Apple is known as a company that especially prides itself on its own novel and inventive products (and, for whatever it is worth, I am a big fan of their products). For example, Steve Jobs and Co. have had a lot of fun through the years mocking Microsoft for supposedly ripping off features of their Mac OS X operating system. Indeed, at one point (before Jobs’ return to the company in 1997), they even sued Microsoft for allegedly infringing Apple’s copyrights in a desktop operating system (through various versions of Microsoft’s Windows operating systems).

So, I was pretty surprised the other day when I read about Kane Kramer, an obscure British inventor who has nothing to do with Apple. Yet, according to several sites, he is “the guy Apple’s lawyers say invented the iPod.” And get this: he hasn’t gotten a penny from Apple for his invention of the iPod.  Even more surprising, he is not upset at all about it. Despite the fact that he is apparently struggling financially, he “was just so pleased that finally something that I had done which has been a huge success and changed the music industry was being acknowledged.”

Wow! What a story. Apple and its lawyers admit that the iPod – possibly Apple’s most popular product ever – was invented by someone else. And Apple is not paying the struggling inventor for it. And the inventor is happy about the whole thing! He just wanted to be acknowledged!

Guess what? It’s not true. Rather, we seem to have another instance of the press not quite understanding intellectual property law. (See also the LA Times’ editorial complaining about Donald Trump’s “patent” on the phrase “you’re fired“)

From a little bit of searching on this thing called “Google,” I was able to get a picture of what really happened here. Apparently, the story starts with Burst.com – a company created during the 90’s tech boom, but is now struggling, and apparently only generates revenue now through licensing of its patents. Among other things, it claims to have patents on “faster than real time” delivery of digital audio and video content. A few years back, it was able to get Microsoft to pony up $60 million to settle a patent dispute.

After Microsoft, it set its sights on Apple, and in particular on getting a piece of the holy grail of digital music: Apple’s iPod. Apple, though, was not ready to fold so quickly. After talks with Burst broke down, Apple fired the first shot, filing its own action seeking a declaration that the Burst patents were both invalid and not infringed by Apple against Burst in the Northern District of California. N.D. Cal. Case No. 3:06-CV-00019 MHP. The case was assigned to Judge Marilyn Hall Patel (the same judge, coincidentally, who handled the Napster litigation). Documents from the case are available here.

About a year into the litigation, in January 2007, Apple filed two motions for summary judgment – one argued that the patents were not infringed and the other argued that the patents were invalid. Apparently, Judge Patel’s claim construction order (i.e., her order interpreting the meaning of the patent’s claims) was not very favorable to Apple so Apple withdrew its motion regarding infringement.  It nevertheless pressed forward with its motion arguing that the patents were invalid. Its motion relied on two prior art patents, one by our friend Kane Kramer, the struggling British inventor, and another assigned to AT&T. Did Apple argue that Kramer was the true inventors of the iPod? No. Rather, Apple argued that Burst’s patents were not novel (i.e. there was nothing new in them) and they were obvious (i.e., if there were something new, it would be obvious) based on the Kramer and AT&T patents. Thus, Apple’s arguments, at best, were that Kramer invented whatever Burst invented, not that Kramer invented the iPod as the reporting I linked above stated.

So, the lesson here: Do not believe everything you read. Especially if it involves the law.  And especially if it involves intellectual property law. And especially if it involves patent law.

And whatever happened to Apple & Burst? Well, on November 8, 2007, Judge Patel issued her order on Apple’s Motion regarding the validity of the Burst patents. Judge Patel invalidated about half the claims in the patents (claims are separate paragraphs of a patent that define a distinct property right; to be liable for infringement, you only need to infringe one claim), leaving over 22 patent claims still in dispute. Judge Patel ruled that some of the claims were invalid in light of Kane Kramer’s patent, and some were invalid in light of AT&T’s patent. So, while Burst may have been bruised, it was no doubt still alive and fighting, and had 22 patent claims left to fire at Apple. But Apple already had another motion for summary judgment on file arguing that the patent claims were invalid for other reasons. Shortly thereafter, Burst backed down. Apple and Burst announced a settlement, whereby Apple paid Burst $10 million (and more than 1/2 of that is going to attorneys’ fees and costs) – a lot of money to you and me, but given the success of the iPod, and the fact that Microsoft paid Burst $60 million to settle its dispute, this looks like a big victory for Apple.