SunPower and SolarCity are embroiled in a legal battle regarding IP theft and computer fraud. SunPower alleges that a group of former employees stole sensitive sales and project information as they defected to rival solar installer (and presumptive IPO aspirant) SolarCity. The legality of that will be decided by the courts.

In regards to the case, SolarCity commented that its “commercial market share has grown significantly in the past few years and this growth threatens SunPower.”

Outside the courtroom, SunPower and SolarCity battle in the marketplace.

And for now at least, SunPower remains on top in the commercial sector.

SolarCity dominates in residential installation and has made large strides in commercial over the last few quarters as gloated in the above quote. Through the end of the third quarter 2011, SolarCity was almost tied with SunPower as the top player in the space, with only a few megawatts separating the two. But after a big fourth quarter in which SunPower installed nearly 20 megawatts in Arizona, California, and New Jersey, the firm solidified its position atop the commercial rankings with an estimated 9 percent of national market share compared to SolarCity at an estimated 6 percent.

Market share by U.S. commercial installers in 2011:

• SunPower  8.8 percent
• SolarCity    5.8 percent
• Chevron Energy Solutions 3.9 percent
• Rosendin Electric 3.7 percent

SunPower recently reported higher than expected gross margins in its utility systems group but deteriorating residential and commercial margins. The utility business gross margin of 17.2 percent was better than the 11 percent expected by stock analysts such as Credit Suisse, while residential and commercial gross margin of 7.4 percent was worse than estimates of 9 percent.

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Andrew Krulewitz contributed to this article.