Apple blunder gives Gates iPod royalty

August 14th, 2005, 12:04 Posted By: wraggster

Apple Computer may be forced to pay royalties to Microsoft for every iPod it sells after it emerged that Bill Gates's software giant beat Steve Jobs' firm in the race to file a crucial patent on technology used in the popular portable music players. The total bill could run into hundreds of millions of dollars.

Although Apple introduced the iPod in November 2001, it did not file a provisional patent application until July 2002, and a full application was filed only in October that year. In the meantime, Microsoft submitted an application in May 2002 to patent some key elements of music players, including song menu software. Apple and Microsoft were two of several companies that developed portable players, but the iPod, with its sleek design and user-friendly controls, has dominated the market.

IPods make up three of every four portable music players bought in the US and account for almost one-third of Apple's sales. Piper Jaffray, a US analyst, believes Apple will sell 25 million iPods this year, bringing the total sold in the four years since its launch to 35 million.

In July, the US Patent and Trademark Office rejected Apple's application, saying some ideas were similar to an earlier application filed by a Microsoft employee, John Platt. The dispute, which emerged this week on the closely watched website, Appleinsider.com, could lead to Apple having to pay a licence fee for the technology of up to $10 a machine.

David Kaefer, Microsoft's director of intellectual property licensing and business development, said: "In general, our policy is to allow others to license our patents so they can use our innovative methods in their products."

Apple has signalled it will resist the move. A spokeswoman said Apple would continue to try to get its patent recognised. The company could take the case to the patent office's appeals board. "Apple invented and publicly released the iPod interface before the Microsoft patent application was filed," it said in a statement.

The battle comes as Microsoft is squaring up against another competitor, Google. Microsoft last month launched a lawsuit against the search-engine giant, accusing it of poaching a top executive to head a new research laboratory in China. The Redmond, Washington-based company also sued the executive, Kai-Fu Lee.

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