Apple to fork out $100m in patent dispute settlement

Apple Computer Inc. will resolve its patent squabble with Creative Technology Ltd. by paying the Singapore-based company US$100 million for a licence to use a recently awarded patent.

The deal announced Wednesday ends all legal disputes between the companies, including five currently pending lawsuits, according to a statement.

In return for its payment, Apple will get a paid-up licence for use of the patent in all its products. It can also make some of that money back by licensing the patent to other companies. In addition, Creative will make iPod accessories under Apple’s “Made for iPod” program starting later this year, the statement said.

Creative is a leading competitor to Apple, in Cupertino, California, which dominates the portable media player market with the iPod.

In May, Creative asked a U.S. court to block sales of iPods, saying they violated a patent that covers the user interface software in most portable media players, including the iPod. Creative also asked the U.S. International Trade Commission to block the importation of iPods into the U.S.

The settlement “removes the uncertainty and distraction of prolonged litigation,” Apple Chief Executive Officer Steve Jobs said in a statement.

The payment will add about $0.85 per share to Creative’s earnings in its current quarter, ending Sept. 30, the companies said.

Meanwhile, Creative shares surged in early trading on Thursday after the company and Apple resolved the dispute.

Creative stock was trading at S$12, up 25 per cent on the day, as of 9:45am local time (01:45 GMT Thursday) on the Singapore Exchange. Earlier in the session it had climbed as high as S$13.20.

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