Why Apple Dropped 3% After Hitting an All-Time High

The iPhone 5 launch on Wednesday, Sept. 12, is sure to be the most important event for tech investors this year. The Motley Fool will be hosting a live chat where our top tech analysts will answer your questions and break down what the announcement means for Apple and tech investors everywhere. Be sure to swing by Fool.com at 12:45 p.m. ET this Wednesday for all your coverage of Apple's next big announcement.

So much for "buy the rumor, sell the news." Apple (Nasdaq: AAPL  ) has frequently been susceptible to rallying ahead of product announcements ("buy the rumor") only to drop after said product is announced ("sell the news"). Of course, the company is set to unveil the iPhone 5 on Wednesday.

This morning, shares briefly tapped a new all-time intraday high of $683.29 before proceeding to trend steadily lower throughout the day. The Mac maker's shares closed down nearly $18, or almost 3%. Meanwhile, the broader market was relatively flat.

What gives?

Sell the rumor?
The iPhone 5 is by far Apple's most important product family, so its performance is paramount for the company's overall success. One very likely contributor to the pessimism even as we head into Apple's most important product event of the year is a Bloomberg Businessweek report from Friday and further making its rounds today.

Taiwan's HTC, a recently fallen angel in the Google (Nasdaq: GOOG  ) Android army, has been duking it out with Apple in court for the past few years. You may remember that Apple scored a big blow to HTC's Android brethren Samsung just last month. Both HTC and Samsung may have some patent ammo in store for Apple, though.

One of the expected headline features of the iPhone 5 will be the addition of 4G LTE data speeds -- the first time Apple has used the technology in the iPhone. Assuming the iPhone 5 sports 4G LTE, which is a safe assumption, rivals are already preparing to strike.

HTC has accused Cupertino of infringing two of its patents related to 4G LTE data transmission, purchased in April 2011, approximately when it started selling its first LTE-equipped phone, the HTC Thunderbolt. They were included in a bundle bought from ADC Telecommunications for $75 million.

Apple has tried to invalidate these patents, but U.S. International Trade Commission Judge Thomas Pender feels confident of their validity. If the patents hold up, HTC could potentially go as far as to seek an import ban on the third-generation iPad, which also features 4G LTE, and the iPhone 5. With half of Apple's business coming from the iPhone, that would indeed be a crippling blow were it to hypothetically reach that point. HTC could also try to finagle a settlement if it gets that far, since Apple has sued it over other patents.

Samsung has also voiced intentions to sue over LTE should the iPhone 5 include the feature, saying it would take "immediate legal action" against Apple around the world, including its home turf in the United States.

Buy the news?
It might not be an easy fight either way, though, because Apple has already begun amassing its own arsenal of LTE-related patents. It purchased 200 patents from Freescale Semiconductor (NYSE: FSL  ) , some of which were related to LTE. It also bought a bunch in the bidding war over Nortel's IP amid that company's bankruptcy.

Apple now has approximately 318 LTE-related patents, 44 of which it developed while the rest were acquired. That figure represents 4.9% of the total number of LTE standards patents registered with the European Telecommunications Standards Institute. Apple also holds a majority stake in Rockstar Bidco, which owns even more, bringing Apple's total tally to 434.

Samsung has a dominant position with almost 12.7% of the total, while InterDigital (Nasdaq: IDCC  ) has 12.1% of the standards patents.

The iPhone 5 is coming
Today's pullback could also include a little profit-taking from Apple's recent rally. The patent talk sounds ominous, but in reality import bans usually aren't particularly effective, either because the dispute never reaches that far or because adversaries design around infringements and render the ban temporary.

I don't even expect Apple to score a meaningful ban on Samsung, even with its domestic victory. There may very well be some legal fireworks and dramatic posturing on both sides, but the iPhone 5 is still coming.

For Apple investors, Wednesday can't get here soon enough. In the meantime, peruse this iPhone 5 report that's included in our premium Apple research service to make sure you're up to speed before the unveiling. Sign up today and get a comprehensive report on about Apple, an iPhone 5 report, and regular updates!