Apple Pays Creative $100 Million

By Richard Menta 8/24/06

Apple and Creative have settled their patent dispute. Apple will pay $100 million to license the patent Creative won regarding the way music players navigate through their song lists. Apple applied for a similar patent for the iPod, but Creative had already filed their patent a year before the iPod first appeared. This produced sabre rattling between both companies as Creative demanded high per player fees for the rights to a license.


The 30GB iPod Video is available on Amazon

Creative is very fortunate to have been granted this early patent," said 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."

With the Apple deal, Creative is now going to push other digital portable manufacturers for licenses. In an interesting negotiation ploy, as more manufacturers sign on Apple will receive part of its $100 million back. Also, as part of the agreement, Creative will make peripherals for the iPod. This includes participating in Apple's "Made for iPod" program, which kicks back 10% of the revenues of officially sanctioned peripherals back to Apple. Creative can now make devices like portable speaker systems that work with both the iPod and their line of players and open up new opportunities for profit for the struggling firm.

Here is a question. I wonder if Creative - during negotiations - tried to get the ability to play iTunes tracks for their players? Winning the ability for their portables to play FairTunes tracks could have been worth more to them than the $100 million. But then who are we kidding?

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Creative Zen Neeon 2

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