RSSApple to Pay Creative $100 Million
By Nate Mook | Published August 23, 2006, 5:35 PM
Apple has agreed to pay Creative Technology $100 million to resolve all legal disputes between the two companies regarding patent infringement, and in a stunning reversal, Creative has announced it will join Apple's "Made for iPod" program.
Creative first sued Apple on May 15, accusing the company of infringement of the so-called Zen Patent. That patent involves the method for selecting at least one track on a portable player as a user sequentially browses through a hierarchy of three or more screens on the display.
Apple moved quickly and countersued the company on the same day, claiming infringement on four patents of its own. A second lawsuit was filed by Apple against Creative in June, accusing the company of violating three patents: one that involves the display of data on a computer; another involving the process of editing data using a portable device; and one involving the creation of icons for organizational purposes.
As a result of the settlement, Apple will receive a license to use Creative's Zen Patent in all of its products. If creative is able to license the patent to other companies without it being invalidated, Apple will be entitled to receive an undisclosed amount of the $100 million back as a reimbursement.
"Creative is very fortunate to have been granted this early patent," said Apple CEO Steve Jobs. "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."
In addition, Creative has dramatically changed its tune on the iPod, embracing its rival and joining Apple's partner program.
"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," commented Creative CEO Sim Wong Hoo.
The shift comes as Creative struggles to remain relevant in the MP3 player industry. SanDisk has taken second place in the market, far behind Apple's iPod, while Creative's share has continued to shrink. However, the company is reportedly preparing a new Zen Vision player for a debut later this year.
Once there is one MP3 player, Apple will charge whatever they want. 2.99 a song, 500 for a mini Ipod. People think it is cool that Ipod is blowing everyone out of the MP3 game. It is only bad for the consumer. Just like Microsoft can charge whatever they want for their OS, because what are people going to do, spend time learning a new OS, which took Joe Blow years to learn how to operate?
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I'm just glad somebody stepped forward (regardless of motive) and was the bigger man in this. All of these lawsuits over patents just irritates me to end. Not so much the lawsuits, but the patents themselves. It's honestly getting ridiculous. "I have the patent of a user clicking a button on the computer! Any other company that tries to steal this idea will be sued by us!" The idea that some people can own these methods is really nonsense, especially in cases where the idea could easily be thought of by more than one person or company.
Either way, I'm glad the five pending lawsuits will be no more now (five lawsuits over frivilous patents).
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Yep, very easy to come up with an idea once someone else already has!
--->idea could easily be thought of by more than one person or company.
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Actually there have been several times in history where complex non-obvious inventions where concurrently developed successfully in isolation from each other...and those were complex non-obvious working inventions, very different from the patented simple reasonably-obvious unimplemented ideas of today.
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if you cant beat them, join them.
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Looks like Creative will post a profit on their MP3 division this quarter. This has been the biggest watershed for them topping sales of their devices and other products.
Congrats Creative - you're making money by technicalities and legal battles, proof that Creative is staying competitive with other technological greats who failed to innovate in the past few years.
And yes, I'm a very proud Creative Labs Nomad Zen Jukebox owner. I don't actually use the device though since it in no way compares to an iPod or River.
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Jobs has done a sensible thing here - the litigation would just be distracting and not profitable for either company, in the end. By settling this way, the iPod can exist as-is with no future threats from Creative, while Creative can reinforce the already dominant iTunes system with their support. Win-win for Creative and Apple, and will make it easy for consumers with less compatibility issues.
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wow. just goes to show, nobody is immune to things like this.
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The secret to Apple's innovation? Theft!
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The secret to Creative's failure? Theft x 4! :P
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Will Zens come with the iPod dock connector??
(It'd be nice to have a zen in my car :)
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Looks more and more like the two choices that are gonna be around are...you guessed it MS and the other..in this case the other is Apple.
Oh well, as long as there is good competition, the consumer benefits...
I wonder which will kill which...
Latz, SB
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Neither, both companies need each other. Apple would have been gone already if Microsoft had wnated that, but instead they bought shares of Apple and bailed the company out.
What does Latz mean?
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Apple was not bailed out by Microsoft. They had over $1b in cash, and Microsoft contributed only $200m. The 'bail out' was sensationalised media bulls***.
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Ok I was obviously mistaken on that part then but my point still stands, Microsoft obviously did not want Apple dead or they wouldn't have contributed at all.
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Really? As I recall, Apple was having serious problems at the time - I don't think they had huge cash reserves such as you describe.
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As I recall, Apple was having serious problems at the time - I don't think they had huge cash reserves such as you describe.
I remember the same thing. Maybe they had $1B in assets, which is alot different. It is never a good sign when anybody starts selling their assets because they need cash; I speak from personal experience.
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Nope, $1B in cash. Check your history - not your sensationalised media.
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There's not really many logical systems for organising songs on an MP3 player except by using a "hierarchy"-based system.
well, I suppose you could have a several thousand long list of MP3s... Might take a while to find things though!
A feeble patent.
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So Creative gets some money that they'll piss away in a couple of years, Apple loses a "competitor," such as Creative was.
I'd say Apple wins.
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Especially considering Apple sold roughly 8 million iPods in the last quarter and posted revenues of $4.37 BILLION. I'd say $100 million is a drop in the bucket to get Creative off their backs and probably as you said, kill the Zen.
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LOL! Another iPod killer...dead!
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