Is Apple In Big Legal Trouble?

       Apple(AAPL) and Qualcomm (QCOM) have been in a legal battle for about nine months now. In January the smart phone giant Apple sued Qualcomm. The basis of the court claim was that Apple was disputing QCOM's legal right to charge heightened royalties for the use of it's chips.

       Apple is suing QCOM in three different countries, the biggest of the lawsuits being in the United states for $1 billion. This lawsuit comes just days after the Federal Trade Commission filed their own lawsuit against QCOM. Apples entire basis of the lawsuit is that " the more Apple innovated with unique features such as TouchID, advanced displays and camera to name just a few, the more money Qualcomm collect for no reason and the more expensive it becomes for Apple to fund these innovations." Apple representatives' also added that "despite being just one of over a dozen companies who contributed to basic cellular standards, QCOM insists on charging Apple at least five times more in payment then all the other cellular patent licensors we have agreement with combined. "



       For those that don't already know- Qualcomm is the is one of the biggest and most successful chip processors in the world. Some may even give them the competitive edge over other large chip processors. Their chips have been in a slew of smart phone and tablet devices.. From HP, Samsung, Windows to Iphone. Before Apple dropped them they owned 50% of the worlds wireless stand alone chip modems. (MediaTek and Intel being the next biggest two).

Essentially- During the Federal Trade Commissions investigation they talked to QCOM as well as their business partners. Apple of course, cooperated the the FTC which QCOM did not appreciate. Apple alleged that QCOM is with holding a billion dollars from them because of their cooperation with the FTC. QCOM denies this. QCOM responded by saying " Apple has intentionally mischaracterized our agreements ad negotiations, as well as the enormity and value of the technology we have invented." The CEO added " We welcome the opportunity to have the meritless claims heard in court where we will be entitled to full discovery of Apple's practices and a robust examination of the merits."


But in a twisted turn of events, QCOM has turned around and sued Apple for something completely different.. They made a massive claim saying that Apple stole their source code and gave it to rival chip maker Intel. If proven to be true- this could cost Apple billions of dollars in fines over the next few years. Qcom claims they have indisputable evidence against Apple.

Despite the on going legal battle- Qcom CEO Steven Mollenkompf says a partnership with Apple in the future is not out of the discussion.

In my personal opinion- QCOM needs Apple more than Apple needs QCOM. However the tables could quickly turn if Intel chips do not live up to expectations. Which is a legitimate possibility if they did actually steal the Intel (pun intended) from Qcom.



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