Netflix Sued Over Fradulently Obtained Patents

An anonymous reader writes "Techdirt has a story about a new class action lawsuit against Netflix, claiming that the patents the company is using to sue Blockbuster were obtained fraudulently. Specifically, the lawsuit claims that Netflix was well aware of prior art, but did not include it in its patent filing, as required by law. The lawsuit also claims that Netflix then used these fraudulently obtained patents to scare others out of the market, in violation of antitrust law. 'Certainly, it makes for an interesting argument. Patents grant a government-backed monopoly -- which should get you around any antitrust violations. However, if that patent is obtained fraudulently, then I can see a pretty compelling claim that you've abused antitrust law. It would be interesting if other such cases start popping up (and, indeed, the lawyer who sent it to us said his firm is looking for additional patents to go after in this manner).'"

Comments

One Click Shopping

[popo]

Plenty of video games featured in-game stores with one click shopping. That should constitute prior art. Amazon knew about these but discounted them because the transactions were virtual.

Does that make this lawyer a

[zappepcs]

patent troll troll?

It would be nice to see this force reasonable patent reform.

OMG I chose the wrong profession...

[RingDev]

"and, indeed, the lawyer who sent it to us said his firm is looking for additional patents to go after in this manner"

Forget IT, go to law school.

1) Help company get patents
2) Profit
3) Help company threaten to sue infringers
4) Profit
5) Defend company against other lawyers representing other patents
6) Profit
7) Sue other companies for bogus patents
8) Profit

Heck, even if the company they represent gets burned and goes under, they still walk away with no penalty. It's like all the financial benefits of inventing something, with out the work or risk!

-Rick

Re:About time...

[plover]

What, because one patent troll sues another patent troll we should celebrate?

Now, if someone were to invalidate all software patents, that would be a reason to celebrate. This is just the (hopeful) invalidation of two patents out of two million, and perhaps the spanking of yet another company acting evil.

In the time it's taking me to write this response, I imagine three other software patents are being granted. Even if this moves forward (which it hasn't yet) we're still moving backwards.

Hard to prove

[umStefa]

While successful lawsuits of this type could result in patent reform, since having a weak patent (with clear prior art) could end up costing company's money instead of being used as corporate weapons, an instantanious problem arises.

You need to be able to prove that the company ignored prior art and if a case comes down to two people saying different things the courts will generally find in favor of the defendant.

I can see it now:

Lawyer 1: "You knew about the prior art before you filed for the patent because your secretary told me so!"

Defendant: "No I didn't!"

Judge: "Case dismissed"

In order for this cases to be sucessful, hard evidence needs to found (i.e. an e-mail saying "Lets ignore the prior art"). Otherwise the only ones who will win are the lawyers (as always).

bout time, now if only

[LOTHAR, of the Hill]

Someone would sue the patent office, charging negligence. Maybe get an injunction against them from issuing any patents until they can issue them properly.

now that's an amusing thought.

Yeah, it's a beautiful racket.

[Mahjub Sa'aden]

I have patented several products and have a patent pending (in manufacturing, not in software, so please no-one try to dissolve me in acid) for products and techniques I think are at least fairly innovative. That said, it's no use blaming the lawyers for the state of affair in the US and Canada. The fact that they're needed at every step of the process -- truly and absolutely needed -- is a testament not to lawyers greed but to legislative bloat.

Now, you can argue that lawyers and lawmakers form a recursive loop, but I'll leave that for people smarter than I.

Netflix needs to get nailed on this

[jandrese]

Even as a person who has used Netflix for years now and absolutely love their service, I can say that if this is true they should be nailed to the wall over it. This is the sort of Patent System BS that must not be allowed to stand if we are to maintain our technology superiority as a country.

It's said that no great idea ever comes out of nowhere. All of the greats stood of the shoulders of giants. However, if people get it into their head to abuse the patent system like this, then there will be no shoulders to stand on and in the end no great achievements.

Who's in the class?

[jfengel]

I can see Blockbuster suing them, or some other company whom Netflix threatened. But I can't imagine that there are enough of those companies to form a "class".

The article is pretty vague on exactly what the evidence is. The actual lawsuit is more informative, but harder to read.

The class (as I finally figured out on page 17 of the lawsuit) is Netflix customers, of whom Dennis Dilbeck is the representative sample. They're suing based on the idea that Netflix's prices are higher than they should be, because competition by Blockbuster should have brought prices down. I just can't see a judge buying it; these people all paid for Netflix's service at the asking price voluntarily.

From what I've read so far, I'm just not buying their claim. They are citing one patent in particular, which is about delivery of resources based on people making requests on a computer, but that's considerably different from Netflix's rental queue.

(I'm assuming that patents are not a completely stupid idea. Please, if you're in the "all patents are inherently evil" category, can you just assume that I agree with you and go preach to the choir in some other thread?)

I don't consider Netflix's idea at all obvious. I thought it was pretty neat when I came up with it: the idea of a rental service which doesn't have a due date is pretty cool and I'd never heard of it.

I know we hate patents, but I hate idiot class-action lawsuits even more. I've been involved in dozens of them; I literally throw them away unopened when they arrive in the mail. The lawyers always make money and I always get a coupon for 30 cents off my next bag of Chex Mix.

Sometimes, I'm even suing myself. Some of those lawsuits were shareholders suing the company. Well, I'm still a shareholder, so I'm suing myself.

All the lawyers need to find is one fool member of the class to make a claim, and the company will often settle rather than fight. It's free money for class-action lawyers.

Or, more realistically...

[Mahjub Sa'aden]

Instead of invalidating software patents, we could shorten their term to a reasonable period (two or three years generally ensures obsolescence for most software products), and drastically expand the criteria against which a particular software patent is judged invalid. Would that not be at least a workable compromise?

Re:Or, more realistically...

[Mahjub Sa'aden]

Most governments and most people, it would seem.

Maybe the problem is that lawmakers simply don't understand that software is not an analog to the real world. They don't understand that it moves faster, and that software development often simply doesn't have to bear the cost of traditional inventions and innovations. Not to say that there aren't software products or implementations worthy of patenting, but rather to say that patents in a software world are simply different.

Or maybe, just maybe, non-technical people are so used to being explained things in terms of analogy they tend to lose sight of the fact that simply because an analogy is the most useful or expedient method of explaining a concept the concept itself isn't bound by the realities an analogy might suggest.

Re:Or, more realistically...

[PsychosisC]

Instead of invalidating software patents, we could shorten their term to a reasonable period (two or three years generally ensures obsolescence for most software products), and drastically expand the criteria against which a particular software patent is judged invalid. Would that not be at least a workable compromise?

That is simply absurd. Two or three years seems like a reasonable period a junk patent, but this is terribly unfair for meaningful discoveries which arguably justify a patent, like RSA.

Hypothetically, let us say that a researcher independently discovered a new algorithm which performed discrete Fourier transformations 2x faster than anything we have today. The commercial and societal value of this discovery is pretty huge. Two or three years of exclusivity couldn't do justice to the impact of this huge discovery.

(No, I am not endorsing patents on algorithms. RSA shouldn't have been patentable. It's just shortened patent periods is not a reasonable compromise, and far from 'Insightful')

Wonderful irony

[Colin Smith]

Leeches feeding on leeches.

Re:How would you fix the patent office?

[Mahjub Sa'aden]

Yes. I have a cousin who is a patent officer in Canada (and we have some stimulating discussions on patent-related subjects when we see eachother), which I imagine is at least somewhat similar to being a patent examiner in the US. I also have a close friend who is a patent lawyer, though we don't talk about that stuff much because it bums out all our other friends.

But still, there are so many things being patented, in such esoteric fields, that even smart people with training in related fields or tangential field or whatever don't have the technical knowledge to grasp the subject at hand, or -- and this is pretty important -- don't have a way to access the information that would give them a better grasp of it.

I mean, you're probably not a dumb guy, but imagine yourself presented with a sheaf of materials that you only vaguely know about from college five years ago. It's written in technical language that, even though broken down as much as it can be, is still pretty arcane. How are you going to judge if that patent application represents something truly innovative, something truly worth granting a patent for?

We can all say, "Well, they should know," but that's much harder said than done. Another problem is that the people truly qualified to judge the patent's worthiness are often very expensive people. While the patent office may pay a lot of money to their examiners, they still don't, as far as I am aware, pay as well as private industry.

YES!

[Mahjub Sa'aden]

So if I understand you correctly, software patents should be treated like soft wax sculptures that don't last very long, but hardware patents are more like durable cast iron hammers. That means we can melt software patents into candles, using them for lighting and ending the energy crisis, while we can use hardware patents to pound legal textbooks into pulpwood to burn for heat, ending the energy crisis. Both end up solving the energy crisis, so shouldn't we treat them the same?

Have you considered running for Congress? Because you are ready to make laws!

MOD PARENT UP

[cronius]

(No, I am not endorsing patents on algorithms. RSA shouldn't have been patentable. It's just shortened patent periods is not a reasonable compromise, and far from 'Insightful') I agree completely. Programming is math, and patenting math is meaningless and definitely does not help the progression of science. Saying that patent laws should be rewritten as a "compromise" does not make the original idea of software patents any better.