Apple and Creative settle legal disputes

 

Gallery

By Simon Aughton

Posted on 24 Aug 2006 at 10:21

Apple has agreed to pay Creative $100 million to license its technology for organising music tracks on portable devices as part of an agreement that ends all legal disputes between the two companies.

Apple will continue to deploy the hierarchical user interface on its iPods, while Creative has signed up to the Made for iPod programme and will begin introducing its first iPod accessories later this year. Apple can also recoup a portion of the payment if Creative license its patent to other companies.

'We're very pleased to have reached an amicable settlement with Apple and to have opened up significant new opportunities for Creative,' said Sim Wong Hoo, chairman and CEO of Creative.

'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,' he added.

Steve Jobs, Apple's CEO, said that the settlement removes the 'uncertainty and distraction of prolonged litigation', although he did not appear entirely happy with the outcome.

'Creative is very fortunate to have been granted this early patent,' he said.

Apple spokeswoman Katie Cotton estimated that had the dispute gone to court then the cost could have run to 'tens if not hundreds of millions of dollars'.

'We want to move beyond the legal issues and get back to innovating,' she said.

The dispute began when Creative sued Apple for what it described as 'wilful infringement' of its patent on organising music tracks in a hierarchical structure of categories and an interface that can be used to change the hierarchy, view track names, and select tracks for playback or other operations.

Apple responded by countersuing twice, likewise alleging that Creative had breached its own patents.

The decision to start producing iPod accessories will put Creative in a unique position, as both a partner and competitor to the iPod, since it has no plans to scrap its range of Zen portable music players. But company spokesman Phil O'Shaughnessy did not see a conflict, pointing out that many of the company's audio products are already iPod-compatible, albeit lacking the Made for iPod stamp.

'We see it as an opportunity to further implement our products,' O'Shaughnessy said.