Apple Pays Rival $100 Million in iPod Patent Dispute Apple settles a patent lawsuit involving the iPod's content menu system. Creative Technology will receive $100 million from Apple to settle the dispute between the two music-player rivals.
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Apple Pays Rival $100 Million in iPod Patent Dispute

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Apple Pays Rival $100 Million in iPod Patent Dispute

Apple Pays Rival $100 Million in iPod Patent Dispute

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Time now for business news.

(Soundbite of music)

Apple Computer has agreed to pay $100 million to settle patent lawsuits with rival Creative Technology. The lawsuits were over technology that allows users to scroll through menus to pick a song on their iPod digital music player.

To better understand what this settlement means, we've called Declan McCullagh, he's a senior writer for Good morning.

Mr. DECLAN MCCULLAGH (Senior Writer, Why, good morning.

MONTAGNE: This seems like, although when you're dealing with Apple it may always seem like this, a David and Goliath story. How did Creative, a small tech company out of Singapore, rival industry-giant Apple?

Mr. MCCULLAGH: Well, Creative has been selling iPod rivals for quite a while. One they call the Zen Media player, and one of them is the Zen Vision, that plays both movies and songs, and it seems to have a little larger screen then the Apple video iPod. But what's relevant here is that they beat Apple in terms of filing this. They filed this in January 2001 with the U.S. Patent Office and got awarded the patent last August.

MONTAGNE: Obviously the settlement means at least $100 million for Creative Technology. What does the settlement mean for Apple?

Mr. MCCULLAGH: Well, the settlement means that Apple can go ahead with its business of selling iPods without worrying about legal uncertainty. A judge could issue an injunction. It's less likely after the Supreme Court's decision on eBay, but it's still possible.

Another thing is that the U.S. International Trade Commission could block the import of iPods if, again, Apple is unlucky, and so Apple gets to get all that out of the way and just go ahead and focus on the business instead of the legal aspects.

For Apple, this isn't that big of a deal in terms of money. It has $9.18 billion in cash on hand, and now it has, after the settlement, $9.08 billion.

MONTAGNE: And for Creative Technology?

Mr. MCCULLAGH: It's a huge deal for Creative. I mean, this is a company that has not been doing that well in selling portable media players. It lost something like $12.7 million in the last quarter, if you can imagine that. This means a lot to it. In fact, its stock has jumped around 34 percent in after-hours trading on Wednesday evening.

MONTAGNE: The settlement though is more than just money. It has to do with the products that both companies will be involved with.

Mr. MCCULLAGH: It does. It means that Creative will sort of be brought into the Apple fold, a little. It's going to be part of Apple's made for iPod program, and some of its things like speakers that can be used with iPods will carry that nice little, sort of reassuring the customers, brand.

But for Creative, they need the cash, and even though, um, there's language in the statement that the two companies released on Wednesday saying, well, yes, we can work together on this kind of thing, in this case, for Creative, it's really about the money.

MONTAGNE: Thanks very much for joining us.

Mr. MCCULLAGH: I thank you.

MONTAGNE: Declan McCullagh is a senior writer for He joined us from his home in San Francisco. $00.00

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