Creative says has patent covering iPod technology

LOS ANGELES (Reuters) - Creative Technology, a maker of portable music players, on Tuesday said it was awarded a US patent that applied to Apple Computer Inc.'s iPod and other rivals.

Creative said it was considering its alternatives, but did not say whether it would file a patent suit, which is typically an expensive process, seek licensing agreements or even if it had talked with Apple.

Apple had no immediate comment.

Analyst Phil Leigh of Inside Digital said he considered the patent award a significant development for both companies.

"We consider it a dead certainty that Creative will go after Apple for royalties or some other type of compensation for what Creative will assert is infringement of its patents, currently and in the past," Leigh said.

But Leigh said it was highly probable that Creative will have a hard time getting its "bite" out of Apple because the applicability of patents can be difficult to prove.

Creative said the patent covers the way music tracks are selected on a device using a hierarchy of three or more successive screens. On the iPod, for instance, users can scroll from artists to albums to songs.

Creative ranks far behind Apple in the market. Apple dominates over 70 percent of sales for music players that use hard drives to store music.

"We're pleased about the patent and the protection it provides us. We're evaluating all the alternatives," Craig McHugh, president of Creative Labs, the firm's US unit, told reporters on a conference call.

Creative said it had applied for the patent -- dubbed the Zen patent after its Zen player -- on 5 January 2001, and it was awarded on 9 August 2005.

"The first portable media player based upon the user interface covered in our Zen Patent was our NOMAD Jukebox MP3 player," Sim Wong Hoo, chairman and CEO of Creative, said in a statement. He said Creative had shipped the NOMAD Jukebox to US retail customers in September of 2000.

"The Apple iPod was only announced in October 2001, 13 months after we had been shipping the NOMAD Jukebox based upon the user interface covered by our Zen Patent," he said.

The US Patent & Trademark Office recently rejected a request filed by Apple in October 2002 to patent some of the device's technology. Microsoft had filed a similar application in May 2002.

Microsoft had no immediate comment, although Creative's McHugh said Microsoft's patent application covers different technology from that covered in its patent application.