Apple, Microsoft Duel Over iPod Patent

ak47m203 · Aug 16th, 2005, 11:51 PM

Apple, Microsoft Duel Over iPod Patent

Aug 16, 2:20 PM (ET)

By GREG SANDOVAL

SAN FRANCISCO (AP) - Given the intense rivalry between Apple Computer Inc. (AAPL) and Microsoft Corp. (MSFT), this recent revelation had a comedic tinge: Apple took too long to file a patent on part of its blockbuster iPod music players, so Microsoft beat Apple to it.

Bloggers and other tech pundits snickered at the prospect of Steve Jobs having to pay Bill Gates royalties on the beloved iPods, which account for more than one-third of Apple's revenue. One Web columnist even dubbed the patent office the "iPod killer."

But that scenario is unlikely.

To be sure, the U.S. Patent & Trademark Office last month did reject a request that Apple filed in October 2002 to patent technologies that support the iPod's rotational wheel interface. The reason for the rejection: Microsoft had apparently outraced Apple to the patent office with a similar request by five months.

Sounds bad, but that setback is hardly a knockout blow.

"It's still very early in the process," said John Ferrell, co-founder of Carr & Ferrell LLP and a leading Silicon Valley patent attorney. "Apple still has a lot of options. This is not like a Supreme Court decision."

Apple could file a declaration stating that it invented the technology before Microsoft filed its patent request - as evidenced by all the iPods already on the market at the time. In such cases, a company can ask the patent office to launch an investigation to determine the inventor.

Apple also could alter its patent claims so they don't overlap with Microsoft's. As a result, a final answer on who owns the patent for iPod's interface may not be answered for at least another six months, Ferrell estimated.

Apple did not explain why the patent applications took so long. The Cupertino, Calif.-based company said in a statement that it "has received many patents for inventions related to iPod, and has many more patents pending."

Microsoft released a statement saying only that it has a long-standing policy of licensing its patents to others.

At stake are the 21 million iPods that Apple has shipped - that amounts to 75 percent of all MP3 players sold in the United States - since launching the device in 2001. Coupled with revenue generated from the iTunes Web music store, iPod sales accounted for 38 percent of Apple's revenue last quarter.

Tim Bajarin, principal analyst for Creative Strategies, pointed out that Apple and Microsoft signed a five-year agreement in 1997 to share technology. When the deal expired in 2002, the music-player patents in question may have been covered, he said.

"If someone were taking bets," he said, "I would wager that Apple never pays Microsoft a cent."