Apple settles patent dispute

24-08-2006

Apple Computer said yesterday that it had agreed to pay $100 million (£52 million) to a rival music player firm in order to settle a long-running patent dispute between the two companies.

Creative Technology, the world's second-largest manufacturer of MP3 music players, launched legal action against Apple in May after accusing the Californian-based company of using its patented technology in its own popular iPod player.

The Creative patent covers the way that music tracks are selected on a device, with Apple allowing iPod users to organise songs under categories such as albums and artists.

After Creative attempted to sue Apple by claiming that it had infringed a patent on its Zen digital music player, Apple moved to counter-sue Creative in June, prompting a probe by the US International Trade Commission.

Apple chief executive Steve Jobs said that the new agreement reached between the two companies ended five lawsuits over the case and removed "the uncertainty and distraction of prolonged litigation".

Mr Jobs said that Creative had been "very fortunate" to be granted the early patent.

Under the deal, Apple will be granted a licence to use a Creative parent in its popular iPod player, while Creative will also be permitted to begin manufacturing iPod accessories.

Creative president Craig McHugh said that the accessories agreement would give the company access to a "dramatically larger market" and represented "a huge revenue opportunity".

The Singapore-based company claims that the $100 million settlement will add around 85 cents a share to its earnings for the quarter ending September 30th.

Following Apple's announcement, Creative shares rose $2.24 to $8.25 in extended trading on the US Nasdaq market. Shares in Apple were down three cents to $67.28 in extended trading on the Nasdaq.


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