UK: The Worm That Turned Leaves Apple iPod £53 Million Out Of Pocket!

After claims and counter claims, the bitter legal dispute between Apple Computer Inc. and ‘Creative’, a technology company based in Singapore, has resulted in a sweet settlement in favour of Creative of £53 million.

Creative, the developer of the ‘Zen’ MP3 player, claimed that Apple used its patent-protected technology, which helps the individual navigate through hundreds of songs by sorting and organising them, in the Apple iPod, iPod Minis and Nanos.

Creative’s technology, developed in 2000, and awarded a patent last year, pre-dated Apple’s introduction of the iPod to the market, however iPod counter claimed on the basis that Creative was in fact infringing three of Apple’s patents.

As we all know two wrongs (or even three or five!) never make a right and the two companies eventually decided to cut to the core and sort matters out once and for all in a settlement which Apple’s Chief Executive Officer Steve Jobs said "resolves the five lawsuits pending between the companies, including a complaint Creative filed with the U.S. International Trade Commission." He went on to state "Creative is very fortunate to have been granted this early patent, …. this settlement ... removes the uncertainty and distraction of prolonged litigation."

As part of the settlement Apple has handed over $100 million in a one off license fee to enable it to continue to utilise Creative’s technology in its iPods. Apple hopes to recoup some of that money where Creative is successful in licensing the technology to others.

With a market capitalisation of $57.4 billion, the payment is likely to have little impact on Apple; however it is likely that Creative will now pursue licensing agreements with other companies which may be infringing its technology.

It just goes to show, it really does pay to protect your intellectual property and it doesn’t matter how big the company – if you infringe someone else’s rights you will end up paying out. The sooner you deal with licensing arrangements the better.

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