IPod - Patent Disputes

Patent Disputes

In 2005, Apple faced two lawsuits claiming patent infringement by the iPod line and its associated technologies: Advanced Audio Devices claimed the iPod line breached its patent on a "music jukebox", while a Hong Kong-based IP portfolio company called Pat-rights filed a suit claiming that Apple's FairPlay technology breached a patent issued to inventor Ho Keung Tse. The latter case also includes the online music stores of Sony, RealNetworks, Napster, and Musicmatch as defendants.

Apple's application to the United States Patent and Trademark Office for a patent on "rotational user inputs", as used on the iPod interface, received a third "non-final rejection" (NFR) in August 2005. Also in August 2005, Creative Technology, one of Apple's main rivals in the MP3 player market, announced that it held a patent on part of the music selection interface used by the iPod line, which Creative Technology dubbed the "Zen Patent", granted on August 9, 2005. On May 15, 2006, Creative filed another suit against Apple with the United States District Court for the Northern District of California. Creative also asked the United States International Trade Commission to investigate whether Apple was breaching U.S. trade laws by importing iPods into the United States.

On August 24, 2006, Apple and Creative announced a broad settlement to end their legal disputes. Apple will pay Creative US$100 million for a paid-up license, to use Creative's awarded patent in all Apple products. As part of the agreement, Apple will recoup part of its payment, if Creative is successful in licensing the patent. Creative then announced its intention to produce iPod accessories by joining the Made for iPod program.