Apple Settles with Creative

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

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 (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

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
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.”

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