Apple, Creative settle dispute
The iPod giant will pay Creative $100 million for a license to its patent for a hierarchical user interface for MP3 players.
A legal battle that started with a wallop has ended with a whimper.
Apple and Creative Technologies said today that they have settled their patent lawsuits against one another, with Apple agreeing to pay Creative $100 million to license the Singapore-based company's patent for a hierarchical user interface for MP3 players.
"Creative is very fortunate to have been granted this early patent," Apple CEO Steve Jobs said in a statement. "This settlement resolves all of our differences with Creative, including the five lawsuits currently pending between the companies, and removes the uncertainty and distraction of prolonged litigation."
The deal effectively ends a skirmish that began late last year, when Creative CEO Sim Wong Hoo said his company planned to aggressively defend its patents. Creative sued Apple in May, claiming the iPod maker was using its interface without a license and therefore infringing on its patents. Creative also filed a request with the International Trade Commission to investigate Apple for patent infringement, and the commission had agreed to do so.
A week later, Apple countersued in both Wisconsin and Texas, claiming that Creative's players violated three of its own patents for the display of computer data, editing device data on a computer, and the use of certain computer icons.
Creative's patent covers the user interface used on most major MP3 players, with each selection opening up an expanding tree of options, such as artist, album, and song titles. Creative filed for the patent in January 2001 and received it in August 2005.
Apple said that it can get back some of the $100 million payment if Creative is able to secure licensing deals with other MP3 player manufacturers that use or plan to use the patented interface.
The deal also certifies Creative in Apple's Made for iPod program, making the company an authorized seller of iPod accessories. Creative will be able to affix the "Made for iPod" logo to its speakers, headphones, and other related products.
"Apple has built a huge ecosystem for its iPod and with our upcoming participation in the Made for iPod program, we are very excited about this new market opportunity for our speaker systems, our just-introduced line of earphones and headphones, and our future family of X-Fi audio enhancement products," Sim Wong Hoo said.
The deal should help the financial position of Creative, which has long been facing a massive deficit in market share among MP3 player makers and has seen its sales decline in recent quarters. Sim Wong Hoo said the $100 million payment will contribute 85 cents of earnings per share to the company's current quarter, which ends September 30.
