Apple Settles iPod Dispute with Creative

mini versus zen

Earlier this week Apple announced that they had reached an agreement with Creative, creators of the Zen series of digital media players, to settle the patent infringement lawsuit that Creative had filed against them and to settle the countersuits that Apple had filed against Creative in the process. The legal wrangling, in my opinion, should have gone to court, if for no other reason than for Apple to have thoroughly trounced Creative in court, and for the inadequacies of the current patent review and awards system to be on display in a public court of law, but alas, it isn’t to be this time around.

Which makes perfect sense from a business standpoint. From a principled legal standpoint, I’m unhappy, but from a business perspective, this allows Apple to get back to the business of making and selling iPods, and the $100 million USD that Apple agreed to pay Creative will help Creative hopefully get on its feet and start making digital media players that people actually like.

I still think Apple could have smacked Creative around in court over this, especially in light of the countersuits they filed (which were, in my opinion, stronger than the original suit) but Apple had bigger fish to fry and the stakes were higher for Apple, who could have wound up with an injunction in their hands and not being able to sell iPods or import them from their assembly facilities in China, versus Creative, who’s ship has long since sailed and is now slowly sinking. The stakes were always higher for Apple, and it kind of makes sense that they just want to put this behind them and get back to business.

Still, the money’s no big deal to Apple, Marketplace [ ] reported that Apple’s got something like 6.1 billion USD cash on hand for things like this, so now they have all of 6.08 billion, and Creative’s stock has soared something like 35% in afterhours trading when the settlement hit the press. In the end, I think this might work out for the consumer-Apple’s had the shot fired across its bow, even if it doesn’t care, Creative now has an influx of cash that hopefully they’ll use to develop better products (although word is they’re going to have to license Apple’s interface design back from them, so some of that hundred million is going right back to Apple…AND they get in on the “made for iPod campaign.” Woo. Do I smell a future aqcuisition on Apple’s part? Hmm…) that will force Apple to innovate and bring new features and products to market. Hopefully the consumer will win, and the digital media player market will keep humming.

Still other reports say that Creative is bleeding cash like a stuck pig, so who knows how long that hundred million will last. But if it does, it works out for the consumer. If it doesn’t, it works out for Apple. Only time will tell.

[ PC World :: Apple Settles iPod Dispute with Creative ]

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