Apple Settles With Creative For $100 Million

[WildPalms]

I hope this eventually leads to Sound Blaster support for macs.

Wtf? Why? Do you have something against digital audio?

 

[wnurse]

I don't know...with five lawsuits between the companies, I wouldn't be surprised if the litigation would have cost at least $100 million. But I do think Apple wasn't terribly confident...

Edit: The estimates I've seen say that a typical patent infringement case costs up to $5 million per side. This would probably be higher than a typical case, with $100 million in total not out of the question.

If apple paid 100 million, they should then sue their lawyers for fraud. This suit would not even come close to 100 million.

 

[WildCowboy]

If apple paid 100 million, they should then sue their lawyers for fraud. This suit would not even come close to 100 million.

Do you mean the cost of litigation or the potential award had Apple lost the case? It does seem like Apple wasn't very confident that they could win the case...after all Creative did file the patent before Apple, Creative was awarded the patent, and Apple was denied their patent. The iPod has brought Apple billions of dollars in revenue...a judgment against them could easily have cost them much more than $100 million.

 

[wnurse]

So, in summary...

Apple pays Creative a one time fee of $100M to licence their patents.

Creative joins the 'Made for iPod' program making accessories for their competitor, Apple, who gets money for 'Made for iPod'.

Creative still HAS to defend it's patent against other competitors - that's the nature of patents - or licence it to them. If they do, Apple takes some of that money too. In a round-a-bout way, Apple is getting money back from it's competitors. Nice.

Creative have a much better case because Apple settled.

Creative still owns a valid patent. If Apple had won, there would be no patent so anyone could copy the Creative/Apple style interface.

Apple continues on as if nothing has happened. No long court case delaying sales. No injunctions to halt imports.

Explain to me why people think Apple lost here?

Creative knew it was about to get reamed by Microsoft's Zune which it's players aren't compatible with. They knew to get out of the market. Instead of legitimising Microsoft's offering, they've tied up with Apple. It might bug us that Apple have legitimised a bogus patent but it's otherwise very, very smart.

Interesting, I did not know so many apple fans were lawyers and patent experts. Some call the patent bogus, some claim apple really didn't infringe but felt like being santa claus to creative and some even claim that the lawsuit would have cost apple 100 million (like it would have cost creative 0. Why not slug it out and see how much creative have in the coffers to pay their lawyers?). You guys would all make excellent attorneys!!!.

I'll summarize.

1. Apple infringed on the patent
2. Apple paid license for use of the patent
3. Go watch TV.. show over folks.

Apple could blow a hundred million in legal expenses. It's less of an instance of throwing in the towel, and more of an instance of, "You know, the way idiot judges/juries hand out settlements these days, let's just give them a paltry sum, let them think they've won, and still destroy them in the MP3 market."

Actually, creative won, regardless of whether apple destroys them in the market or not. Man, even Steven (jobs) is not as pissed as you all are. I think he's lying comfortable in his bed right now, probably watching the news. Chill out. Companies infringe on other companies patents all the time. Companies settle all the time. This is not an abnormal event.

 

[wnurse]

Do you mean the cost of litigation or the potential award had Apple lost the case? It does seem like Apple wasn't very confident that they could win the case...after all Creative did file the patent before Apple, Creative was awarded the patent, and Apple was denied their patent. The iPod has brought Apple billions of dollars in revenue...a judgment against them could easily have cost them much more than $100 million.

The cost of litigation would not even remotely approached 100 million. The cost of losing (ie, having a judgement against apple), now that would have probably exceeded 100 million. When a company is not sure about it's position, the best thing is to settle. You don't see IBM settling their Linux suit, do you?. And SCOunix hasn't even paid close to 100 mil in lawyers fees yet and they are fighting a losing battle.. no, if you are sure, you don't settle.. if you not sure or have even a sliver of doubt, it's better to settle. I'm sure apple filed the countersuit and initially decided to fight in hopes of having creative go away (basically, apple was bluffing).. you have to believe they knew they were infringing.. It does not matter what we think of the patent system.. that same patent system serves apple needs too. You live by the patent system, you sometimes get caught by it. Seems fair to me.

 

[musiclover137]

there goes all those iTunes sales

I hope you're joking about that. iTunes is not about making money for apple

 

[hondaboy945]

So dose this mean ms can sue apple if they decided to use wifi in ipods ????

I skimmed to this post, so sorry if it has been answered. Does MS own every Wi-Fi license. Just wanted too know.

 

[AvSRoCkCO1067]

I hope you're joking about that. iTunes is not about making money for apple

Apple makes money off of iTunes Music Store - they won't tell us how much, but it is a money maker (all be it insignificant compared to the iPod)

 

[ezekielrage_99]

Still got to love the fact that Dell wouldn't do anything for the consumers without tha dang video hitting the net.

Got to love customer relations

 

[hondaboy945]

I hope you're joking about that. iTunes is not about making money for apple

I don't think he is joking, it is about more than sales, but 100m songs on Itunes did make apple roughly 100M. So I think he is speaking solely about the moetary aspect of the Itunes sales. So no joke: money is money.

 

[sushi]

Apple makes money off of iTunes - they won't tell us how much, but it is a money maker (all be it insignificant compared to the iPod)

I think that you mean Apple makes money off of iTMS (iTunes Music Store). And yes, it would be interesting to know how much they really make.

 

[KingYaba]

Apple got lucky. Good to hear no real damage was done.

 

[bloodycape]

Steve Jobs knew this was a BS patent and it shows in his comments. Absolutely Stupid. Hell, the LISA had a Hierarchal File System. I'm still angry that this patent was even granted in the first place.

Bottom line: Creative knew this was a BS patent, too, but they figured they had to try. However, when the patent was granted to them, they had a weapon in their war against the iPod. Rather than concentrate on making a better product, they used this weapon as a way to get some quick cash. They bet on Apple settling and not going to court.

In the meantime, MS comes in and announces Zune, which threatens other WMA compatible players like Creative's offerings. Creative now thinks they need a backup plan and decides that during the negotiations with Apple, they can get them to give them a license to produce iPod-approved products. Now they have a fallback incase their own offerings fizzle out.

The question is: Will they go after Microsoft, too? It would be hypocritical not to, after all.

Many people are speculating they go after ms they have/will to go after Archos, Cowon, iRiver, Samsung, Sandisk and Toshiba.

Maybe creative maybe nice enough to give ipod some their X-Fi technology? This could be a good thing on both sides.

Creative was doing bad for the most part however Q1 and Q2 of this year they actually saw some profits. So things were changing for them. Just go to their site they have it all listed there.

 

[WildCowboy]

I don't think he is joking, it is about more than sales, but 100m songs on Itunes did make apple roughly 100M. So I think he is speaking solely about the moetary aspect of the Itunes sales. So no joke: money is money.

Actually, 100 million songs on iTunes makes Apple less than $10 million. Most of the money goes back to the record labels, and most of the rest pays for the infrastructure to run the store.

 

[whatever]

Not really. Creative was going broke. This was the best possible outcome for them.

To Apple it could have made all the sense of a business deal.

Imagine the lawyers:

"Ride it out and you may win or you may lose and it'll cost you $200-250 million.

Pay up now, get Creative on board, don't appear to be the bad guy and close any issues with patents - now and in the future - for $100 million."

Actually there are two other reasons why Apple settled.

What if Creative was bought by Microsoft, then without a settlement they could have continued the suit.

Now that Creative has money they can sue others (Microsoft) who also planning on infridging on their patents.

 

[IlluminatedSage]

yeah, but it isn't a bad deal. hell creative could have pulled a lawsuit, much like the lawsuit which almost shut down blackberry.

so... this is good. a win win. scenario. apple gets another big time vendor to sell products that accessorize apple's IPOD.

 

[sinisterdesign]

Creative found a way to make money. good for them.

 

[balamw]

1. Apple infringed on the patent
2. Apple paid license for use of the patent
3. Go watch TV.. show over folks.

You forgot:

0. Once issued, even the most bogus patent has the presumption of validity.

I look forward to the recent IBM proposals to create a Wiki for reviewing patents before they issue. http://money.cnn.com/magazines/fortune/fortune_archive/2006/08/21/8383639/index.htm

B

 

[musiclover137]

Apple makes money off of iTunes Music Store - they won't tell us how much, but it is a money maker (all be it insignificant compared to the iPod)

Right, insignificant.

Sure, a few cents a song. But not the reason for the iTMS. It's all just fodder for the iPod machine.

I don't think he is joking, it is about more than sales, but 100m songs on Itunes did make apple roughly 100M. So I think he is speaking solely about the moetary aspect of the Itunes sales. So no joke: money is money.

The money from each iTunes song DOES NOT go to Apple. It is split up widely amoungst publishers, record labels and the artist, and if there's any left, then to Apple.

100 millions songs sold DOES NOT EQUAL $100 million

 

[IJ Reilly]

Apple could blow a hundred million in legal expenses. It's less of an instance of throwing in the towel, and more of an instance of, "You know, the way idiot judges/juries hand out settlements these days, let's just give them a paltry sum, let them think they've won, and still destroy them in the MP3 market."

Not in 20 years, they couldn't. And no matter how often it's said to the contrary, $100 million is still very serious money.

Reminds me of 1997, when Microsoft was forced to invest $150 million in Apple as part of a settlement of a patent lawsuit, a lot of people couldn't wrap their minds around the idea that Microsoft had actually lost. They did then. Apple did today.

 

[MyLeftNut]

This seems like a good move from Apple...very strategic. If I didn't know better, they are throwing Creative's dead corpse at Microsoft before Microsoft join the battle...

I can see it now, Steve has a secret hideaway with big tabletop toy soldiers and BOOM! Creative's just fell down...hehe.

 

[princealfie]

Good job Apple. Finally Apple can buy out Creative in a few years. At least if Creative is going to make iPod accessories that will be a good start for them to profit very handsomely.

 

[Evangelion]

Steve Jobs knew this was a BS patent and it shows in his comments. Absolutely Stupid. Hell, the LISA had a Hierarchal File System.

Not Hierarchial File System! Hierarchial MENU System!

Now, we can freely discuss the "merits" of this patent, but fact is that Apple lost, fair 'n square. If Apple thought that Creatives patent was bogus, they would have NOT paid. 100 million dollars is a lot of cash, no matter how you slice it. If the patent was bogus, and they still paid, Apple would be sending other companies a message that said "Want some cash? Sue us with bogus patents, we'll gladly pay!". No, Apple paid because they felt that they were really infringing and that if they had proceedd with the lawsuit, they would have lost a lot more than 100 million.

Bottom line: Creative knew this was a BS patent, too, but they figured they had to try.

If it's a BS patent, why did Apple pay? Clearly, it was NOT a BS patent. Truem the patent-system might be screwed up, but that is not the point of this discussion.

The question is: Will they go after Microsoft, too? It would be hypocritical not to, after all.

If it's UI infringes on the patentt, sure. If it doesn't, why sue?

Creative is only worth $500 million, how come Apple didn't just buy them?

Because it would have cost the five times more than it did now? Because Creative has very little of interest for Apple? Because if they did that, everyone would be suing Apple with hopes that Apple would just buy them as well?

Wong Hoo to Creative engineer: "This is no good, i give you $1000000 more and i want something much much better"
unCreative engineer: "Wooo Hooo, thanks Mr, Hoo, i'll do it in 128 different colors, am sure that it will turn the market upside-down"

As Jobs said in his most recent keynote more money in R&D isn't everything, and if he says so i believe him.

Unless Woo has something extraordinary under his sleeve - which he doesn't cause if he did he would not need more money - i see Creative in the same position in a couple of years from now. And then they'll try to sue somebody else.

The article you are quoting was published two years ago....

 

[chasemac]

Also announced is that Creative is joining Apple's "Made for iPod" program, and will be introducing an array of iPod accessories later this year.

Thats hilarious!! For $100 mil I would too!

 

[theahnman]

Positive Outcome!

Seriously, all... this is much better than the alternative. I.e. Apple having to completely re-engineer or stop selling the iPod. $100 million is chump change. Stock market is highly reactionary and irrational. It should all smooth out in the next couple days.