Mises Wire

Apple Pays Creative $100 Million To Settle Patent Suit--Creative uses its patent on "Automatic hierarchical categorization of music by metadata" (PDF copy; FPL version) to force its way into doing business with Apple and to extort $100M from them.

The first and broadest claim of this brilliant innovation gives Creative the exclusive rights to make, use, or sell the following "method" (I've broken out the actual five steps covered by the method in bullet points: the first part is a mere preamble and merely defines terms and sets the context for the actual steps; any competitor that has a product that engages in all five of these steps, or their "equivalent" (even if the competitor uses additional steps too) is "infringing" this claim:

A method of selecting at least one track from a plurality of tracks stored in a computer-readable medium of a portable media player configured to present sequentially a first, second, and third display screen on the display of the media player, the plurality of tracks accessed according to a hierarchy, the hierarchy having a plurality of categories, subcategories, and items respectively in a first, second, and third level of the hierarchy, the method comprising:

• selecting a category in the first display screen of the portable media player;
• displaying the subcategories belonging to the selected category in a listing presented in the second display screen;
• selecting a subcategory in the second display screen;
• displaying the items belonging to the selected subcategory in a listing presented in the third display screen; and
• accessing at least one track based on a selection made in one of the display screens.

Wow, this case is a perfect illustration of the idea that patents are just such a great source of innovation and wealth. I'm sure, without Creative's heroic innovation and genius engineers, no one would have ever figured out that it would be useful to have "an interface that lets users navigate through a tree of expanding options, such as selecting an artist, then a particular album by that artist, then a specific song from that album". Without Creative's brilliant creativity--which we would not have been blessed with but for the incentives of reaping $100M in go-away money from the big guy on the block--society would forever be doomed to have MP3 players that only allow you to choose from thousands of songs alphabetically. Think how much time and effort we are all spared now, due to this blockbuster innovation by Creative

. But wait a sec. For Creative to win their patent suit against Apple, they don't even have to prove Apple got the idea from Creative's patent. Even if Apple came up with the idea independently--even if the idea is, shall we say, fairly obvious--Creative could still win. Hmm.