Apple Settles Burst Lawsuit

While the judge did note that several of Apple’s claims could be brought forth at a later stage of litigation, I posited in an article about the Markman phase that it was unlikely Apple would pursue the matter further, unless Burst’s licensing or settlement terms were just too onerous.

The small company took the initial Markman ruling to heart, and its position was again bolstered on November 8 by the final order in the Markman phase, which Burst noted on its website:

"Judge Marilyn Hall Patel of The United States District Court, Northern California, today issued an order that invalidated as obvious or anticipated 14 claims in the patents in suit between Apple Computer and Burst.com, Inc. The order leaves 22 claims remaining, . . . [which] include some significant audio and video claims that reach key Apple products including the Macintosh Computer. Burst looks forward to trying its case in court against Apple early next year."

The case never made it to 2008, though; as of last week, Apple agreed to settle for $10 million, which will end up putting approximately $4.6 million into Burst's coffers, after legal fees have been accounted for. It is uncertain whether early investors, such as the rock group U2, will receive any shareholder benefits from this settlement, but the irony of Bono and Steve Jobs on opposite sides of the bargaining table, when both have benefited from stratospheric iPod sales, was also too much for some pundits to resist.

What does Apple get out of the settlement? In a word, protection. Protection from Burst's current lawsuit that claimed Apple had refused to license four patents for its wildly successful iPod. Protection also from future suits, which may have been in the works given Burst's success in the Markman hearing (and may still be in the works given the number of other companies who have created streaming systems that rely in part on Burst's patented delivery system). Apple also wins the right to use most of Burst's patent portfolio, but it limits Apple's right to use, according to an announcement, "four additional Burst patents that have not been shared between the two companies, three of which are related to digital video recorders and have yet to be granted".

While neither company is saying much about what the future holds, Apple is facing another lawsuit for its iChat videoconferencing software, with the claim far-reaching enough (and driven, some have said, by Acacia, even though the suit is being filed by a small company called Digital Background Corporation) that its discussion warrants another article.

For now, Burst is content to announce on its website that its technology is part of two of today's biggest names in web video:

"The Windows Media Player and QuickTime for Windows Player have been Burst-Enabled to play content from Burstware Servers. The Burst-Enabled Players are isolated from network interruptions because content is played directly from the local buffer".