Apple has agreed to pay undisclosed royalties to a company that challenged the core concept behind the iTunes Music Store.

E-Date Corp. owns European and US patents that describe a "system and method of distributing [commercial] digital content over electronic and wireless networks". The company claimed that ITMS was just such a system, and as such required Apple to license its intellectual property.

And that's what the iPod maker has just done, gaining the right to use E-Data's patent throughout the world in exchange for not only future royalties but a payment to cover past usage.

Apple hasn't been E-Data's only target. In October 2003, the company instigated legal action against UK-based digital music distributor, On Demand Distribution (OD2), a number of the company's customers and its software supplier, Microsoft. OD2 and co. settled with E-Data last February.

The company is also pursuing litigation with online digital photography libraries Corbis and Getty Images.

E-Data's key IP is dubbed the 'Freeny Patent' after its inventor, Charles Freeny. In the US it is recorded as patent number 4,528,643, in Europe as EP 0 195 098 B-1. Filed in the mid-1980s, the invention covers the authorised, commercial downloading of content from to a "material object" - essentially a PC, Mac, MP3 player, optical disc, etc.

Apple, meanwhile, is also being sued by a British technology firm, BTG, which claims the company's Software Update system infringes a patent it holds for "web-enabled software update technologies". BTG is pursuing Microsoft on the same grounds. ®

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