Letting Aureal die on it's own as it was going to do anyway, probably would have been cheaper for Creative than filing a lawsuit at a point when Aureal was longer a viable competitor or any threat to Creative's market share.
Aureal was still an enormous threat to CreativeLabs- their IP was enough to easily kill the completely inferior(to this day) technology. If nVidia, to use a single example, had picked up the A3D technology and rolled that into a product with DD encoding and put out a card based on it CL would be dead by now. Don't think for a moment that they didn't know this either.
The technology behind A3D 1.0 was about on par with EAX 4, A3D 2.0 was vastly superior and 3.0 made EAX look like the antiquated relic it is. That level of innovation was rapid fire when Aureal was around- and CL despised the fact that they may have to work in order to compete.
The lawsuit not being settled was certainly a large factor in the eventual closing of Aureal also. If they had had the resources to finish the case off CL would have been responisble to reimburse them for all of the millions they spent in defending themselves from a case that never had a shred of merit. Given it wasn't the only element that led to the demise of the company, but it was a sizeable portion of the losses they took on their way out of business.
I think even using that disgustingly poor tactic to help push Aureal under most consumers still wouldn't have minded as much if they had taken the time to implement the vastly superior technology that Aureal had into their own products. That, of course, would have cost money which is something CL most certainly doesn't want to spend.
I don't really care if a company is a monopoly if they are providing a level of service I'm happy with. I tried the Linux route and ran MacOS for years and am currently a very happy MS customer- I shop at BB regularly and am most pleased with them overall as a company too. CL utilizes every underhanded technique they can to kill innovation and prevent progress- that I have an issue with.