Apple Settles with Creative for $100 Million

Removing a dark cloud from the future of its now-iconic iPod music players, Apple Computer has announced it will pay Creative Technologies $100 million to settle all legal disputes between the companies. The payment grants Apple a paid-up license to use Creative’s so-called “Zen” patent in all Apple products; under the terms of the agreement, Apple can recoup some of the money if Creative is able to license the Zen patent to other parties.

Creative filed suit against Apple in May 2006, almost 10 months after having been granted a patent on the organization and navigation of music tracks on a portable device. Creative initially filed for the patent in January 2001, when it debuted its first Nomad and Zen music players. Apple introduced the first iPod in October 2001. However, Creative’s claim took until August 2005 to wend its way through the U.S. Patent and Trademark Office.

The settlement not only removes doubts from the future of the iPod line (as part of its suit, Creative was seeking to block the importation of iPods into the United States), but also saves Creative from a protracted and costly patent battle. In addition to having to prove its case against Apple, Apple had filed two salvos of suits accusing Creative of violating Apple patents. The settlement presumably lets the companies set aside all litigation, and – what’s more – Apple gains a partner. Creative plans to join Apple’s “Made for iPod” program and begin producing its own lines of iPod accessories later this year.