Apple, Burst settle patent dispute for $10m

Apple and Burst.com on Wednesday settled their patent dispute for $10 million dollars. The agreement ends almost 2 years of litigation and offers Burst a one-time payment of $10 million cash in exchange for a non-exclusive license to its patent portfolio -- not including one issued U.S. patent and 3 pending U.S. patent applications related to new DVR technology. A similar claim -- over a technologies used in Windows Media Player's transmission of music and video -- was settled in 2005 with Microsoft for $60 million.

As part of the settlement, Burst also agreed not to sue Apple for any future infringement of the DVR patent and any patents that might issue from the pending DVR-related applications. More than half of the recouped license fee is expected to pay for the court costs, expenses, and attorney's fees, according to the company.

The settlement ends a battle that began almost three years ago when Burst first claimed that the iPod infringed on some of its media patents. Apple soon filed a preemptive lawsuit to defend itself following a breakdown in protracted negotiations for issuance of a license of Burst's patents to cover Apple's iPod and iTunes products. Burst then countersued, alleging that its technology has been essential to Apple’s success by and provided a critical part of the Cupertino-based company's audio and video-on-demand media delivery solution.

Earlier this year, a pre-trial hearing validated many of Burst's concerns over computer media transmission patents and Apple's attempt to dismiss the case failed: while nearly 14 claims were thrown out earlier this month, more than 22 were upheld by the trial court judge.

The $10 million patent license provides Apple with the right to use its intellectual property in its own technology and products, without further consideration. Burst, however, retains the right to enforce its patent portfolio against others and said it plans to continue identifying and evaluating companies who represent licensing opportunities and intends to diligently pursue those likely to yield suitable returns.

Burst, however, said it did not plant to announce specific names of suspected infringing products or companies in advance of negotiating with them or filing litigation to enforce its patent rights. Burst does not plan to publicly release any internal assessments of market segment size or dollar value of those markets, although it believes that they are significant enough to warrant the aggressive pursuit of patent licensing.

Legal fees, expenses exceed 50%

Court costs, expenses and attorney’s fees in connection with the settlement of the litigation with Apple will reduce proceeds to the Company to approximately $4.6 million. According to the agreement, payment to Burst is to be made promptly after signing of a definitive settlement agreement. Burst’s Board of Directors has indicated that it will be considering an undisclosed cash distribution to Burst’s shareholders as remuneration for Apple's license fee.

Filed under: Apple