Apple Inc. (Nasdaq: AAPL) and Samsung Electronics Co. (PINK: SSNLF) moved into a California courtroom this week.
Brewing for months, the patent trial officially began on Monday with jury selection. Apple is suing Samsung for $2.5 billion in damages, accusing the Korean company of "slavishly copying" both the hardware and software of its iPhone design.
Samsung has emerged as the biggest threat to the iPhone's continuing growth. Samsung sold 50 million smartphones in the June quarter, by far the most of any vendor.
Meanwhile, AAPL reported sales of just 26 million iPhones in its June quarter - a major concern since Apple gets more than half of its revenue and profits from the iPhone.
Samsung has countersued, claiming the iPhone infringes on patents it holds that enable all smartphones to function. Samsung wants a 2.4% licensing fee for each iPhone sold, which would cost Apple a whopping $2 billion per year.
The ferocity of the fight stems from what's at stake. Both want to dominate the rapidly growing market for mobile computing devices -- smartphones and tablets.
"This is a cage match for rights to one of the most lucrative markets in the world," Colin Gillis, an analyst at BGC Financial, told the Los Angeles Times. "They're fighting on everything: They're fighting on innovation, they're fighting on price, they're fighting in the courts."