Qualcomm is one of the big players in the tech industry, but what many people may not know is that Qualcomm has extended their business by using licensing. If you own or use a smartphone, it is very likely that you are using hardware that carries the Qualcomm name. In fact, in recent years, licensing has accounted or roughly one-third of Qualcomm's revenue.
When a business goes down this path, it can be incredibly profitable -- but it can also create legal headaches. With licensing comes royalties, and those royalties can trigger complicated legal action by the parties that are forced to pay those royalties. Qualcomm is learning this right now, and it poses a threat to the new profitable arm of their business.
Apple is suing Qualcomm for charging them royalties that Qualcomm "has nothing to do with." The lawsuit targets Qualcomm for $1 billion. What is interesting about this lawsuit is that it follows a trend in the business world of royalties coming under legal attack. Before, companies were willing to deal with royalties, even if they didn't like paying them. But now, more and more companies are willing to take the royalty fight to court. This is just another example of this trend.
Litigation of this ilk, and other lawsuits pertaining to the operation of a business, can have serious consequences for any company -- may it be a start-up or an establish corporate entity. Having an attorney to help you during these times is crucial.
Source: CNBC, "How Apple's lawsuit threatens Qualcomm's business model," Ari Levy, Jan. 23, 2017