Creative had sued Apple over the use of navigation systems to find and organise music on iPods which it said violated patents held by Creative. Creative makes rival portable music players under the Zen name.
In its suit, Creative had asked the International Trade Commission to ban the importing of iPods to the US, since the machines are made outside of the country. Apple in turn filed two counter-infringement patent lawsuits against Creative, which is based in Singapore.
Apple founder and chief executive Steve Jobs said that all outstanding cases were settled by the payment. "Creative is very fortunate to have been granted this early patent," said Jobs in a statement. "This settlement resolves all of our differences with Creative, including the five lawsuits currently pending between the companies, and removes the uncertainty and distraction of prolonged litigation."
The payment is a one-off licensing fee for Creative's patented technology. Under the terms of the deal, Creative will also be permitted to badge some of its products as 'made for iPod' as part of an accessories affiliation programme operated by Apple.
"This was a very broad settlement,'' Craig McHugh, president of Creative Labs, told the San Jose Mercury News. "We have the opportunity to now enter the iPod ecosystem and sell our accessories such as speakers and head phones. It's wonderful. We felt this was for the best."
Creative was the first company to market portable digital music players but the brilliantly designed and well marketed iPods quickly overtook Creative in sales and now dominate the market. IPods now account for 26% of the digital music player market, while Creative's second place still only brings them 6% of the market.
