Apple and Burst.com have settled their lawsuit for $10M. After legal fees this leaves Burst with roughly $4.6M. Pretty much walking around money. While some speculation for possible damages foolishly ran into many hundreds of millions, certainly no one thought it would go or a lousy $10M.
So what’s the real story? I’m sure many people, starting with Cringely, will speculate on this, and I see no reason not to toss my own hat into that ring because the settlement was such a surprise.
Here are several scenarios that I see as possibilities. They are numbered here not in the predicted order of probability, but rather simply for easier reference later in this post.
- Burst would lose, so they settled. A judge dismissed 14 of the claims, leaving only 20. It’s possible the 14 dismissed were the “good ones” as far as Burst was concerned, and without them they felt very little chance of winning. So they took what they could, buried the story right before a holiday, and called it a day.
- Burst’s pending patents are being protected. As Cringely notes, there are three “pending” patents not covered by the settlement, but that Burst has agreed not to sue Apple over. So Apple can use them without fear of reprisal, but the $10M didn’t apply to them so their “value” is unknown. Presumably, Burst can go after others for licensing fees.
- Burst has an arrangement in place to license the pending patents. Maybe the $10M applies only to existing patents because Apple will license the “pending” ones. In other words, once they’re no longer pending, a new licensing agreement may be made public. Such future licensing would explain why Burst doesn’t want to pursue the past.
- Burst is actually getting more than $10M. Maybe this is tantamount to the Apple-Microsoft deal back in ’97. Microsoft paid $150M, a paltry sum to them at the time. There was speculation an “undisclosed” sum was also paid to Apple. Perhaps Apple is slipping more $$$ to Burst, but the disclosed figure is only $10M. It would be interesting to see what the actual settlement states, and if Burst’s financial statements over the next few quarters revealed any “extra” cash.
- Apple is buying Burst.com. Hey, it could happen. Here’s $10M, now we’ll see whether those “pending” patents ever become official and then we’ll buy you.
- It isn’t over yet (Burst took the press release down). Cringely said there was a press release on Burst’s site that they’ve since taken down. I see no press release as of today. Why would they do this? If a press release went up what purpose does it serve to take it down now? If the intent was to bury the story over a holiday now you’ve just intensified it, not downplayed it. Maybe there was a miscommunication, or some i’s not dotted and t’s not crossed?
At this stage of the game I can’t say I’d be shocked if any of the above were true. My biggest “shock” came when I saw the settlement in the first place.
I think #2 is probable in that Apple may have had Burst over a barrel, so it made more sense to let them have the pending patents — but not tie it to the $10M — and hope to go after others for settlements. These are DVR patents, so Apple’s use may be in relation to Apple TV, which is hardly a hit right now.
I think #3 could be an extension of #2, but that Burst’s potential case on the pending patents is strong enough that Apple simply agreed to license them if Burst lets the previous suit go. You can’t license “pending” patents, so that announcement would come later. While the upshot is good for Burst, they look pretty weak until the patents are official and they announce a licensing agreement with Apple.
You could say #4 ties in with #3, only Burst wouldn’t agree to let the past go for only $10M. However, Apple didn’t want a large amount disclosed, so the actual figure is confidential. Still, if such were the case you’d think Burst could have picked a better figure than $10M.
I’m not sure if #5 is silly. Apple has plenty of money to acquire technology, but whether Burst makes sense lies very much in the validity of the current suit as well as the pending patents. Apple doesn’t throw around money like Microsoft does, but if Burst’s case is strong and their DVR patents are good, maybe an acquisition makes sense.
I didn’t put #6 in the mix for conspiracy purposes, but I’m curious why the press release was removed. There could be a very simple explanation: Apple did not post a press release, perhaps they were supposed to go together. Maybe Apple won’t be ready until Monday and Burst jumped the gun. While it may in Burst’s best interest to bury the story, Apple would like front-page news on such a small settlement, hence the wait. It will be interesting to see what Monday brings.
No, I didn’t forget #1. Sometimes the easiest explanations are correct. Maybe after 14 claims were dismissed the remainder were simply to weak to pursue, so Burst took what they could get, end of story. Who knows?
Finally, if I thought about it a while longer I could probably come up with another half-dozen scenarios, so it could very well be none of the above. What are your thoughts on this?