Dr. Dre is the second richest rapper alive after the lucrative acquisition of Beats Electronics by Apple. Apple bought the company back in May, its first acquisition, for a whopping $3 billion. Beats entered the market in 2005 gaining popularity after being plugged into music videos by top hip hop artists. It is known for its superior bass audio.
Bose Corp, the original creator of noise cancellation technology and audio equipment, has filed a case at the International Trade Commission (ITC) seeking a ban on the importation of Beats noise cancellation headphones that are made in China. They have filed a similar patent infringement suit in the federal court of Delaware, which will not be dealt with until the ITC have given their order. Bose is also seeking damages for infringement on five of its patents. Bose launched its line of QuiteComfort headphones in 2000, using sound waves to cancel out unwanted noise.
Bose’s noise cancellation headphones seem to be on firm ground. Its technology relies on 22 granted patents and 14 pending applications. For those of you interested in the details, Priorsmart lists the five patents that are being disputed:
- Dynamically configurable ANR filter block topology
- Dynamically configurable ANR signal processing topology
- Method and apparatus for minimizing latency in digital signal processing systems
- Digital high frequency phase compensation
- High frequency compensating
One of the above goes as far back as 2004, which begs the question, since Beats has been in business since 2005, what took Bose so long to bring this suit? Although the acquisition of Beats is a done deal, the sale is still pending regulatory approval. Consequently, any damages that the court awards may be taken from the $3 billion sale price. Bose could not have struck at a more opportune time. In the lawsuit filed Bose does claim it had issued a number of warnings to Beats in the past but to no avail. Waiting for Beats to make it big before slapping an infringement suit means more damages.
Only time will tell which way the court rules. A ruling in favor of Bose will deal a heavy blow to Beats and force them to license the technology; if at all Bose is willing to play ball. That $ 3 billion paycheck may take a trimming.
If your startup plans to rely on third party technology, make a licensing deal before you make it to the big leagues. It will help you twofold: firstly, you won’t have to pay as much; and secondly, you will be entering a negotiation on the same level playing field rather than at the mercy of the patent owner.
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