Apple to pay $100 mn patent fee to Creative

Apple will pay Creative $100 million for a paid-up licence to use the latter's recently awarded patent in all Apple products.

Apple can recoup a portion of its payment if Creative is successful in licensing the patent to others. Creative has also joined Apple's 'Made for iPod' programme and will be announcing its own iPod accessory products later this year.

"We are very pleased to have reached an amicable settlement with Apple and have opened up significant new opportunities for Creative," Sim Wong Hoo, CEO and chairman, Creative Technology, said.

"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," he added.

Digital music player maker Creative had asked a US court to ban Apple from selling or marketing its iconic iPods in the US.

Creative alleged that the navigational menu used for finding and playing music on the iPod violated the patent for its own Zen MP3 player. It had applied for the patent in 2001, which was granted in August 2005. It has since been threatening legal action.

Apple launched the iPod in 2001 and now has 72 per cent of the US portable MP3 player market while Creative has less than 10 per cent, according to research group NPD.

"Creative is very fortunate to have been granted this early patent," said Steve Jobs, Apple's CEO.

"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."