Creative Accuses Apple of Violating its Patent

August 31st, 2005 at 3:00 PM - Reports by Brad Cook

Creative Technology, which on Tuesday announced that it has won what it calls the "Zen Patent" covering the interface for its MP3 players, is "looking at all [its] alternatives right now," according to president Craig McHugh.

According to a New York Times article, Mr. McHugh noted: "We have always been very vigorous in our defense of our patent portfolio." Reporter Laurie J. Flynn noted that Mr. McHugh "said on Wednesday that Apple was the only company that Creative had identified so far that was in violation of the patent, although Creative was investigating others."

Creative said that its defense could include legal action. Apple declined to comment.

Ms. Flynn quoted intellectual property (IP) lawyer Mark Goldstein as saying that Creative is "trying to show theyire in the same league" as Apple by going after what he called "the 500-pound gorilla" in the marketplace. Creative holds about 3.3% of the MP3 player market while Apple controls approximately 74%.

However, Tom Field, a professor at Franklin Pierce Law Center who specializes in IP issues, told The Mac Observer that companies donit typically defend their patents by going after the top dog first. "They go after the small potatoes who canit afford to defend themselves, collect license fees from them and then build a war chest for going after the big company," he explained.

He added: "That also makes the patent look better because they can show all these other companies that have agreed to pay license fees."

Mr. Field said that if Apple is found in violation of Creativeis patent, it would be forced to pay royalties on the sale of all iPods going back to the date of the Zen Patentis publication, which was Jan. 5, 2001. That would cover all iPods sold since its introduction in October 2001.

Going forward, Apple would have to obtain a license from Creative to keep including that interface on the iPod, which Mr. Field said seemed unlikely "given the bad blood between the two companies." Creative could refuse to sell a license to Apple, if it wants.

Of course, Apple has other alternatives before it has to resort to paying for licenses, altering the iPodis interface or even discontinuing sales of the MP3 player. Mr. Goldstein pointed out to Ms. Flynn that Apple could request that the U.S. Patent Office re-examine Creativeis patent. However, to fight Creative in court, Apple would have to show that it had similar technology in existence before Creative started shipping its MP3 players in September 2000.

"What would matter then is what was out there in, say, 1999 and 2000," Mr. Goldstein said. "What anybody was doing similar to Creative could be a huge burden to overcome."