Bose Sues Apple Acquisition Beats for Patent Infringement

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Apple in CourtBose Corporation filed a complaint with the U.S. International Trade Commission (ITC) Friday accusing Beats Electronics of willfully infringing on five patents, according to Bloomberg. Bose also launched a parallel lawsuit. Beats is in the process of being acquired by Apple, and Bose has accused the company of violating its patents in Beats Studio and Beats Studio Wireless headphones.

Bose wants an injunction prohibiting import of the infringing devices, financial compensation for past infringement. The Verge reported that the suit also seeks a complete accounting of, "all infringing sales and other infringing acts by Beats."

The patents in question involve noise cancelling properties in Beats Studio and Beats Studio Wireless headphones. Bose claimed in the suit that it has been working on noise cancelling technologies for 40 years.

In its ITC filing, Bose said, "The inventions covered by the asserted patents arose out of the inventors’ recognition of the unique technical problems associated with constructing improved high-performance noise canceling headphones."

Apple announced it was acquiring Beats Electronics and Beats Music in May. The deal included US$2.6 billion up front and an additional $400 million that will vest over time. Barring something unexpected—say, for instance, a major lawsuit—the deal is expected to close later in the September quarter.

Neither Bose, nor Beats, nor Apple has commented on the suit or the ITC complaint. If the complaint and the suit aren't settled, Apple is likely to be the owner of both Beats and the proceedings when they go to trial.

Shares of $AAPL closed higher on Friday at $97.671, a gain of $0.641 (+0.66 percent), on moderate volume of 43.4 million shares trading hands.

Comments

MacFrogger

Pure speculation here Bryan, but:  Unlike patent trolls, Bose may actually have not only a legal case but a moral one.  They not only invented most of the tech in this area, they are actually a practicing entity using it to make a corporate living.  Again, I plead ignorance on the specifics of the case, as I don’t know the specific patents, their claims, or what is being allegedly infringed.

Apple is likely to say, “But why didn’t you sue Beats before we announced our acquisition?”  But that doesn’t get around anything, because a requirement of the acquirer is to do a thorough review of the acquirer’s patents and other IP. Its called due diligence.

Caveat emptor!

MacFrogger

Yo Bryan! 

On further thought, I’m thinking that Apple should just buy Bose!  smile

MacFrogger

Grrrr…autocorrect problem?  Or should the commenter not have had that second beer earlier this eve?!

Re:  ...a requirement of the acquirer is to do a thorough review of the acquirer’s patents and other IP. Its called due diligence.

Should have been (obviously):  ...a requirement of the acquirer is to do a thorough review of the acquiree’s patents and other IP. Its called due diligence.

iJack

I can attest to some of what MacFrogger says; Bose makes the best noise–cancelling headsets in the world, bar none. I’m thinking a worthy judge may take their quality, continuing R&D and longevity into account, especially vs a pop-up like Beats.

Purchasing Bose, rather than Beats would indeed, have been a smart move, IMO.

Lee Dronick

I just returned from the mall and had stopped in at the Apple Store. I was trying out bluetooth, earmuff style headphones. I didn’t get to try any Bose, but I did try Beats Studio. I was impressed by the sound quality, and noise cancelling, but not the controls. It didn’t have volume, stop/start, next and such, not that I could find, which I consider a deal breaker.

brett_x

I think the timing of this has a lot to do with the Apple acquisition. But not in the standard “We want Apple’s money” way.

This thought came to me by way of me thinking to myself: “Wow, Bose is saying that Beats is using/stealing their technology? I should probably check out Beats the next time I’m in the market”.

Beats used to be a small company and not much of a competitor.  Bose highlighting (through litigation) that they are using their technology would have certainly given them the legitimacy that the Apple acquisition is doing anyway. 

The truth is that I was already considering checking out Beats after Apple announced their plans.

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