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Netflix Suing Blockbuster for Patent Infringement

Posted by samzenpus on Wed Apr 05, 2006 06:59 AM
from the there-can-be-only-one dept.
Patents The Courts
grouchomarxist writes "Netflix is suing Blockbuster for Patent Infringement. From the article: 'Netflix holds two U.S. patents for its business methodology, which calls for subscribers to pay a monthly fee to select and rent DVDs from the company's Web site and to maintain a list of titles telling Netflix in which order to ship the films, according to the patents, which were included as exhibits in the lawsuit. The first patent, granted in 2003, covers the method by which Netflix customers select and receive a certain number of movies at a time, and return them for more titles. The second patent, issued on Tuesday, "covers a method for subscription-based online rental that allows subscribers to keep the DVDs they rent for as long as they wish without incurring any late fees, to obtain new DVDs without incurring additional charges and to prioritize and reprioritize their own personal dynamic queue -- of DVDs to be rented," the lawsuit said.'"

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  • Worried! (Score:5, Funny)

    by Anne Thwacks (531696) on Wednesday April 05 2006, @07:02AM (#15065090)
    Does this also cover my shopping list at Asda (Walmart)?

    I am really worried. Any minute now, someone will patent going to work by bus. (Including SCSI and VME)

    • Re:Worried! (Score:3, Funny)

      by dodobh (65811)
      Nah, we will patent going to work over the Internet.

    • Re:Worried! (Score:3, Insightful)

      by GuyverDH (232921)
      If you are really upset about the methods being used by litigious patent-pushers, stop using their products / services.

      #1 - Caldera SCO - very easy to stop using - no products or services worth using IMNSHO.
      #2 - Amazon - a little tougher, but not terribly

      • Re:Worried! (Score:5, Funny)

        by Eccles (932) on Wednesday April 05 2006, @07:38AM (#15065306) Journal
        I'm in the process of patenting my invention, I call it "money".

        *Looks in wallet*

        Well, I'm not infringing...
        [ Parent ]

          • Re:Worried! (Score:3, Funny)

            by Eccles (932)
            Now I'm going to go and patent using your wallet to hold air. Its a win/win baby!

            I don't think so. I have waaaay too much prior art.

  • Patents on business methods are stupid. (Score:5, Insightful)

    by tpgp (48001) on Wednesday April 05 2006, @07:02AM (#15065091) Homepage
    TFA:
    "Blockbuster has been willfully and deliberately copying Netflix's business methods," Netflix spokesman Steve Swasey said.
    So what if they're copying your business methods - thats called competition.

    • Re:Patents on business methods are stupid. (Score:5, Insightful)

      by Mecdemort (930017) on Wednesday April 05 2006, @07:18AM (#15065184)
      It has long been said that: Imitation is the highest form of flattery.

      In the past copying products in a different form was alowd. You couldn't patten chicken noodle soup, but you could pattent a specific formula. This form of patenting ideas is going to strangle us as a civilization, and lead to a few companies that control everything.

      Just wait until someone patents a pure idea, and if anyone gets caught thinking about it you have to pay them.

      [ Parent ]

    • Re:Patents on business methods are stupid. (Score:5, Informative)

      by hackstraw (262471) * on Wednesday April 05 2006, @07:23AM (#15065225) Homepage
      So what if they're copying your business methods - thats called competition.

      Nobody that uses patents as their business model wants competition. Just ask Tom Woolston.

      Hint. He's a patent attorney, who loves to be his own customer.

      [ Parent ]

    • Blockbuster: sue the USPTO (Score:4, Interesting)

      by Anonymous Coward on Wednesday April 05 2006, @07:35AM (#15065284)
      Blockbuster, if you're listening, you need to lay hard into the US Patent Office and sue them for incompetently issuing bogus patents that will cost you huge penalties in legal fees and possible settlement costs.

      The advantage of vigorously pursuing full-scale litigation against the patent office is that most of the research for your legal team will be done free of charge. There is a huge community who are already aware of the problem with the USPTO and can point to at least hundreds of similar bogus patents that have or may in the future cause significant financial loss to other companies.

      [ Parent ]
    • to all but lawyers (confession: I am a recovering lawyer). Under the current approach, Coca-Cola's greatest error was not New Coke, it was not patenting the "containing of a carbonated fluid in a variable sized vessel..." Take that Pepsi, et al. Henry Ford

  • a sad time (Score:5, Funny)

    by tont0r (868535) on Wednesday April 05 2006, @07:05AM (#15065105)
    next 7-11 will sue circle K because they both run the same business.

    • Re:a sad time (Score:5, Funny)

      by QuantumPion (805098) on Wednesday April 05 2006, @07:41AM (#15065328)

      1) Patent "the process of exchanging goods or services for finiancial reimbursement"

      2) Sue the entire world, muahahahaha

      3) Profit!

      [ Parent ]

      • Re:a sad time (Score:3, Funny)

        by chrismcdirty (677039)
        You can sue the entire country. You can only threaten to sue the entire world. The rest of the world will laugh at you because they don't have such retarded patent systems as the US.

  • Broken beyond repair (Score:5, Interesting)

    by CRCulver (715279) <crculver@christopherculver.com> on Wednesday April 05 2006, @07:05AM (#15065106) Homepage

    The first patent, granted in 2003, covers the method by which Netflix customers select and receive a certain number of movies at a time, and return them for more titles.

    So a common-sense business method is patentable? The U.S. patent system really is broken, I'd encourage all to read Jaffe & Lerner's Innovation and Its Discontents [amazon.com] to see just how broken it is. Personally, I think there's no hope of repair, and innovation would progress better were the entire system thrown out. But patents are seen as such a triumph of early American government, with founding fathers like Jefferson in favor of them. Plus, our legislature is currently enslaved to monetary interests. So, we're stuck in quite a pickle where nothing can really be done.

  • Aside from patentability (Score:4, Insightful)

    by PornMaster (749461) on Wednesday April 05 2006, @07:06AM (#15065114) Homepage
    Aside from whether or not business methods should be patentable... since they were granted the patent, it's pretty obvious that they had come up with a novel process which was straight-up copied. On the legal merits, they should certainly win.

    • Re:Aside from patentability (Score:5, Insightful)

      by Pofy (471469) on Wednesday April 05 2006, @07:11AM (#15065136)
      >Aside from whether or not business methods should be patentable... since
      >they were granted the patent, it's pretty obvious that they had come up with
      >a novel process which was straight-up copied.

      Please tell what part of it that is novel and non obvious (to people in THAT area)? In addition, it should be something that no one has done before 2003 (or even later since that was the first patent).
      [ Parent ]

      • Re:Aside from patentability (Score:3, Insightful)

        by smelroy (40796)
        Sure it is obvious now... thanks to Netflix pioneering it seven years ago (getting a patent takes a while). Although I don't have much respect for the US patent system, I have to wonder how else would Netflix protect their novel business model from a compe

        • Re:Aside from patentability (Score:5, Insightful)

          by FrostyWheaton (263146) <mark.e.frostNO@SPAMwheaton.edu> on Wednesday April 05 2006, @08:11AM (#15065519) Homepage
          Shouldn't they be able to protect that in some way?

          Sure, they can protect it the same way McDonald's, CarMax, Wal-Mart and others have protected their place. To my knowledge neither of these three (or of dozens of other premier companies with 'novel business models' has needed the USPTO to help retain their place of prominence. Being first to market is a huge advantage and that alone will sustain the fellow who 'thought of that first' in many cases.

          TANSTAAFL, especially in the business world. Just because I come up with the novel concept of providing a subscription CD service (totally different from DVDs which appears to be what is patented), over the internet, with sprinkles gives me no more claim to royalties than the fellow who figured out that people were dumb enough to pay $1.50 for a bottle of water.

          [ Parent ]

        • Re:Aside from patentability (Score:4, Insightful)

          by multiOSfreak (551711) <culturejam@NospaM.gmail.com> on Wednesday April 05 2006, @08:49AM (#15065843) Homepage Journal
          Although I don't have much respect for the US patent system, I have to wonder how else would Netflix protect their novel business model from a competitor like Blockbuster? BB has several major advantages already: a huge, existing inventory of movies and actual stores. How can Netflix compete with that without protecting their novel business model?

          Maybe Netflix could protect its business model by...I don't know...offering the best service/product in the market? If they are the best (in the view of the public), it won't matter how their competitors model their businesses to compete.Netflix is more or less asking the courts for special protection against market competition. I don't think *that* is a very good business model, but then again, I don't run a multi-million-dollar corporation.

          I subscribe to Blockbuster now because of the fact that I get 2 free rentals every month from a store in addition to the all I can watch by mail. ... Netflix can not compete on that level without partnering with some other competing retail rental chain.

          If you're so worried about Netflix's business, why don't you support them instead of Blockbuster? And as for Netflix not being able to compete "at that level," well, that's tough shit. They entered a national video rental market, and the have to find a way to compete "at that level."
          [ Parent ]

  • Utter, utter BS (Score:5, Insightful)

    by stunt_penguin (906223) on Wednesday April 05 2006, @07:07AM (#15065115)
    OK so what if I go out and patent queueing at a shop checkout to pay for goods, or paying for magazines to be delivered to your home on a monthly basis, or, or........

    This shit has to stop, I mean netflix are just being totally petty about the whole damn thing. I mean, what *other* way is there to organise online DVD rental? Are they going to enforce patents on their *whole* business model.

    This has to stop. Gah!

  • Library patents (Score:5, Insightful)

    by doddi (881823) on Wednesday April 05 2006, @07:09AM (#15065127)
    The first patent, granted in 2003, covers the method by which Netflix customers select and receive a certain number of movies at a time, and return them for more titles.

    Isn't this exactly how libraries have worked since ...um, long before 2003?

    • Re:Library patents (Score:4, Informative)

      by montyzooooma (853414) on Wednesday April 05 2006, @07:13AM (#15065158)
      No, because this is ONLINE. Throw "on the internet" in there and you can patent pretty much any existing business practice. Other magic phrases are "on a handheld device" or "on a games console".
      [ Parent ]

      • Re:Library patents (Score:5, Insightful)

        by Comboman (895500) on Wednesday April 05 2006, @08:03AM (#15065467)
        No, because this is ONLINE

        Been to a library lately? My local library has been online since before 2003 http://catalogue.halifaxpubliclibraries.ca/ [halifaxpub...braries.ca] and allows you to add books, CDs and yes DVDs to your personal list, informs you when they are available for pick-up at your local branch, and when you return them they send you the next ones on your list when they're available. Sounds like 'prior art' to me, the only real difference is that the library isn't charging a monthly fee.

        [ Parent ]

  • Simple solution. (Score:5, Interesting)

    by RandoX (828285) on Wednesday April 05 2006, @07:09AM (#15065128)
    Blockbuster should charge $.01 per year late fees. No longer the same as the patent.

    • Re:Simple solution. (Score:3, Interesting)

      by stunt_penguin (906223)
      Actually, that's a really good idea, and gets around part of the problem. Maybe they can then introduce a customer bonus system that means they get their late fees back if they rent more than 5 movies in a year, thereby making the whole thing null and void

      • Re:Simple solution. (Score:3, Interesting)

        by Aneurysm9 (723000)
        Then you run into the doctrine of equivalents. Even if one device or method does not correspond 1:1 to the claims in the patent, infringement may be found if the device or method is sufficiently equivalent.

  • Netflix sues Blockbuster, Users Sue Netflix (Score:3, Insightful)

    by digitaldc (879047) * on Wednesday April 05 2006, @07:10AM (#15065133)
    First of all, Blockbuster sucks, they 'settled' their class action lawsuit for overcharging for late fees by offering about 3-4 free rentals as payment. That is unfair. They made millions from these late fees and then when they were found to be scamming, they just offered some free rentals, big deal...we never saw that late-fee money again.

    Netflix needs to stop staggering movies for frequent-renters. Just because someone can take full advantage of their 'all-you-can-rent' policy, doesn't mean they should be penalized for it. Netflix already gains from those who don't return their movies regularly, so why should they care if some rent and watch a new movie every day? Just charge more per month or get rid of the policy.

  • Anyone wanting to discuss this intelligently ... (Score:5, Informative)

    by Throtex (708974) on Wednesday April 05 2006, @07:12AM (#15065144)
    ... should probably take the time to read the patents in controversy assigned to Netflix first.

    They are:
    US Patent No. 6,966,484 to Calonje, et al.; and
    US Patent No. 7,024,381 to Hastings, et al.

    As you do so, look at the claim language, not the specification, to find out what the invention actually covers. Discuss.

      • Re:Anyone wanting to discuss this intelligently .. (Score:5, Interesting)

        by Valdrax (32670) on Wednesday April 05 2006, @07:37AM (#15065300)
        There's a difference between patenting inventions (i.e. what the system was designed for) and patenting commercial actions and methods of organization, which is what business model patents are. Business model patents do NOT promote the Sciences and Arts. They merely ensure a monopoly without encouraging innovation.
        [ Parent ]

  • Before you jump on the "Patents are bad" bandwagon (Score:4, Insightful)

    by defwu (688771) on Wednesday April 05 2006, @07:16AM (#15065169) Journal
    Yes, "common-sense" business models are patentable. Why? Because "common-sense" is not as common as you would think.
    As for the "patents are bad for innovation" argument : if you come up with a way to manufacture widgets that no one else has before, and that innovation has cost you a certain amount in development costs, should you not have the right to protect that investment? If your competition can just steal your methods, then you would have no incentive to innovate.
    I am not saying that there isn't a line here, or that the the line hasn't been jumped over by the US. patent office, but by and large patents do in fact encourge business investment into research that would otherwise not happen.
    • Business method patents would be more palatable if the term of protection weren't so long, especially when the web is involved. Seventeen-year legal monopolies just don't fit a twelve-year-old medium.

    • Re:Before you jump on the "Patents are bad" bandwa (Score:5, Interesting)

      by orzetto (545509) on Wednesday April 05 2006, @07:57AM (#15065426)
      [if] that innovation has cost you a certain amount in development costs, should you not have the right to protect that investment?

      I believe not at all. Rights are granted for the benefit of the whole of society, not single individuals: otherwise you might as well reintroduce slavery, as it was very beneficial to a few guys. Having a monopoly on something that can be reproduced indefinitely such as business or programming methods, and knowledge in general, means unfairly harming everybody else. You are not damaged by someone else who's using your methods (this does not block you from using them), unless you mean by competition, and last time I checked there is quite a load of legislation that actually protects competition, as it is demonstrated to improve product quality for society.

      If your competition can just steal your methods, [...]

      You cannot steal a method or an idea. You can only copy it. The original author still has it.

      ... then you would have no incentive to innovate.

      On the contrary, if you know that the competition is going to figure out your methods and implement them after a while, you know also that you must keep innovating and leveraging your position as first in the market (it takes time to make a Webshop from just an idea: and if you are slow and competition is faster than you to commercialise, it's all your fault). In other words, you have to do actual work, not rest on your laurels because some law forbid everybody else from using your methods.

      From the whole society's point of view (that is, our point of view), if Netflix wins we are going to see worse service from Blockbuster and less competition. If Blockbuster wins, competition will be closer between the companies and they will have to find a way to get more customers.

      The more I think of the patent system the more I think that the whole concept is flawed. As generally with IP, Beethoven and Mozart died in poverty, Britney Spears is filthy rich.

      [ Parent ]
      • Rights are granted for the benefit of the whole of society, not single individuals: otherwise you might as well reintroduce slavery, as it was very beneficial to a few guys.

        Are you insane? All rights are granted to individuals only, never to "society".

      • Re:Mod parent up (Score:4, Interesting)

        by egburr (141740) on Wednesday April 05 2006, @08:22AM (#15065595) Homepage
        Netflix may have been the first to offer "all you want for a single monthly fee" for DVDs, but they aren't the first to have an "all you want for a single monthly fee" offer. Check out the local bus line at any large city. Check out downtown parking lots at any large city.

        Come to think of it, almost any restaurant or fast food store offers "all you can drink until you leave for a single fee". Many sports teams offer a season pass, which is "all the local games you can attend this season for a single fee".

        How does applying this concept to DVD rentals make it unique?

        [ Parent ]

  • My beer shopping patent (Score:3, Funny)

    by ip_freely_2000 (577249) on Wednesday April 05 2006, @07:20AM (#15065202)
    A method in which I look in the fridge on a regular basis and realize it is empty. I then get in the car and drive to the beer store to replenish my supply of beer.

    You all owe me.

  • patent throttling (Score:3, Insightful)

    by maryjanecapri (597594) on Wednesday April 05 2006, @07:22AM (#15065215) Homepage Journal
    Do you think Netflix is going to also patent their wonderful method of throttling their better customers? I just signed up for Blockbuster after watching my netflix shipping come to a slow grinding halt. I am actually LUCKY if I get my three movies at a time in a single week now. So I wanted to check out Blockbuster to see how they fared. Now they are getting sued by Netflix. Boy is that irony? Of course this will never go through - if it does, imagine the precident it will set. KMart will go after Walmart (for their methodology of having consumers in lines to pay for goods). Converse will go after Adidas (for their methodology of creating goods to go on someone's feet). I just hope like hell Blockbuster isn't also sued for slowing down the shipping of movies. I do believe Netflix has the corner on that market!

  • Intelliflix (Score:5, Interesting)

    by szembek (948327) on Wednesday April 05 2006, @07:36AM (#15065295) Homepage
    I use these guys: http://www.intelliflix.com/ [intelliflix.com]. It's cheap. Anyways, they too are copying Netflix, must be that they're not big enough to get sued for it yet. Estupido.

  • My friend at Netflix (Score:5, Interesting)

    by leather_helmet (887398) on Wednesday April 05 2006, @07:40AM (#15065318)
    My good friend who has been working at netflix for approximately 5 years says that most of the employees think the lawsuit issue with blockbuster is a waste of time

    Blockbuster has been getting their asses kicked in regards to marketshare vs. netflix for about the last year or so
    When blockbuster initially tried to compete with Nflix, the Nflix folks were a bit scared, including my buddy who was worried about the future of the company he helped develop - however, after Nflix's somewhat recent resurgence & increased user subscription, which in turn boosted the stock prices from all time lows, blockbuster has become a non-issue to Nflix (well at least to my buddy and most of the staff)
    --

    • Re:My friend at Netflix (Score:4, Funny)

      by scribblej (195445) on Wednesday April 05 2006, @08:29AM (#15065649)
      When blockbuster initially tried to compete with Nflix, the Nflix folks were a bit scared, including my buddy who was worried about the future of the company he helped develop - however, after Nflix's somewhat recent resurgence & increased user subscription, which in turn boosted the stock prices from all time lows, blockbuster has become a non-issue to Nflix (well at least to my buddy and most of the staff)

      You got something against E.T.?

      Eeeeeliiiiooooot...

      [ Parent ]

  • Time limits are the issue here I think? (Score:5, Insightful)

    by ami-in-hamburg (917802) on Wednesday April 05 2006, @07:57AM (#15065429)
    Well, at the time, NetFlix was new and innovative with their business model. Therefore, the patents were reasonable at the time. Just because something seems obvious now doesn't mean that it has always been obvious.

    IMHO, a time limit is needed for business model patents. I won't argue here how long they should be valid, just that they should have a reasonable expiration date. That way, the innovative company can cash in on their research and development for the time limit of their patent while still allowing competition in the market.

    Naturally, companies (and I assume politicians as well) won't like the idea of time limited business model patents but I think that is what would be best for the consumer.

  • PRIOR ART in 1700s "Subscription Library" (Score:5, Interesting)

    by Tsu Dho Nimh (663417) <abacaxi AT hotmail DOT com> on Wednesday April 05 2006, @08:05AM (#15065477)
    PRIOR ART! Netflix has patented the old mail-based "Subscription Library" model. In the USA, they were founded by Ben Franklin, who later went on to run the USPTO after the Revolution. Here's how the subscription libraries worked:

    In-town, one could stroll to the lending library (or send one's maid or footman) to return a book and pick up the next one on the list. It was a social occasion as well as a literary one. Subscription price varied depending on how many books you wanted to have in your posession at a time.

    Out of town patrons paid a subscription fee (higher to cover the cost of shipping) that depended on how many books they wanted to posess at a time (a few, up to dozens of them if you were going to India), handed over or mailed in their list and waited for the postman to deliver the books. When they were finished with the book/s, they sent it/them back and got the next batch on the list that was in stock.

  • While patenting (Score:5, Insightful)

    by the_Bionic_lemming (446569) on Wednesday April 05 2006, @08:42AM (#15065764)
    Did they also include a patent for slowing shipping down because you rent too many movies from them?

    After all, Unlimited isn't really unlimited with netflix.

    I'm leaving netflix To go to blockbuster - I guess people like me defecting is what really prompted the lawsuit. Instead of living up to the "Unlimited Rentals" they are going to sue everyone else out of existance.

  • Is throttling part of that patent? (Score:3, Insightful)

    by graffix_jones (444726) on Wednesday April 05 2006, @09:32AM (#15066293)
    I wonder if throttling is part of that business method that is patented.

    That would actually make it 'novel' and potentially patentable... I mean, who actually would think of a system of Unlimited rentals that was in fact Limited depending on whether or not the customer actually tried to use the service as if it were unlimited.

    Who here can show prior art where the word Unlimited actually means Limited.

    That actually sounds pretty novel to me.

    /me wipes the sarcasm off his lips...
    • One hand washes the other, but your post is more like both hands waving apprehensively in the air because you weren't sure which one to wave but now you realize that waving both looks stupid but you've already committed to your decision and don't want to l

      • Y'know, I really get tired of this right-wing bashing of Al Gore. Of course he didn't invent pants, but he was instrumental in getting funding for the original ARPANTS which is what our modern high-speed pants derived from. So, while he of course doesn't

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