Apple pays $100m to end Creative battle

The patent lawsuit between the two companies is over, with Apple agreeing to license Creative's music player patents

Apple and Creative Technology have agreed to settle their legal dispute over music player patents for $100m, the companies announced on Wednesday.

The $100m, to be paid by Apple, grants Apple a licence to a Creative patent for the hierarchical user interface used in that company's Zen music players. After months of hinting that it would be coming after rival music player companies, Creative sued Apple in May, claiming the iPod maker was infringing on its patents.

A week later, Apple countersued, claiming Creative was infringing on Apple patents for user interfaces. As a result of the settlement, all legal disputes between the two companies related to the patent will disappear. Creative had also asked the International Trade Commission to investigate Apple for patent infringement.

The patent covers an interface that lets users navigate through a tree of expanding options, such as selecting an artist, then a particular album by that artist, then a specific song from that album, said Phil O'Shaughnessy, a Creative spokesman. The patent applies to portable media players, which includes devices such as the iPod or mobile phones that have the ability to play music, he said. Creative filed for the patent on 5 January, 2001.

Apple can get back some of the $100m payment if Creative is able to secure licensing deals with other mp3 player manufacturers, said Steve Dowling, an Apple spokesman. He declined to specify exactly how much Apple could recoup or how many deals it would take to trigger the payments.

"Creative is very fortunate to have been granted this early patent," Apple's chief executive Steve Jobs said in a press release. Apple was eager to move beyond the legal dispute caused by the patent, which could have eventually cost the company as much as the $100m settlement amount, Dowling said.

"We're very pleased to have reached a broad agreement with Apple," O'Shaughnessy said. Creative plans to speak with other mp3 player companies about its patent, he said, but is not providing details on whether it has entered discussions with other companies.

As part of the agreement, Creative will also enter Apple's Made for iPod programme as an authorised seller of iPod accessories. Creative will be able to affix the "Made for iPod" logo to its speakers, headphones and other related products, O'Shaughnessy said.



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