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Netflix Sues Blockbuster for Patent Infringement
Posted by
Zonk
on Fri Sep 08, 2006 11:34 AM
from the lovely-time-of-year-for-an-infringement-case dept.
from the lovely-time-of-year-for-an-infringement-case dept.
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."
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News: Netflix Users Experience Paradox of Abundance 432 comments
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[+]
Backslash: That Nagging Netflix Queue 161 comments
Instead of being used and returned at the pace of cloth diapers, it seems DVDs rented from Netflix are often gathering dust, unwatched, in customers' homes, in what a posting yesterday dubs a "paradox of abundance." Readers suggested some reasons why this was so, and why this might not be a bad thing, in the comments attached to the story; read on for the Backslash summary of the discussion.
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Business models? (Score:5, Insightful)
Re: (Score:3, Insightful)
Re:Business models? (Score:4, Informative)
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Re:Business models? (Score:5, Funny)
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Re:Business models? (Score:5, Informative)
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Re:Business models? (Score:4, Funny)
four bucks to rent a movie? screw you, blockbuster.
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Re:Business models? (Score:5, Insightful)
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Re:Business models? (Score:5, Insightful)
- 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?Parent
Re:Business models? (Score:5, Informative)
http://en.wikipedia.org/wiki/Red's_Giant_Hamburgs [wikipedia.org]
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Re:Business models? (Score:5, Insightful)
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Re:Business models? (Score:5, Informative)
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The patents (Score:5, Informative)
6,966,484 [uspto.gov]
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 [uspto.gov]
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.
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Re: (Score:3, Insightful)
As for the other patent, I stopped reading at "a computer-implemented approach for renting items to customers". That patent is just lunacy, and as the abstract explains it, I have no idea how it could get through the patent office. That's
Re: (Score:3, Interesting)
But I ask you, what is the point of a patent at all, if not to create a monopoly and stifle competition? Patents are an open admission that pure supply and demand capitalism is not workable (or at least not equitable). I guess the only question is how high the bar must be for an innovation to be deserving of a government-imposed monopoly. Or at least, how long that monopoly
Re:Business models? (Score:4, Informative)
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Re:Business models? (Score:4, Interesting)
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Re: (Score:3, Informative)
Since July 1998. [72.14.253.104]
Re:Business models? (Score:4, Informative)
Since July 23, 1998. That was when the United States Court of Appeals for the Federal Circuit handed down the decision in State Street Bank & Trust Company v. Signature Financial Group, Inc.
Products, yes, but business models?
Products are not patentable; it's inventions that are patentable. Prior to the ruling, business methods were often asserted to be abstract ideas, like mathematical algorithms. You can't patent laws of nature, natural phenomenon, or abstract ideas including mathematical algorithms. You can only patent useful, applications of these. By analogy, you can't patent the consumer procrastination, but you can patent exploiting this by creating a subscription service where your competitors are creating rental services.
I think business method patents are a completely unintended result of the constitutional authority to grant patents from article 1 section 8. However, the court's reasoning in State Street v. Signature is impeccable. Congress has been granted the right to patent inventions without any stipulation as to the kind or nature of the invention. Given that this is so, it's hard to argue that novel business methods ar not inventions. Furthermore, the SC has pretty much ruled that the Congress may use the powers it is granted in the Article 1, section 8 in any manner they see fit, even if the results contradict the intent of the framers.
So, if Congress uses those powers in a way that expressly retards the progress of the useful arts and sciences, what matters is the extent of the powers used, not the use to which the powers are put.
So, even if buisness and software patents are manifestly a bad thing, Congress may create them.
In his Second Treatise on Government, John Locke, who was the primary philosophical influence on the framers, described the conditions under which things which are common property can be privatized. The fundamental principle is that any appropriation of the commons as private property requires that "enough and as good" be left for others. Claiming the idea of a business strategy by creating a business method around it seems to fail this test. But then again, if abstract ideas are in the commons (as patent theory says they are) claiming almost any invention as your personal property probably fails this test. Which is why patents are a time limited form of property, if it indeed is proper to call them property at all. They are a deal between the state and the inventor, which the state undertakes for the public good. If the state undertakes such deals against the public good, then the proper response in a democracy is to change the people running the state.
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Re:Business models? (Score:5, Informative)
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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I'm pulling for Blockbuster (Score:4, Insightful)
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It's not new (Score:5, Informative)
(I've posted this information before, but it seems to bear repeating.)
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Re: (Score:3, Funny)
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Re:I'm pulling for Blockbuster (Score:5, Insightful)
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.
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Re: (Score:3, Funny)
Product: Captitalism
Reported Agains: 2.0
Severity: Critical
Status: RESOLVED
Resolution: WONTFIX
Report describes proper operation of Capitalism 2.0 (see spec at Constitution/1_8#commerce). Please read project documentation before submitting further bug reports.
Re: (Score:3)
Netflix overcame that "hurdle" by the very, very fraudulent practice of throttling [msn.com]. I wouldn't call that an innovation.
I was a Netflix user when it first came out, and cancelled the service only because I didn't rent enough discs for it to be useful. Now I use Blockbuster because their delivery is faster (there's a distribution center next town over so I get my DVDs in 1 day, sometimes less if I time it right).
That said, I ne
Exactly! (Score:3, Insightful)
A) There's a concrete enough financial interest that it generates a lobby.
B) Joe Sixpack is displeased with the situation.
We can all make B) appear to come a little faster by bitching to our Congress-critters every time we see an abuse like this. Remember net2phone's "method of establishing a communication channel by exchanging IP ad
In other news (Score:5, Funny)
Blockbuster may have a case (Score:5, Interesting)
What a let down.... (Score:5, Insightful)
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....
Ben Franklin said it best... (Score:5, Interesting)
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?
Re: (Score:3, Insightful)
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Also, he's the guy who wrote, "Fart Proudly." He is a man to be admired, and emulated. Live lustily and long, that's my motto.
Sit in front of a computer eating Cheetos, that's my life.
Go blockbuster!! (Score:3, Interesting)
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You're a marketer's wet dream!
Classic... (Score:3, Insightful)
Go ahead Netflix, kick 'em while they're down! You're the new guerrilla in the DVD rental business, and rightly so. On behalf of every poor college kid that ever got a collections notice for $4.38 for late fees that weren't paid in 4 weeks or less, I say thank you. Bury the bastards.
Re:Classic... (Score:5, Insightful)
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Re:Classic... (Score:4, Insightful)
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Patenting business models? (Score:4, Insightful)
If we're lucky, this might be the case to finally set a precedent against the old formula
If Blockbuster doesn't settle out of court, that is...
Injunction (Score:3, Informative)
If the judge in the case grants an injunction against Blockbuster's online service, there will indeed be many pissed customers out there. Thankfully, Blockbuster has at least one way to mollify them in the meantime: give their customers the same X-rentals-at-a-time access to their brick and mortar stores as they do through online rental queues. Blockbuster's online rental service already includes vouchers for a fixed number of store rentals per month (in parallel with the online queue rentals). This would just make it entirely brick-and-mortar based. The store on the corner doesn't have nearly the selection, but it might hold over some customers that would otherwise quit Blockbuster. There should be some way to craft it that doesn't encroach on the patents in question.
Note to self (Score:3, Funny)
Time to patent new business model that increases customer satisfaction through the extension of services at prices the customer can afford while providing support and an extended "Customer is right" attitude.
Then I can sue all the companies that have happy customers, hmmm It may be hard to find them now.
Just in Time for my Meeting (Score:3, Interesting)
Netflix is doing a marketing research thing in my area. I've agreed to meet with them in person for 30 minutes next week in exchange for 4 months free service. Now along with their throttling I'll have something else to hit them with.
Any suggestions of other stuff you'd want them to know or have your complaints heard through me? I'd be glad to bring it forward.
-[d]-
Good luck to Netflix on this one.... (Score:4, Insightful)
They were developing methods for on-line rentals and even on-demend video distribution back in about 1999 IIRC. Netflix was actually copying Blockbusters model , only doing it on line, until then. (Having late fees, etc, making people pay for postage).
They will be deperately hard pressed to prove they innovated many , if any, of these business practices, and I believe some of their patents could actually be thrown out because of being brought to the light of day like this.
I despise with a passion "business model patents" which basically say "we figured out how to do business, don't you dare try to compete with us!"
Family Video is a nice alternative! (Score:3, Interesting)
Patent Nonsense Business (Score:4, Insightful)
These principles are obvious. Not only are they politically obvious to anyone who understands that artificial government monopolies must merely balance freedom of expression against investment protection. They are obvious to anyone in business. It's obvious to people patenting how much advantage they gain. And it's obvious to people excluded how much competition it prohibits.
Maybe now that American business is becoming at least as much a consumer of IP as a producer, these corporations will battle away the IP law imbalances that crimp their economy. Then we'll also see how obvious it is that corporations are the only "persons" which matter to the government.
Re:Busted, but maybe not... (Score:5, Interesting)
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
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