Apple Inc. and high-end audio speaker and headphone manufacturer Bose have come to an agreement over a Patent dispute that involved Beats headphone. The agreement between Bose and the iPhone maker, who acquired Beats earlier this year, should prevent a lengthy court battle. Bose had claimed that Beats had infringed on their patented noise cancellation technology in their headphones and moved to block the importation of the stylish headphones.
The settlement between the two companies has them asking the U.S. Trade Commission to stop their investigations of the original claim. While the terms of the agreement between Apple Inc. and Bose have not been revealed, it is expected that some concessions on both sides were made. In July, Beats was accused of infringing on five Bose patents that allegedly resulted in Bose profits falling. Bose was seeking unspecified damages.
Both Beats and Bose headphones have been available through Apple’s retail stores and since Apple acquired Beats Electronics earlier this year. Since Beats officially joined the Apple fold, the headphones and Bluetooth speakers have received a marketing push in the 254 Apple retail locations and online at the Apple Store. A push that Bose appears to view as unfair and cutting into their profits. Bose earned nearly $2.5 billion last year, while Beats only drew in $1.3 billion. With Apple pushing their new product more than Bose offerings, it is expected that Beats will draw closer to Bose in earnings.
In the dispute from Bose, accusations against Apple Inc.’s Beat electronics of pilfering its noise cancellation technology, a technology that Bose claims are key to their success and profitability. The Bose QuietComfort headphones have been labeled as the best in the market for tuning out any background noises and offering the wearer a distraction free music experience.
While the court battle between the two giants may be over, the two companies are still facing off in battles away from the legal system. The Beats offerings that were the brainchild of former NWA rapper, Dr. Dre, are popular with athletes. Due to a contract with Bose, the NFL has banned all players from displaying the Beats headphones. This restriction started during TV interviews during the preseason, training camps, practices, and game day, from before the ball is kicked off to start play through 90 minutes after the final whistle.
Beats suffered a similar ban in Brazil during the World Cup, where Sony and FIFA have an exclusive deal. While it was not Bose banning Beats, it was still a kick in the sound quality to athletes who love or are sponsored by Beats to have to change their pre-game rituals because people they have never seen shook hands and paid a lot of money.
Apple could still bite back against Bose and stop carrying their products in their retail stores and online. That could be devastating for Bose as the network of Apple Inc. retail outlets are an important source of revenue for the company. This could take the dispute into a whole new realm and build the rivalry between Bose, Apple Inc. and Beats.
By Carl Auer