Brief

Creative wins $100 million suit

If you have come up with an idea but for some reason could not make a successful product out of it while some other company took the idea and produced a killer product, don’t lose heart. Creative didn’t, and sued Apple whose iPod dominates the market for MP3 players. Apple is shelling out $100 million to Creative which owns key patents that it had claimed were infringed upon by Apple. Creative Technologies filed a case against Apple last year for using its patented navigational MP3 technology or hierarchical menu-based user interfaces. Apple replied by filing a counter-suit against Creative. What went in Creative’s favour was that they beat Apple by filing their patent first.

Apple and Singapore-based Creative had sued each other in California, Texas and Wisconsin in the US. The International Trade Commission was also investigating complaints made by both sides about each other regarding patents infringement.

Creative has been trying to beat Apple’s iPod but has failed so far. By winning this case Creative also gets an entry into Apple’s Made for iPod program as an authorised seller of iPod accessories. It can also put the ‘Made for iPod’ logo on its speakers, headphones and related products. However, analysts feel that Apple can recoup a portion of the payment if Creative is successful in licensing this patent to others. The settlement is good news for Creative. It gets to enter the Apple iPod accessories market, and the $100 million contributed about $0.85 of earnings per share to Creative’s current quarter ending September 30, 2006.

This settlement resolves all differences between Apple and Creative, including the five lawsuits that were pending. However, this out-of-court settlement could spill over into the MP3 player market as Microsoft is soon going to release its ‘iPod killer’ known as Zune.