Apple Settles Creative Lawsuit for $100 Million

E IS mC(Square) writes "CNet News reports that `Apple Computer and Creative Technology have agreed to settle their legal dispute over music player patents for $100 million, the companies announced Wednesday. The $100 million, to be paid by Apple, grants Apple a license to a Creative patent for the hierarchical user interface used in that company's Zen music players. The patent covers an interface that lets users navigate through a tree of expanding options, such as selecting an artist, then a particular album by that artist, then a specific song from that album. Creative filed for the patent on Jan. 5, 2001. Apple can get back some of the $100 million payment if Creative is able to secure licensing deals with other MP3 player manufacturers, said Steve Dowling, an Apple spokesman. "Creative is very fortunate to have been granted this early patent," Apple's CEO Steve Jobs said in a press release.`"

Doesnt it sound like...

[NexFlamma (919608)]

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

You can almost hear him whispering "motherfuckers!" under his breath after saying this.

Re:Doesnt it sound like...

[by Anonymous Coward]

I've had it with these motherfucking patents on this motherfucking planet!

Re:Doesnt it sound like...

[Riding Spinners (994836)]

Writing software for a Mac and/or Linux is a very different proposition from fabricating hardware for a niche music player.

As expensive as software development is, it doesn't really compare with tooling a factory for making hardware that works with a specific MP3 player, then programming the firmware for said device.

The iPod has been using pretty much the same dock connector for a couple years now, so if you make a gadget for the iPod dock connector there's damn near 50 million potential customers out there.

Creative has clawed it's way to be the biggest of "the rest of them" with the Zen (at least in terms of last year's sales), but I wouldn't be surprised if somebody came out with a statistic that said there were more iRivers out there than Zens. If you are going to go after the "not an iPod" market, your best bet is to make generic gadgets which plug into the headphone jack of any player, and don't rely on the manufacturer-specific features on one niche player.

The iPod is far from perfect. It needs more RAM, and still lacks gapless MP3 playback (a major buzz-kill), but with its market dominance and it's dock connector with standardized pin-outs, it's no surprise that it's what most manufacturers are building accessories for.

If I'm the CEO of "SuperCoolOggAndMP3Players, inc.", I'd be talking to Apple about licensing the iPod dock for my player. It probably would not be a cheap deal, but it would give me a leg up over Creative and all the other also-rans out there, including the upcoming players from Microsoft.

Then again... being a sore loser, rolling on the ground kicking and screaming, and extorting $100,000,000 out of a company would probably make Creative more money than their iRivers ever would. Maybe frivolous corporate lawsuits are the future of "competition".

Re:What goes around comes around

[theLOUDroom (556455)]

It's good to see companies which patent and sue about trivial ideas get sued themselves. Remember the trash can patent?

Is it?

It's not like that money comes from nowhere or means nothing.
Consider how many people 100 million dollars could employ.
Consider that nonsense like this is a direct disincentive to both innovation and copetition.

What you're saying is like saying that it's nice that heroin dealer got shot by herion dealer B. Is this really a good thing?

Re:What goes around comes around

[StikyPad (445176)]

Consider how many people 100 million dollars could employ.

Just one, but I'll work O/T and weekends too!

OK then, $100mill question

[Kanasta (70274)]

so does that mean Creative invented the treeview, or the database search?
cuz billions of programs out there may be affected by this.

Re:OK then, $100mill question

[elysian1 (533581)]

Since this case was settled, it doesn't mean anything. It just means Creative was willing to drop the lawsuit for $100 million.

Pay. Counter License. Smile.

[catwh0re (540371)]

Step 1. Pay Creative 100M

Step 2. License offending patents to Creative for 150M.

Step 3. There is no step 3.

I suppose it's a new version of Rip. Burn. Mix.

Somebody is soon going to get a patent ...

[140Mandak262Jamuna (970587)]

... for an anatomical opening to expel the byproducts of digestion and sue everyone in sight with an a*****e.

This is BS

[hackstraw (262471)]

100 million is a pretty big payout for an obvious way to navigate through music that I myself invented when I was a kid. This method is: "The patent covers an interface that lets users navigate through a tree of expanding options, such as selecting an artist, then a particular album by that artist, then a specific song from that album."

I mean, isn't that how the stuff is organized in the record store too?

  "No wireless. Less space than a nomad. Lame." 100 million dollars in patent taxes lame.

Re:This is BS

[ilmdba (84076)]

don't be a prick. the text of the patent could be directly interpreted as "selecting an artist, then a particular album by that artist, then a specific song from that album" as the parent posted. just because you dug up the verbose text doesn't change what it is.

and yes, it's a pretty fucking obvious way to categorize and navigate through digitally stored music.

just about every ripper i've used has an option to create artist then album directories to contain the actual song files - so just putting a folder of ripped tunes behind a web server infringes on creative's patent? that's BS, completely fucking obvious, and never should have been granted as a patent.

the question now is, who has the patent on doing this with video?

What amazes me

[pickyouupatnine (901260)]

.. is that the idea was patentable. I mean come on... a simple heirarchical tree interface got patented? Who cares if it was for an mp3 player - does that make any difference? We've had tree interfaces for a while - its how many of us organize our music libraries (virtual and physical).

Re:What amazes me

[by Anonymous Coward]

Yeah, which is more scary:

1) that something *SO* obvious was granted a patent, or
2) that it was probably cheaper for Apple to pay $100 million rather than to try to prove it was that obvious in court.

If you ever wondered what is wrong with patents

[edbarbar (234498)]

This is a great example. The patent claims read just as described: how do you find a track to play using indexing.

Patents like this are not helping the public interest, but are simply ways for companies to lock out ideas without having to pay to develop them.

Time for the open source community to make "open patents" that are used to attack companies like creative that abuses them.

All your patents are belong to us

[robotsrule (805458)]

I have three fears with every line of code I write:

- It is buggy
- A better block of code already exists in SourceForge or somewhere else on the Internet
- It is stepping on one or more patents for completely obvious or barely novel ideas

I believe at this point paranoia is not only rational but optimistic and gin and tonic are my only defense since I can't afford lawyers, guns, and money.

Re:All your patents are belong to us

[VValdo (10446)]

I wonder if your fear #3 is grounds for challenging current patent law. I mean, the constitution says the congress shall have power:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

I believe at this point paranoia is not only rational but optimistic and gin and tonic are my only defense

If it can be demonstrated that the current law is HAMPERING the progress of science, would that not make overreaching patent law unconstitutional? That may be a hard case to make, but I bet there is a ton of evidence to support the premise, from scientists who are afraid to invent or publish, programmers who are afraid to release code, corporations which sit on inventions rather than exploit them, etc. Would not a climate of fear engendered amongst Authors and Inventors not be hampering the progress of science and the useful arts?

Incidentally, I note that the constitution specifically refers to "writings and discoveries." What is the "discovery" related to this particular patent?

W

Non-obvious to someone skilled in the art?

[cblack (4342)]

If I recall correctly from reading and a bit of training we were given at my company, this is supposed to be the guideline for validity of a patent application. I would think that if you asked just about any computer geek in 1995 to come up with a way to navigate a large music library, a hierarchy would have been the result. This is also how I used to arrange my mp3s before there were nice frontends, as a directory of Artists with subdirectories for Albums for each artist.

Re:Non-obvious to someone skilled in the art?

[antispam_ben (591349)]

What I learned from my company (by seeing it done before my very eyes) was that you get a patent on what will do the most to hinder the competition, regardless of whether it is an innovative part of the design. It's up to the attorney writing the patent to hype up how it is innovative. Patents in the last several decades get pushed through with little or no regard to the "Non-obvious" and similar clauses. I and a co-worker have two patents, each in both our names and we had nothing to do with choosing what areas were patented. FWIW, the complete schematic and an attorney-digested (i.e. expanded in to legalese/patentese) descripion of the complete device's operation were put into the patent. I could show you what I and the other engineer thought were the innovative parts, but those weren't what got patented.

If you can get a patent on a method for growing broccoli sprouts, go for it - it will only take the rest of the broccoli sprout industry going to court to get it declared invalid. Yes, it happened, google for the story.

That's a lotta cabbage!

[JimmytheGeek (180805)]

That's going to wipe out the profit margin on sales of 20-30 ipods!

really good chess move by Apple...

[primalamn (716272)]

I think this post at MacRumors hit the nail on the head:

http://forums.macrumors.com/showpost.php?p=2752753 &postcount=115/ [macrumors.com]

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.

I think the thing that people are forgetting here is that by settling Apple is pretty much making Creative defend this patent, essentially outsourcing the litigation - they pay nothing for that. If Creative does not defend the patent, or loses any case setting new precedent, Apple could conceivably sue to get the $100 million back.

Plus, they get back money, as stated above, for the 'Made for iPod' program that Creative is now a part of, and the iPod ecology is enhanced. They have taken on a partner here.

This is a win for Apple thinking long term. Good chess playing.

Re:Bad news for the rest of us ....

[shark72 (702619)]

"And it would be a bad thing if Apple started patenting user interfaces ... really."

Maybe that's a joke that went right over my head, but Apple is quite well known for patenting user interfaces. For instance, nobody else is allowed to depict a hard drive as an icon that looks like a photo or an illustration of a hard drive, because Apple has the patent on it.

Here are some examples:

• D523,441: Icon for a portion of a display screen
• 7,064,759: Methods and apparatus for displaying a frame with contrasting text

This is a case of "live by the sword, die by the sword."

Re:Well.... there's gotta be a reason

[tji (74570)]

Good point.. By licensing the patent, they are legitimizing it. The net effect is that it creates a big barrier to entry for new competitors. This is easy to do when you're the dominant player already seeing tons of revenue. Paying millions in licensing is a non-starter for the small innovators looking to enter that market.

Re:Well.... there's gotta be a reason

[mpaque (655244)]

Heh. Most of the press copied this line from the Apple/Creative press release:

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

They were in a hurry, though, and not many caught this:

Apple can recoup a portion of its payment if Creative is successful in licensing this patent to others.

So, Creative now has cash in the bank, 'validation' of its patent with a license from Apple, and an incentive to go forth and seek licenses from others...

Then there's this:

In addition, the companies announced that Creative has joined Apple's "Made for iPod" program and will be announcing their own iPod® accessory products later this year.

Apple puts money into Creative, Creative makes iPod accessories, and a cut of the accessory revenue goes back to Apple.

So... Apple gets rid of some lawsuits, sets things up to make trouble for some other music player makers, and gets another revenue stream. All in all, this doesn't look too bad as a business move for Apple.

Re:prior art?

[Achromatic1978 (916097)]

probably cost more than $100 million to prove that in court

I'm not sure what your experience is with legal costs - but I'll give you mine, as an inhouse technology expert at a tier-1 law firm: Ok Tedi Mining and BHP - pollution of a river, the suing of a multinational (one that just yesterday posted a US$10 BILLION profit) in multiple states of Australia, involving the government considering legislation to prevent the lawsuit, had legal costs at the time of settlement, for both parties, of under US$15M (the settlement was for $110M).

Factoring in other things I find it very, very unlikely that the cost of proving such a claim would even come remotely close to exceeding $100M. If you look at a legal team billing $5,000 an hour (which would be a reasonable figure including paralegals, clerks, ancillary support staff as well as lawyers), for, say 60% of the cost, 10% as being court fees, and the remaining 40% as "expert/proof costs" (ie the technical research and findings, as opposed to the legals), that's still in the order of 5 years FULLTIME work by that entire legal team to even use up that.

Not impossible, but exceptionally unlikely.

Re:disgusting!

[back_pages (600753)]

You don't have the slightest clue what you're talking about. (This is the 1 sentence that has replaced the 100 line flame that I just deleted.)

Patent for hierarchical user interface? Anything from a file system to nested menus is a hierarchical user interface. Oh but this one is used in a music player. That's where the innovation comes in.

I'm not sure what you're talking about but it is not the claims from the patent. If you'd like to respond, I'm going to require that you read the claims of the patent because otherwise you are literally wasting my time. Here is the link. The Patent [uspto.gov]

The patent system is in need of a major reform. Currently when you are sued for patent infringement you have the burden to prove that either you don't infringe on the patent or that the patent is invalid. This obviously doesn't work.

First, you are apparently unaware of a JMOL for clearly unreasonable patent infringement suits. Secondly, it's called "a defense". Technically it's optional.

Instead, the patent holder should have the burden of proving that the invention is truly novel and non-obvious. The patent would simply serve as documentation proving when a particular thing was invented.

It's called "patent prosecution" and it's the only way to get a patent in the United States. Clever idea.

The patent office would not need to examine patents for validity (i.e. it could continue doing what it's doing) since that would be established at the trial. This would cut down on the amount of "one-click" patents, reduce or even eliminate the need for defensive patents, and make patent trolling much more difficult.

(I've already deleted 100 lines of flame but let me say) I don't believe for a second that you have the slightest idea what is or is not a valid patent. Secondly, I don't think you have put any thought whatsoever into how you would prove or disprove this at a trial from scratch. (I say my patent is valid. We're done. Oh no - suddenly someone has to prove it's INVALID - we're right back to the problem you claim to have solved.) I think that you are unaware that patent prosecution before the patent office takes anywhere from 2-6 years. You suggest we move that (or some variant) into the COURTROOM? Are you trolling? Thirdly, you have begun your paragraph with a groundless conclusion and end it the same way - how in God's name would this make trolling any more difficult? Under your system, I don't even need to WIN the infringement suit, I can simply tie up your exorbitantly expensive legal team for an additional 5 years. It's legal extortion at its best.

I know this post is not very nice but please bear in mind that what you've read is completely rewritten. I don't intend to flame, but I do think you're completely out of your element. The bottom line, for me, is that I really wish Slashdot would stop carrying stories about patents because misinformation and worse is consistently moderated to the top. Without a doubt, Slashdot is the Fox News of patents.