Ok, looks like some copycat company is feeling guilty. 
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Apple Computer Inc. said Wednesday that it is paying $100 million
to settle a dispute with rival Creative Technology Ltd. over the
design of its trendy and iconic iPod digital media player.
Creative, developer of the Zen digital media player, had sued the
Cupertino technology company this year, charging that the iPod took
its patent-protected technology to sort and organize thousands of
songs. It sought, among other remedies, to halt iPod shipments to
the United States from China, where they are manufactured.
Apple countersued, arguing that Creative, based in Singapore with
U.S. operations in Milpitas, infringed on three of its
patents.
The two companies said Wednesday that they had amicably settled
their differences. Apple will pay $100 million to license
Creative's technology and use it in its iPods, with the opportunity
to get back a portion of the fees if Creative is able to license
that technology to other companies.
Creative will also begin making accessories for the iPod as a
member of Apple's "Made for iPod" program. Creative also makes
headphones, speakers and other high-tech devices
The agreement was disclosed after the stock markets closed for
regular trading. Shares of Creative jumped to $8.26 in the
after-hours market, up more than 36 percent. Apple's stock was
little changed.
Creative introduced its MP3 player before the iPod, but the iPod --
and its accompanying iTunes music service -- quickly caught on
among consumers. The iPod's market share is roughly six times that
of Creative's, said Tony Berkman, director of research for Majestic
Research.
Last year, Creative was awarded a patent for its system to
categorize a large number of music files on a portable device. It
suggested at the time that it would go after companies that
infringed on it.
In a statement, Apple Chief Executive Officer Steve Jobs said the
settlement resolves the five suits and countersuits between the
companies, including a complaint Creative filed with the U.S.
International Trade Commission.
"Creative is very fortunate to have been granted this early
patent," Jobs said. "This settlement ... removes the uncertainty
and distraction of prolonged litigation."
The iPod has propelled Apple into Silicon Valley's digital darling.
During April, May and June alone, Apple sold 8.1 million iPods,
taking in nearly $1.5 billion. The device has also spawned a
multimillion-dollar market of accessories, from Bose speakers to
clothes to dress up the iPod.
Creative said it hopes to take advantage of the iPod's popularity
by developing products for it, even though its Zen digital media
player competes against it.
"The iPod has a huge base and we'll be able to tap into that,"
Creative Labs President Craig McHugh said in an interview. "It
gives us an opportunity to develop products for (not only) our Zen,
but (also) for the iPod."
Analysts said the settlement removes a threat hanging over the
iPod.
"Even though it costs Apple money, it is a small amount considering
the size of Apple's iPod business," said Tim Bajarin, principal
analyst at the research firm Creative Strategies. "One hundred
million is not pocket change, but it's a relatively small amount to
get that out of the way."
Wednesday's settlement could help Creative strike licensing
agreements with companies that might have infringed on its
patents.
Though McHugh did not specify other firms that use similar
technology, he said Creative's patented ability to easily find and
access files is found in many high-end MP3 players and cell
phones.
"Creative can trumpet (the settlement) and say this is a serious
claim," said Allonn Levy, an attorney with Hopkins & Carley in
San Jose. "The fact you have a serious player and a substantial
exchange of money suggest there is something to the claim."