Creative started in 1981 as a Singapore computer repair shop. In the 1980s, Creative developed an add-on memory board for the Apple II. The Sound Blaster sound card appeared on the market for the PC in late 1989, launching Creative into global leadership of the market. Since, Creative has spread product tentacles in various areas of computer sound; one being its portable "Nomad" MP3 player, introduced in April 1999. Creative was not the first to market; Diamond Multimedia and Korea's Seahan Information System blazed that trail; but Creative, by dint of its reputation & fame, was excellently positioned to dominate the market. Creative followed the Nomad with the Zen in early 2001. But Creative was destined to lose to a marketing master: Apple Computer.

Apple introduced its first iPod in October 2001. By 2006, Apple had captured three-quarters of the U.S. market for portable MP3 players. Creative had 9%. Financially, Creative has been struggling, losing money and its stock sinking to a five-year low, while Apple has been riding high, the success of its iPod rubbing off on its other products, including the venerable Macintosh.

According to Creative, Apple's Steve Jobs first approached Creative in January 2001, to see if Creative would license its MP3 player technology to Apple, or spin off that part of its business into a separate company, in which Apple would invest. Creative demurred.

Early on in product development, both companies were filing patents. Creative's '433 Zen patent, which claims a method of selecting tracks, a feature which is used in both Creative's and Apple's players, was filed in early 2001; a similar patent application was filed by Apple in July 2002.

On May 15 of this year, Creative sued Apple for infringing '433 in Northern California, as well as initiating proceedings before the U.S. International Trade Commission (ITC), to stop Apple from importing its iPods from China, where they are made. The ITC complaint is likely to take precedence, staying the district court suit.

Apple countersued the same day, first in Western Wisconsin with four patents, and again June 1st in the Eastern District of Texas with three (6,157,363; 5,640,566; 5,504,852).

Though it could have landed a single blow, Apple's countersuit one-two punches in different venues are intended to spread the pain to Creative, causing further financial bleeding on two fronts when Creative can ill-afford it. But Apple has more to lose than Creative: an injunction against its iPod would be positively crippling, whereas Creative could conceivably struggle on without a portable music player.

Anything but a settlement is unimaginable. The two parties have already held extensive discussions, and they are likely to be ongoing. 90% of patent spats settle, and this will be no exception. The only questions left are when and on what terms.