The technology firm will be able to recoup a portion of its payment if Creative is successful in licensing this patent to others in its market, but for present time the sole rights lie with the two firms.
In addition, the companies announced that Creative has joined Apple's "Made for iPod" programme and will be announcing its own iPod accessory products later this year.
Apple chief executive Steve Jobs said: "Creative is very fortunate to have been granted this early patent.
"This settlement resolves all of our differences with Creative, including the five lawsuits currently pending between the companies, and removes the uncertainty and distraction of prolonged litigation."
Sim Wong Hoo, chairman and chief executive of Creative, which makes the Nomad and Zen MP3 players, said: "We're very pleased to have reached an amicable settlement with Apple and to have opened up significant new opportunities for Creative.
"Apple has built a huge ecosystem for its iPod and with our upcoming participation in the Made for iPod program we are very excited about this new market opportunity for our speaker systems, our just-introduced line of earphones and headphones, and our future family of audio enhancement products."
Apple is recalling 1.8m Sony-made batteries for the iBook G4 and PowerBook G4 sold between October 2003 and August. Dell recalled 4m similar Sony batteries last week.
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