RealTime IT News

Apple Settles with Creative

Apple and Creative Technology announced they have settled a patent infringement lawsuit that had threatened to drag out for years.

The suit, brought by Creative in May, charged Apple's market-leading iPod had infringed on a U.S. patent Creative held for its Zen MP3 player, which describes how users navigate digital music devices.

"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," said Apple CEO Steve Jobs in a statement.

Apple has filed numerous patents of its own related to the iPod, but it's believed Creative beat Apple  to the patent office by mere months. Jobs said Creative was "very fortunate to have been granted this early patent."

In an agreement that lives up to its name, Creative  collects $100 million from Apple, but also joins the fast-growing universe of iPod accessory suppliers. Creative said it has joined Apple's "Made for iPod" program and plans to announce iPod accessory products later this year.

In addition, Apple can recoup a portion of its payment if Creative is successful in licensing its patent to others.

"Ultimately this deal is a win-win because Creative gets cash," Tim Bajarin, president and analyst with Creative Strategies, told internetnews.com. (Bajarin's market research firm is not connected to the similarly-named Creative Technology).

"But it doesn't help their MP3 business because Apple emerges as a stronger competitor with an open license to Creative's patent. The iPod accessory business is a billion dollar market, so that's a good opportunity for Creative."

Bajarin also said the deal goes a long way to validating Creative's patent claim.

"I wouldn't be surprised if Apple is able to recoup a lot of the settlement money as competitors realize they need to get a license to Creative's patents," he said.

If there's another major shoe yet to drop it's Microsoft's Zune, an iPod competitor the software giant plans to release later this year.

"We don't know what the Zune user interface is going to be," said Bajarin. "It's possible Microsoft will have to pony up to them as well."