Apple, Qualcomm In Court: What You Need To Know

Apple Inc. AAPL's ongoing patent dispute with Qualcomm, Inc. QCOM could be determined by a federal court, with opening arguments to start Tuesday in San Diego, The Wall Street Journal reported.

What Happened

The core of Apple's dispute with Qualcomm boils down to iPhone royalties. Apple believes that Qualcomm's licensing practices of demanding a 5-percent royalty on iPhone sales is wrong, as the company is essentially profiting off Apple's innovation. On the other hand, Qualcomm argues Apple is in the wrong by withholding royalties and thereby violating its patents.

The upcoming trial could see an end to a long-lasting feud between Apple CEO Tim Cook and Qualcomm CEO Steve Mollenkopf. A settlement could in theory be reached, but Cook is showing no signs of willing to change his position, and the company is moving ahead with its own plans to lessen its reliance on Qualcomm, WSJ said. 

Even if Qualcomm agrees to a lower royalty rate, it will need to extend the same terms to other manufacturers, the Friday report said. 

Why It's Important

Apple is in a difficult position where its iPhone has fallen behind rival devices in terms of 5G capabilities. The iPhone maker would need access to Qualcomm's chips to better compete in the 5G race, WSJ said. 

"Both sides have their hammers out," a source familiar with the matter told the newspaper "There has to be something that happens to make one side put their hammer away."

What's Next

One of the "ugliest corporate battles in history" dates back to the Steve Jobs era and has turned into a "personal" feud between the two CEOs. The financial impact of the court case could be in the billions of dollars and impact Qualcomm's entire licensing model.

Related Links:

Kerrisdale: Qualcomm Ruling Could Cut 'Stock Price In Half'

Sell-Side Stays On Sidelines With Qualcomm, Awaits Resolution Of Licensing Disputes

Photo courtesy of Apple.