A few weeks ago, I wrote an article about how Qualcomm is digging itself into a deeper hole in its legal battle against Apple and that it would be far better off not digging any deeper.
This morning, according to a court filing, Apple has stepped up the legal battle against Qualcomm with an argument that states that approximately 12 of Qualcomm's patents were invalid since they conflict with already established and existing patents and that others were irrelevant (not required anymore) for cellular communications.
Apple further stated in the filing that Qualcomm wants to continue to keep rights over a product even after selling it, which was the same issue involved with Lexmark and printer retailers, which the Supreme Court struck down by saying that Lexmark's rights ended once they sold the cartridges.
Basically, Apple is saying that Qualcomm cannot demand royalties for its technology after selling the chips to Apple.
No double dipping. Makes sense to me.
Apple is also looking for the courts to rule in its favor regarding the issue of paying Qualcomm a fee based on a percentage of iPhone and iPad revenues given the fact that Qualcomm technology covers a small portion of what goes into those devices.
Qualcomm has been arguing that Apple and its OEMs signed agreements to pay their fees in this manner to which Apple says at the time (of signing the agreements) they were forced to do so but with Intel possibly making similar chips, Apple depends on far less on Qualcomm now.
Qualcomm is under fire from the FTC as well and is being investigated by the agency for unfair licensing terms. In addition, South Korea regulators have already fined Qualcomm almost a billion dollars for antitrust behavior.
I score two points in Apple's favor and one in Qualcomm's, however, that still does not change the fact that Qualcomm will serve its shareholders far better by reaching an amicable settlement with Apple and other smartphone makers and get on with the business of business so the rest of us can get on with the business of investing.
(Long aapl, long and short aapl options)