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Apple Pays Creative $100 Million to Use Patent; Creative Joins 'Made For iPod'
Wednesday, August 23rd, 2006 at 5:15 PM - by
Apple and Creative Technology on Wednesday announced a settlement in their ongoing cross-litigation with the news that Apple will pay US$100 million for a paid-up license to use Creative's patent for an MP3 player interface. However, Apple can recoup a portion of that money if Creative successfully licenses its patent to other companies.
Creative also announced that it has joined Apple's "Made for iPod" program and will introduce its own iPod accessories later this year.
"Creative is very fortunate to have been granted this early patent," said Apple CEO Steve Jobs said in a press release. "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."
"We're very pleased to have reached an amicable settlement with Apple and to have opened up significant new opportunities for Creative," said Sim Wong Hoo, chairman and CEO of Creative, said in the same press release. "Apple has built a huge ecosystem for its iPod and with our upcoming participation in the Made for iPod program we are very excited about this new market opportunity for our speaker systems, our just-introduced line of earphones and headphones, and our future family of X-Fi audio enhancement products.
"We expect that the one-time licensing payment of $100 million will contribute approximately $.85 of earnings per share to our current quarter, ending September 30, 2006."
The latest volley in Apple and Creative's back-and-forth lawsuits came in early June, when Apple alleged that Creative was infringing on three of its patents that related to the use of icons, as well as displaying and editing data. In May, Creative launched its first lawsuit by claiming that Apple was infringing on its "Zen patent." Apple responded later that month with a counter-suit.
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