Netflix Sues Blockbuster

Discussion in 'DVD talk' started by Paper Pills, Apr 5, 2006.

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  1. Paper Pills

    Paper Pills Sophomore Designer

    Link removed as article is posted below.
    Last edited by a moderator: Apr 6, 2006
  2. JupiterPrime

    JupiterPrime New Member Designer

    I hate giving other websites the click just to read the news that other people think is interesting - not to mention referring this site back to them....please post the article along with the link...

  3. Paper Pills

    Paper Pills Sophomore Designer

    noted :ph34r2:
  4. casualimp

    casualimp New Member Member

  5. cavemanlawyer

    cavemanlawyer New Member Master Designer

    No chance. Netflix is suing for patent infringement on a US patent which has no effect in Canada. Furthermore, the patent is on a business method which is a non-patentable subject matter in Canada so there is no way Netflix could get a similar patent in Canada.

    I reviewed Netflix's patent and it does appear that BlockBuster is infringing. BB may be able to just modify their plan structure so as to not infringe, but in my opinion, its stupid that they should have to. Business method are not what patents are supposed to protect and that's why most countries won't let you do it. Fortunately business method patents are going to be seriously reviewed over the next couple of months in several cases by the Supreme Court and its very plausible that their strength will either be substantially diluted or (hopefully) they will be disallowed entirely. If this happens than this Netflix case will become moot.

    There is a patent infringement case going before the Sup. Court right now that actually makes THINKING about something an infringement if it is upheld.
  6. JupiterPrime

    JupiterPrime New Member Designer


    So would that mean my Sharon Stone and Frineds Basic Instinct 2 POV downloadable sex video still an infringment if I dont call it BI2 or POV?
  7. cavemanlawyer

    cavemanlawyer New Member Master Designer

    I have no idea what you just said but movies are protected by copyrights and their titles are protected by trademarks. Patents are not applicable.

    The thinking patent I was referring to is specific to a patented device. Basically the patented device measures a vitamin level to determine if you have a deficiency. The patent is being reviewed to determine whether it covers the actual thought process of seeing the measurement and making the determination that, whoops your vitamin levels are too low. What it would mean is that even if you used a non-patented device to measure you still would come to a "patented conclusion" and would have to pay royalties to the other device's patent holder. What it all boils down to is that the first person to invent a major tool in a particular industry will get a cut of the money made by all subsequent inventions in the industry. The ruling will have broad implications and could affect the scope and validity of business method patents like the one Netflix is using as a basis for their suit.

    This is a huge year for patent law, the most significant in over 40 years. The Sup. Court is tackling some issues that could cause major change and we've got two new justices on the court and there's no telling how they will rule.
  8. Paper Pills

    Paper Pills Sophomore Designer

    why isn't netflix suing walmart. didn't walmart infringe on the business method as well with its online rental service?
  9. cavemanlawyer

    cavemanlawyer New Member Master Designer

    Well they're not suing Walmart now because they bought out Walmart's online rental service division instead. As for why they never sued before, its probably one of two things. Either they chose to hold it over Walmart's head during negotiations to buy the serivce...and it worked, or Walmart's service was not actually infringing. Patents are extremely specific. If you can get around even one of the many claims than you are not infringing. Even in this netflix suit they are suggesting that BlockBuster can avoid a suit just by altering their plan options. They can still provide an online rental service.
  10. Paper Pills

    Paper Pills Sophomore Designer

    oh...i never realized netflix bought out the walmart service. that explains alot.
  11. RickT

    RickT R1DB Lifer

    To say that NetFlix "bought out" Wal-Marts DVD service may not be quite on target. I can't seem to find any information about any monetary transaction. Here's an excerpt from an article I found:

    I don't doubt there may of been some type of monetary transaction between NetFlix & Wal-Mart. It's just that I've never seen any type of indication of that. It's not to far fetched to think that an agreement between the two was all there was to the takeover is it?
  12. cavemanlawyer

    cavemanlawyer New Member Master Designer

    They partnered. Walmart gets some percent of earnings while Netflix runs it. That's a purchase.
  13. Paper Pills

    Paper Pills Sophomore Designer

    so netflix does have grounds for this case...i mean it isn't a case of just being pissed that blockbuster is encroaching on what has been pretty much their market. there is some validity to it? i didn't know much about patenting a business method.
  14. cavemanlawyer

    cavemanlawyer New Member Master Designer

  15. bazzah

    bazzah Freshman Member

    Going slightly off topic, this whole 'thinking patent' really bothers me. Don't you find it rediculous? How far would it go? Does every company that uses/sells televisions/fibre optics/radar have to pay a royalty fee to John Logie Bairds family?
  16. thomkai

    thomkai New Member Member

    Well, I know much, much less about law, but I read somewhere that what makes this not really stand up is that it's an "obvious" method; it's something that anyone can logically decide to do in a situation such as this. I want to rent out movies online, so I let customers choose titles to rent, make a wish list of titles to rent, and have them delivered in that order. I think that's the jist of what they are suing over, right? The "queue"? It does seem fairly obvious. But I don't really know if "obviousness" applies in a legal matter.
  17. JupiterPrime

    JupiterPrime New Member Designer

    I agree - just change the name from "Queue" to "vieweing order" or "rental order" and it shoud not matter.... NF shouldnt be allowed to get away with this - not that I have any particular love of BB, but suing over an easilly appliable static business model (yes its static - theres nothing really dynamic about it, you pay, you pick, you wait, you watch, you return....its not as if you pay, you browse, you download, you cancel, you download something else, your done) is just wrong and sends the wrong message.

    It would essentially allow NF to monopolize the industry, as they would sue anyone running an online video rental business and we have monopoly laws forbidding that sort of activity. This country's business and economy thrives through competition and what NF needs to do is compete....they need to get more titles and some of the titles that the others other but NF does not....

    how many of you have multiple online video rental accounts becasue some other company has something NF doesnt have? once you have it, how long do you keep it? maybe if NF didnt "throttle" everyone to death, people wouldnt have to subsidize their rental accounts with other ones just to receive the things they want at a normal rate of speed (yes I would get the 4 at a time plan on NF and BB and get disc 1 and 2 from one service and disc 3 and 4 from the other so that I get it all in a timely manner becasue both are nototriously slow in delivery - if I get 4 at a time, why do i only recieve 1 or 2 every 2 or 3 days?)

    I had used BB for their 2 week free trial at 3 at a time - I managed to squeek in 6 discs right at the two week cutoff time before having to pay for the account...TWO WEEKS....for 6 discs - thats an absurd and ridiculously slow rate of delivery and return acknowledgment...well guess what? NF is pretty close to that close at the moment on my 4 at a time plan... i get 1 maybe 2 discs on about a 3 to 4 day turnaround, when I used to get 5 at a time, and get an entire tv show season of 6 or 7 discs within 3 days - this throttling crap needs to stop - I am a high volume user and I consolidate returns by sending back multiple titles in single envelopes, saving them some money - I should get priority delivery not the guy who only watches 4 or 5 movies a month

    what I think NF should do is be able to prevent others from doing the same I thinks that if a patent is registered for a certain idea, then that company should be allowed to sue if someone else tries to launch the same idea before they get their patenent finalized and business launched - but once it is an appliable business model, all bets are off and let the consumer see which one gets it right....

    maybe NF should get all the movies that people get from other places....offer a better price point - competition - if they can offer a better pricepoint than anyone else and they close becasue of it, thats competition and fair business practice (to a degree). Open more distribution centers - GUARANTEE a maxmium of a 2 day turnaround - dont throttle - if someone gets 8 at a time, give them that - get more copies of each popular movie - dont make people wait 2 weeks for something that is a shoirt wait....or dont make people have to wait at all, and then resell your overstock on those titles once they arent popular anymore...all this will prevent customers from using other services, and prevent you from having to sue anybody and pass on ever greater savings to your customers and increase your bottom line becasue you have to pay your lawyers for a litigating a friviolous monopolizing lawsuit , and youll have to pay for them again to defend you when the monopoly lawsuit comes down from the Justice department.
  18. cavemanlawyer

    cavemanlawyer New Member Master Designer

    Obviousness is one of the three tests of patent eligibility, so the fact that Netflix had their patent granted means that the US Patent Office already deemed it non-obvious. Obviousness is also not as general as you might think. Its not really a matter of, "oh anyone could have thought of that," rather its based on scientific publications and prior art which consists of past or existing patents or patentable technology that for whatever reason was never patented and thus fell into the public domain. So in other words, if no one tried it before and no one bothered to publish documentation on the concept, than it probably passes the non-obviousness requirement. The main point of the non-obviousness requirement is to prevent people from making trivial improvements to existing inventions and then patenting them. But if its never been done before than its largely fair game, so a patent can indeed be VERY trivial. (ie: patent on comb over hairstyle for bald men, patent for the process of swinging on a swing.)

    It is possible for a court to retroactively deem a patent obvious and thus void, but it doesn't happen all that often.
    Last edited: Apr 7, 2006
  19. JupiterPrime

    JupiterPrime New Member Designer

    yeah but what will be next? Burger King cant sell burgers and fries anymore because McDonald's thought of it first? New burger joints cant sell either flame-broiled or griddle-cooked burgers becasue McD and BK have operational control over those two methods of making burgers?

    I cant sell a big 32oz. cup of slush ice with added soda and flavoring, and a spoony-shaped straw becasue 7-11 owns Slurpee and Big-Gulp?

    are the places that make these materials to provide these vendors doomed to only be able to sell to them becasue those vendors are the only ones who are allowed to make the product? they might as well be absorbed by those companies

    Granted these may be an extreme examples, but cases like these always manage to bring out the examples of the extreme just to show how ridiculous the end results can become.

    I dont see how NF can possibly sue (or win a suit rather) over a business model such as theirs....thats like telling me I cant buy millions of precooked BK burgers, freeze them and mail them to millions at a profit. I already paid BK for them - theire mine - if I want to eat them or sell them to other people who dont have easy access to BK burgers, I should be allowed to do so - just as long as I dont call my business Burger King - they can either not buy, pay my price, or drive however long they need to for them direct from BK.

    NF is selling a rental service to be a rental distributorship of a product owned by another party (Hmmm...sounds a lot like the Blockbuster business model...) and they charge a fee for it (yep, also sounds like BB). The only eminent domain I see here is how much they charge, over how many and their name

    For example....going uder the assumption that the following is perfectly legal and the federal government is not going to jail me for it....I get me a little store front - I have over 400 videos to rent and because I have limited titles and no distributorship fees to worry about, I can afford to seriously undersell BB at saaaaay 2.00 each as opposed to their 4.88....just a little something to subsidize my income - I know I cant compete, but becasue I can outprice them on a public business model (making money for providing goods) you're saying BB can sue me for operating the exact same business they do, under a different pricing point and name?

    sounds like unionized and organized labor trying to shaft the little guy operating privately (who has no union dues to pay) just trying to keep his head above water with some side work......this society and economy practically demands at least 2 primary incomes in order to survive these days, but seems to be returning to its old thoughts and prejudices towards moonlighting - you can work....but you gotta work FOR ME ONLY
    Last edited: Apr 7, 2006
  20. cavemanlawyer

    cavemanlawyer New Member Master Designer

    Everything you are saying is an argument against business method patents generally, and I agree. But they are currently valid and enforceable so Netflix's case is as good as any. Such a patent does not prevent online DVD renters from engaging in business. They just can't do it in exactly the same way as the patent protects. Blockbuster, assuming they are infringing, will have to mix things up a bit to avoid infringement. Its stupid that they have to change something just for the sake of changing, but that's how the patent world works.

    Your little store front hypothetical really isn't the same. Patents only grant monopolies in inventions not in areas of business, which as you mentioned above is a violation of Antitrust laws. Its not that you can't rent DVDs online, its that you can't do it in a claimed way. Most everything that you can do in the physical business world has been done for decades, so you cannot patent a rental service or a food distribution service. The area where business method patents really apply is in the virtual world, on computers, and the consolation is that there are many ways to accomplish the same thing on a computer so it leaves room for competition.

    Software-like patents (can't actually get a patent on software) and business method patents are relatively new concepts. It always works out this way. A new area opens up and the gates are flooded until litigation starts pulling things back.
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