Apple Sued for Alleged Patent Violation

The iPod maker is charged with infringing Creative's patent on an interface used to access songs stored on MP3 players.
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Updated from 5:59 p.m. EDT

Creative Technology's

(CREAF)

MP3 players haven't done well in the marketplace compared with

Apple's

(AAPL) - Get Report

iPods.

Now Creative is calling foul.

The Singapore-based company has sued Apple in federal court and filed a complaint against the iPod maker with the U.S. International Trade Commission.

The actions charge Apple with violating Creative's patent on a user interface used to navigate and access songs stored on an MP3 player. Charging Apple with willful infringement of the patent, Creative is seeking to bar Apple from being able to sell its higher-end iPod models and an unspecified amount of monetary damages.

"The iPods, iPod nanos and iPod minis sold by

Apple are specifically configured to access and display music loaded by the user in ways that infringe

our patent," Creative said in the complaint it filed Monday with the U.S. District Court for Northern California.

Apple "knows or should know that those players have no substantial non-infringing uses.

Apple engages in those acts despite its actual notice and knowledge of

our patent," it said.

A Creative representative declined to comment on the complaints. An Apple representative did not immediately respond to a call seeking comment on them.

Creative was one of the early entrants in the MP3 player market. The company found initial success in its Nomad Jukebox line, which it introduced at the beginning of this decade.

Apple launched its iPod line about a year later. According to the trade commission's complaint, Apple entered the market only after initially exploring a partnership with Creative.

Through the two companies' discussions, Creative showed Apple its now-patented MP3 player interface.

The U.S. Patent Office issued Creative patent No. 6,928,433 last August. Creative originally applied for the patent in January 2001.

The success of the iPod has revived Apple's business and its stock price. Indeed, in Apple's last two quarters, the company has garnered more revenue from selling iPods than from selling Macintosh computers.

In contrast, Creative has struggled. The company's MP3 players have been a distant also-ran to the iPod line. Overall, though the company's sales have risen in the last two years, its profit plummeted last year.

And while Apple's stock is up nearly 500% over the last five years, Creative's stock is down 42% over that time period.

Apple's recent success in digital music has made it a target of lawsuits from disgruntled customers, business rivals and patent holders. The company faces at least one other suit related to the iPod interface, for instance.

Additionally, the company has been battling

Apple Corps

, the Beatles' record company, over whether its entry into digital music violates the terms of an earlier agreement that ended a trademark battle between the two companies.

Last week, a British judge ruled that Apple's iTunes music store can continue to use the Apple logo; Apple Corps has reportedly said that it plans to appeal the decision.

After ending the regular trading session up 9 cents to $67.79, shares of Apple were off about 19 cents, or less than 1%, to $67.60 in recent after-hours trade.

Creative shares were up about 27 cents, or 5%, to $5.73 recently after hours. The company's stock closed regular trading off 10 cents, or about 2%, to $5.46.