Apple Sues To Save Its iPod

Apple’s suit against Burst.com is a pre-emptive strike over a patent dispute between the two companies.
With Apple set to introduce new media distribution technology at next week’s Macworld Conference, the company on Wednesday filed a lawsuit in U.S. District Court in San Francisco against Burst.com Inc. to protect its burgeoning digital content delivery and iPod empire.

“Burst.com approached Apple claiming that some of our products violate their patents. But we don’t agree,” an Apple spokeswoman said in a prepared statement. “Unfortunately, we’ve been unable to resolve the disagreement with Burst directly. So we’ve asked the court to decide.”

To Richard Lang, co-founder, chairman, and CEO of Burst.com, Apple’s rejection of his company’s claims represents something of a double standard. “Big companies love patents as long as they’re not owned by someone else,” he observes.

Apple is seeking a declaratory judgment from the court that its products do not infringe upon patents held by Burst.com. Apple declines to specify which products are the focus of the dispute. Burst.com says it has been pursuing licensing for Apple’s QuickTime, iPod, and iTunes products, including Apple’s iTunes Music Store.

Last year, Burst.com settled a similar dispute with Microsoft. In exchange for $60 million, Microsoft received a license to Burst’s audio and video distribution technology. Burst has approached other companies, including Apple, about the use of its intellectual property.

“This is clearly an active area of innovation,” says Bruce Wecker, a partner with Hoise MacArthur LLP in San Francisco, who is representing Burst.com. “Apple has come out with its video iPod, which is at the heart of Burst’s IP [intellectual property].”

According to Lang, his company has been in negotiation with Apple for several months, but the two companies have been unable to come to terms. He suggests the timing of Apple’s suit indicates that Burst’s claims may have some impact on the products Apple plans to announce at Macworld.

Apple news site ThinkSecret.com reported last month that Apple plans to introduce a new content distribution system to stream audio and video content through Apple’s .Mac Internet service to subscribers’ computers.

Apple’s court filing says that Burst approached Apple in late 2004 and notified Apple in 2005 that it was infringing on Burst.com’s patents. The complaint notes that Burst.com’s claim “has created in Apple a reasonable apprehension that [Burst.com] will initiate a patent infringement suit” and that unless the court declares Burst’s claim’s invalid, it believes Burst.com will continue to “wrongly assert” its rights and thereby cause Apple “irreparable injury and damage.”

The patents at issue are #4,963,995, #5,995,705, and #5,164,839. They will expire between 2007 and 2009, which suggests the royalties sought by Burst were significant enough that Apple would rather gamble in court than pay for a few years of peace.

“We’ve been hoping to create a win-win situation with Apple and we continue to hope that’s where it will end up,” Lang says.

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