nuvia last year to beef up its technology and allow it to field more powerful chips. It’s part of a broader strategy by CEO Cristiano Amon for Qualcomm to decrease reliance on the smartphone industry and grab a share of the laptop-chip market and the lucrative server-processor business.

Arm’s suit is designed to hamper Qualcomm’s plans, the U.S. company’s attorneys argued.

QCOM shares declined 83 cents in price early Thursday afternoon to $117.28, while those for Nuvei increased $1.04, or 3.5%, to $30.40.