Creative puts Aureal out of its misery

Richer sounds wins the day

By Drew Cullen • Get more from this author

Posted in Business, 25th September 2000 13:15 GMT

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Litigation is business by other means, as Creative Technology's $32 million takeover of moribund rival Aureal Semiconductor proves.

Creative is buying all the intellectual property owned by sound chip designer Aureal, and is settling outstanding litigation between the two firms.

"Since Creative would not be able to recover significant damages given Aureal's bankruptcy, there was no upside in continuing this protracted litigation," said Craig McHugh, president of Creative Labs Inc in a statement reported by AP. "We believe that this outcome is the best we could have expected."

Too right.

Aureal declared itself bankrupt in April, following the resignations of the entire management team. Very simply, the company burned through its cash until there was nothing left. Sure, management made mistakes, but a fair chunk of its 1999 expenditure - principally $6 million+plus costs incurred through the patent infringement lawsuit brought against it by Creative - was outside its control. Aureal won the first round of that legal battle and countersued Creative, accusing it of malicious litigation. No money meant that Aureal never had its day in court. ®