It's an age-old tactic: When under attack, take the higher ground to gain an advantage over your enemy. In Qualcomm's (NASDAQ:QCOM) case, taking the higher ground includes reporting higher revenue, higher earnings, and higher cash flow, too. The company's recent report of fiscal third-quarter results show the company is performing superbly even while hunkering down for continued legal battles.

Qualcomm reported net income of $798 million on $2.33 billion in revenue as more and more consumers snapped up feature-rich, third-generation (3G) wireless devices. Demand for 3G devices from companies like Motorola (NYSE:MOT), LG, and Sony Ericsson -- joint venture between Sony (NYSE:SNE) and Ericsson (NASDAQ:ERIC) -- along with the expansion of 3G networks around the world has increased faster than even Qualcomm estimated, leading to higher-than-expected royalty revenue and chipset sales.

The company delivered 65 million chipsets in the quarter, which is an 18% increase. The average selling price for mobile devices -- upon which Qualcomm's royalties are calculated -- increased 2%, coming in at $217 this quarter. With the increased chip sales, market research firm iSuppli estimates that Qualcomm has now surpassed Texas Instruments (NYSE:TXN) as the leading supplier of semiconductors in mobile devices.

The various patent lawsuits, injunctive threats, and ITC ban have yet to do any significant damage to Qualcomm's business directly. In the next quarter, however, the company expects Nokia (NYSE:NOK) to withhold license payments, which will affect the bottom line by $0.05 per share. Qualcomm also noted that significant uncertainty surrounding other legal initiatives brought by Broadcom (NASDAQ:BRCM) could have significant financial impacts in the future, including the effects of a product ban from the ITC.

The company noted that it's reaching a crucial stage in various legal matters. Indeed, the ban from the ITC goes right to the heart of Qualcomm's supercharged performance -- banning the advanced chipsets that consumers are increasingly demanding is the driving force behind Qualcomm's gains. The company was up front about this risk and admitted it had been "losing ground" on some legal fronts. CEO Paul Jacobs even started the conference call with discussion of the elephant in the room before moving to the earnings story.

So even though Qualcomm holds the higher ground and even increased forward guidance, there are significant threats to its business -- especially when the main combatant, Broadcom, insists on licensing terms that completely undermine Qualcomm's business model.

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Fool contributor Dave Mock takes the high road and the low road -- whichever one beats the traffic. He owns shares of Motorola and Qualcomm. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy stands head and shoulders above all other disclosure policies.