July 5 (Bloomberg) -- Apple Computer Inc. and Creative Technology Ltd. said in court papers they ``remain open to the possibility'' of ending their litigation battles over handheld music players.

Apple, whose iPod music player controls about 77 percent of the U.S. market for such devices, and Singapore-based Creative are suing each other in California, Texas and Wisconsin. The International Trade Commission also is investigating complaints each has made accusing the other of infringing patents related to the devices.

Shares of Creative have risen 17 percent over the past five days on optimism the lawsuits may be settled. In a July 3 joint court filing in Madison, Wisconsin, the companies said they were in negotiations involving the licensing of Creative's patent to Apple before the suit was filed and were ``open'' to an agreement.

``The parties will remain open to the possibility of settlement,'' they wrote in the joint report to the judge. ``No specific settlement discussions are planned.''

Creative has claimed that Apple Chief Executive Officer Steve Jobs first learned of the company's technology at a January 2001 tradeshow and approached a Creative employee. A month later, the two sides met and Creative said it felt there could be ``joint business opportunities,'' until Apple said there wasn't enough ``financial room'' for two companies in the market.

Apple instead proposed Creative license its technology to Apple, with Apple buying a stake in Creative's portable digital media player business, Creative said in court papers. Creative said it turned the offer down, and Apple introduced the iPod.

Six Months of Talks

Creative Labs President Craig McHugh said in court papers that there were about six months of talks about Apple licensing the Creative patent before any lawsuits were filed beginning in May. During that time, ``Apple never alleged that Creative infringed the patents Apple has asserted'' in the Wisconsin and Texas lawsuits, McHugh said.

Creative has less than a 10 percent share of the U.S. market for digital music players in the U.S. and ranks behind Apple and Milpitas, California-based SanDisk Corp., according to The NPD Group. Apple has sold more than 50.8 million iPods since Jobs introduced the gadget in 2001.

Shares of Creative declined 1 percent to S$9.50 as of 10:35 a.m. in Singapore. The stock has lost 30 percent this year, the second-worst performer on the 50-member Straits Times Index. Apple's shares fell 1.6 percent to $57 yesterday and have dropped 21 percent this year.

`Amicable Solution'

``Creative has always been open to reaching an amicable solution with Apple,'' Creative spokesman Phil O'Shaughnessy said in an e-mail. Apple spokesman Steve Dowling didn't immediately return messages seeking comment.

In the Wisconsin case, Apple suggested a March trial date, while Creative suggested November 2007. That case involves some of Apple's claims of infringement against Creative.

Creative, maker of the Zen player, wants the Wisconsin case transferred to California, where its suit against Apple is pending. In its filing, Creative said the companies are located within 15 miles of each other in California, and both are close to the federal courthouse in San Jose.

Creative's U.S. headquarters of Creative Labs Inc. is in Milpitas, California; Apple is based in Cupertino. The California case has been put on hold until the U.S. International Trade Commission resolves a complaint that Creative filed seeking to block U.S. importation of the iPod, which is made in China.

Response Due

Creative denied infringing any Apple patents involved in the Wisconsin case, and challenged the validity of them. The company's response to the Texas lawsuit is due tomorrow, court records show.

The trade commission on June 30 agreed to investigate Apple's complaint that Creative infringes its patents. It already is looking into Creative's complaint against Apple. The companies are seeking to block U.S. imports of the rival devices.

The suit is Apple Computer Inc. v. Creative Labs Inc., 06cv263, U.S. District Court, Western District of Wisconsin (Madison). The trade complaint against Creative is In the Matter of Portable Digital Media Players, 337-TA-576, U.S. International Trade Commission.

The other Apple suit is Apple Computer Inc. v Creative Technology Ltd., 06cv114, U.S. District Court for the Eastern District of Texas (Lufkin Division).

The Creative complaints are Creative Technology Ltd. v. Apple Computer Inc., 06cv3218, U.S. District Court, Northern District of California (San Francisco); and In the matter of Portable Digital Media Players, 337-TA-573, U.S. International Trade Commission.

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net.

Last Updated: July 5, 2006 22:47 EDT