In 2002, John Platt, a scientist at Microsoft Research, filed a patent request for a method of "generating playlists from a library of media items." In July, the U.S. patent office denied a November request by Apple to review the petition.

Microsoft vs. Apple

Platt's patent was submitted in May 2002, five months prior to Apple applying for a patent covering the iPod's rotational wheel to select media items. "Although the type of computing device can vary, the improved approaches are particularly well suited for use with a portable media player," according to Apple's September 2002 patent filing.

Apple vice president Jeff Robbin and CEO Steve Jobs are listed as the iPod interface's primary inventors. Along with his work on the iPod, prior to coming to Apple, Robbins was employed by Casady & Greene, a software company that originally created MP3 software that Apple eventually purchased and rebranded as iTunes.

Although the patent review was rejected, Apple has three months to appeal, ask for further review or change the original patent application.

'Obvious Setback'

Apple's failure to patent the iPod interface "is obviously a setback," said Michael Gartenberg, an analyst with Jupiter Research. Gartenberg said Apple will modify its patent application and "simply find a way to tweak it."

Could the lack of a patent open the doors to other companies copying the iPod success? According to Gartenberg, Microsoft will not overcome Apple's dominance in the digital music market. "It's essentially Apple and the other guys," he said.

Licensing Doubted

With more than 21 million iPods already sold, the specter of Apple paying licensing fees to Microsoft has arisen. Although analysts still are reviewing the patent office's decision, few see this kind of licensing as a future problem for Apple.

"The user experience is in the scroll-wheel hardware , not software," maintains Yankee Group analyst Nitten Gupta.

In related news, Apple settled a lawsuit it was facing concerning the iPod's battery life, according to a report the computer maker filed Tuesday with the SEC.

Apple also faces a Chicago lawsuit from Advanced Audio Devices over a patent covering "a music jukebox which is configured for storing a music library therein."