Apple pays rival £52m in iPod copycat row

13 April 2012

Apple is to pay £52million to Singapore-based rival Creative Technology Ltd in a wrangle over iPod technology, it has been revealed.

The computer giant is to settle five law suits brought by Creative over technology used for accessing and navigating songs on the popular iPod music player, which Creative say they patented first.

More here...

• Safety alert over Apple computer batteries

The settlement allows Cupertino, California-based Apple, to recoup a portion of its payment if other electronics companies license Creative's technology.

"Creative is very fortunate to have been granted this early patent," Steve Jobs, Apple's chief executive, said in a statement yesterday.

"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."

Creative Chairman and CEO Sim Wong Hoo called the settlement "amicable."

In June, the U.S. International Trade Commission agreed to investigate whether Apple's iPod infringes on one of Creative's patents.

Creative filed the ITC complaint and a federal lawsuit, alleging that iPods infringed on its patent for a navigation system used to organise and access music on its Zen media players.

Apple ship millions of iPods around the world and the popular product outsells Apple computers by almost eight-to-one ratio, a significant contributor to the company's quarterly profit of $472million (£249 million).

In the ITC complaint, Creative asked the ITC to block imports of the company's market-leading iPods, which are manufactured abroad. If the federal agency had sided with Creative and approved the ban, Apple would have been unable to import the company's most popular product to the world's largest consumer market.

Countersuits

In court documents, Apple maintained no wrongdoing and subsequently filed two patent-infringement countersuits against Creative, which were also settled yesterday.

"The ITC presents a uniquely fast and threatening forum," said Stefani Shanberg, a partner and patent litigator with Perkins Coie LLP in San Francisco.

"The ITC's decision would have come down before any district court decision, and that was probably a motivating factor in getting the settlement done quickly. Both companies had a pretty quick day of reckoning coming."

The one-time licensing payment would not materially affect Apple's financial performance, said Apple spokesman Steve Dowling. The payment will add 85 cents per share to Creative's earnings in the current quarter, which ends on September 30, Hoo said.

Michael Kroll, a Syosset, New York-based patent attorney and engineer, called the one-time payment "nickels and dimes" for Apple, which has a market capitalisation of $57.4billion (£30billion).

"A settlement doesn't mean anyone's right or wrong. In general it's just the cheapest way to get on with life," Kroll said.

"You do what's best at the time. I'm sure that's what Apple was thinking."

The settlement has had a big impact on Creative.
After it was announced during after-hours trading, the share price surged nearly 37 per cent, gaining $2.25.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in