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Netflix Sues Blockbuster for Patent Infringement

StrongGlad writes "Is the concept of renting movies over the Internet an original idea that deserves patent protection? Netflix claims it is, and is suing Blockbuster for patent infringement, alleging they are copying its seven-year-old online movie-rental business method. Netflix argues that it has patents covering its many online features, including allowing subscribers to keep DVDs for as long as they want without incurring a late fee, obtaining new DVDs upon return of those already watched, and prioritizing their own personal movie list. Blockbuster, for its part, has counterclaimed, insisting that Netflix is trying to monopolize the online movie-rental industry and stifle competition. Blockbuster also alleges that Netflix obtained its patents fraudulently by failing to disclose pertinent information to the U.S. Patent and Trademark Office, and further contends there is nothing original about renting videos online in the first place."

22 of 268 comments (clear)

  1. Business models? by daeg · · Score: 4, Insightful

    Since when are business models subject to patent rights? Products, yes, but business models?

    1. Re:Business models? by Apocalypse111 · · Score: 5, Funny

      [to ask] Microsoft. They might [to know]. They seem [to patent] everything anyways.

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    2. Re:Business models? by jimfinity · · Score: 4, Funny

      i would agree with you if i didn't just hate blockbuster so dang much.

      four bucks to rent a movie? screw you, blockbuster.

    3. Re:Business models? by RovingSlug · · Score: 4, Insightful
      This is getting so out of hand. People think technology and the internet make these things special somehow. For instance
      • Imagine if McDonalds had patented drive through food.
      We'd all agree that's stupid, right? Why do people think business models on the internet is any different?
    4. Re:Business models? by daeg · · Score: 4, Informative

      USPTO is funded almost entirely by patent fees and is run under the Department of Commerce. The DoC is run from a cabinet position, thus placing it under the Executive Branch. The USPTO is run by an appointee of the President.

    5. Re:Business models? by Josh+Hiles · · Score: 4, Informative

      This really is all the court's fault. It was some case called Diamond v. Chakrabarty which defined a patentable item as, "anything under the sun that is made by man." This has opened the door (far wider anyway than it was) to all kinds of ridiculous lawsuits. Witness, a company called Knight and Associates attempting to claim that it's perfectly legal to file patents on plots (for books, movies, etc) and attempting to file said plot. It's just an attempt to set up a monopoly of ideas and eliminate all competition. Truly we live in a wonderfully capitalist society. Our business owners believe in free markets completely and totally, until someone bigger and better comes along and the market dictates their destruction. Then they squawk louder than any socialist I ever heard.

    6. Re:Business models? by no_pets · · Score: 5, Informative
      --
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    7. Re:Business models? by rednip · · Score: 4, Insightful
      Great example, wrong company.
      Actually that would make Mcdonald's patent example a better real world example, as many of these granted business model patents are just as disputable, as prior art seems to be often overlooked. Many claim that they often violate the novelty, and non-obvious requirements stipulated by patent law as well.
      --
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    8. Re:Business models? by jo_ham · · Score: 5, Informative

      I think you missed the point of the joke. This was an obvious nod to the (erronously summarised) story earlier this week about MS patenting verb conjugation, adding more fuel to the "patent obvious stuff: profit" model that has been emerging over the past few decades.

    9. Re:Business models? by geoffspear · · Score: 4, Insightful

      The 1-click patent is problematic, sure, but it's not really in the same category as this one. This is more like is Amazon tried to patent selling books on the Internet.

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    10. Re:Business models? by pluther · · Score: 4, Informative

      I'm not sure who the first was, but up to 30 years ago, you could rent books on tape the same way. They were mainly marketed to the blind, and you ordered from a paper catalog, not the internet, but the keep them as long as you like, get the next one when you return them ideas were the same.

      Also, my local library (Multnomah County, downtown Portland Oregon) did the same thing: for one dollar per book, you could get a book, either from the library or inter-library loan sent to your house. You could only have two out at a time that way, and you could have a queue which, in the mid-80's, you could update online by dialing in (directly, via 300 baud modem!). (You could also update it over the phone, by mail, or in person at the branch, I believe). They would send the next one when you sent one back.

      These are the only two I can think of. But any decent patent lawyer should be able to find these and others pretty easily, I would think.

      What about other companies doing exactly the same thing? Like DVDBarn, Intelliflix, etc.? Is Netflix suing them, too?

      --
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  2. I'm pulling for Blockbuster by xannik · · Score: 4, Insightful

    How exactly is renting movies online an original or novel idea? I think Netflix is feeling the pinch in their pockets from Blockbuster and is resorting to some desperate measures. I really hope the courts send a message to businesses that patent lawsuits are not just another source of income.

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    1. Re:I'm pulling for Blockbuster by kthejoker · · Score: 4, Insightful

      Yes!

      Many of those hurdles could no doubt be covered by patents (such as "A Package To Mail A DVD without Breaking It") and good old fashioned business acumen ("We cut an exclusive deal with Fed Ex, and pass the savings on to you") in a way that encourages competition.

      Being first matters a lot. It instills loyalty. But it's not a guarantee. And you know what? If some guy can come along and beat you at your own game, that's not inherently a bad thing. And if Blockbuster jacks up the price, someone else will just come along and compete with them, undercut them, and the cycle continues. There's no free pass in the market.

      The *real* problem with NetFlix's model is that it's impersonal. It's just a DVD in the mail. Nobody cares about the color of the envelope. In fact, the NetFlix business model is the IDEAL "faceless corporation" business, because it's a

      a) middle man service
      b) driven by economies of scale
      c) for a product everyone wants.

      It's not a lemonade stand or a piano lesson. It's hegemony waiting to happen.

  3. In other news by rolfwind · · Score: 5, Funny

    SCO is suing Netflix for stealing its business method....

  4. Blockbuster may have a case by w33t · · Score: 4, Interesting

    Maybe blockbuster could countersue for the business model of renting movies on a recorded meduim and then returning them to rent of others.

  5. What a let down.... by Himring · · Score: 4, Insightful

    I'm a big netflix fan. I got into it in order to re-watch the entire xfiles series last year. I also like the story of its origins: someone finally got sick of ridiculous late-fee charges, and in answer, blockbuster lost mega business. Blockbuster countered with its own service which I thought was not doing well against netflix. This latest news seems to indicate otherwise.

    But netflix using patent laws this way is crazy. Blockbuster should counter with the charge that they own the ability to perform the action of receiving monetary units for analogue and digital copies of light and audio produced theatrical and documentary events....

    --
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  6. Ben Franklin said it best... by sugapablo · · Score: 5, Interesting

    In his autobiography, he recounts that he was offered a patent on a new
    kind of stove he invented that was a tremendous improvement in terms of
    heating a building and in reducing the amount of wood needed.

    He declined this patent, stating that from "Principle which has ever
    weigh'd with me on such Occasions, viz."...

    "That as we enjoy great Advantages from the Inventions of others, we
    should be glad of an Opportunity to serve others by any Invention of
    ours, and this we should do freely and generously."

    But screw that, right?

  7. The patents by truthsearch · · Score: 4, Informative

    For further reference, here are the patents:

    6,966,484

    Mailing and response envelope

    Abstract
    A mailing and response envelope for conveying an item from a sender to a recipient and back is disclosed. The envelope comprises a base panel, a sender address panel, and a recipient address panel. The sender address panel is affixed to the base panel by an adhesive region. The sender address panel and adhesive region define a pocket sized to accept an item. The adhesive region extends laterally on the base panel in an amount selected to ensure that a postal cancellation is not applied to an area overlying the item. The recipient address panel is joined to the base panel by a detachable joint. In this configuration, a fragile item may be conveyed from the sender to the recipient and from the recipient back to the sender without damage to the item.

    7,024,381

    Approach for renting items to customers

    Abstract
    According to a computer-implemented approach for renting items to customers, customers specify what items to rent using item selection criteria separate from deciding when to receive the specified items. According to the approach, customers provide item selection criteria to a provider provides the items indicated by the item selection criteria to customer over a delivery channel. The provider may be either centralized or distributed depending upon the requirements of a particular application. A "Max Out" approach allows up to a specified number of items to be rented simultaneously to customers. A "Max Turns" approach allows up to a specified number of item exchanges to occur during a specified period of time. The "Max Out" and "Max Turns" approaches may be used together or separately with a variety of subscription methodologies.

  8. Re:Classic... by truthsearch · · Score: 4, Insightful

    I'd rather see them buried by the market than the legal system.

  9. It's not new by wbean · · Score: 5, Informative

    When I lived in London in the 50's Harrods had a lending library. You paid a monthly fee and they assigned a librarian to you. He/she (mostly she) picked out books for you - or you could request specific titles. The books were delivered in Harrods green electric vans. When you'd finished a book Harrods would pick it up and ship you another one. Sound like a familiar business model? It even involved technology (the electric vans).

    (I've posted this information before, but it seems to bear repeating.)

  10. Re:Busted, but maybe not... by Deadstick · · Score: 5, Interesting

    They certainly developed a silver bullet of a model. I had an interesting experience recently: dropped a fistful of mail into the box at the Post Office, then came to the sickly realization that I had put neither postage nor return-address stamps on. The postmistress sent a helpful clerk -- yes, I said helpful P.O. clerk -- to open the box and stand watch while I rooted out my envelopes.

    That bin was almost a sea of red. Netflix envelopes by the TON. I commented on that, and the clerk said yes, the P.O. was proud of the special handling deal they have.

    Netflix is now the fifth largest user of first-class mail. At the cities where they have processing centers a Netflix truck drops a load of outbound envelopes bagged by ZIP code and pre-sorted down to carrier route, and picks up the incoming directly off the dock.

    rj