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Aureal Semiconductor

Defunct American electronics manufacturer

  • 4 min read
  • 2 chapters

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Through Electronics, Semiconductor and Intellectual property

History

In May 1996, Aureal Semiconductor was founded from what previously was Media Vision Technologies Inc. after being involved in a financial scandal that led to then-CEO Paul Jain stepping down. Media Vision incurred in approximately $104 million in aggregate losses in 1995 before the company was renamed.

Aureal sustained further losses of $17 million in 1996 and $18 million in 1997. After having acquired Crystal River Engineering in May 1996, Aureal worked with them to develop and market the A3D audio technology. The technology was incorporated into video games, surround sound systems and sound cards.

On March 5, 1998 Creative Labs sued Aureal for patent infringement. Aureal countersued because they believed Creative was guilty of patent infringement. After numerous lawsuits Aureal won a favorable ruling in December 1999, which vindicated Aureal from these patent infringement claims, but the legal costs were too high and Aureal filed for bankruptcy. On September 21, 2000, Creative acquired Aureal's assets from its bankruptcy trustee for US$32 million through the bankruptcy court, with the specific provision that Creative Labs would be released from all claims of past infringement by Creative Labs upon Aureal's A3D technology. The purchase included patents, trademarks, other property, as well as a release to Creative from any infringement by Creative of Aureal's intellectual property including A3D. The purchase effectively eliminated Creative's only competition in the gaming audio market, and with it any requirements for Creative to pay past or future royalties as well as damages for products which incorporated Aureal's technology.

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