Apple, Creative Tech Settle Patent Dispute

Updated from 6:48 p.m. EDT

Apple Computer (AAPL Quote) and Creative Technology (CREAF Quote) have decided to bury the hatchet.

Under a deal announced on Wednesday, Apple will pay Creative $100 million to license its patent on MP3-player-interface software. The deal comes three months after Creative sued Apple and filed a complaint with the U.S. International Trade Commission, accusing the iPod maker of violating that patent.

"Creative is very fortunate to have been granted this early patent," Apple CEO Steve Jobs said in a statement. "This settlement ... removes the uncertainty and distraction of prolonged litigation."

"We're very pleased to have reached an amicable settlement with Apple and to have opened up significant new opportunities for Creative," said Sim Wong Hoo, the company's CEO, in the statement.

Shares of Creative spiked on the news. In after-hours exchanges, the company's stock was up $1.76, or 29%, to $7.77. Apple's stock was off 9 cents, or about 0.1%, to $67.22 after the bell.

In its complaints, Creative had alleged that before Apple launched the iPod it had talked with Creative about an MP3 player partnership. In those discussions, Creative showed off to Apple the interface it used on its digital music players, which helps users organize and navigate songs. Creative alleged that Apple copied that interface when it launched its iPod line.