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Netflix Suing Blockbuster for Patent Infringement 410

Posted by samzenpus
from the there-can-be-only-one dept.
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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Netflix Suing Blockbuster for Patent Infringement

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  • by tpgp (48001) on Wednesday April 05, 2006 @08:02AM (#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.
  • by PornMaster (749461) on Wednesday April 05, 2006 @08:06AM (#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.
  • Utter, utter BS (Score:5, Insightful)

    by stunt_penguin (906223) on Wednesday April 05, 2006 @08:07AM (#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 @08:09AM (#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?
  • by digitaldc (879047) * on Wednesday April 05, 2006 @08:10AM (#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.
  • by Pofy (471469) on Wednesday April 05, 2006 @08:11AM (#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).
  • by defwu (688771) on Wednesday April 05, 2006 @08:16AM (#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.
  • by Mecdemort (930017) on Wednesday April 05, 2006 @08:18AM (#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.

  • patent throttling (Score:3, Insightful)

    by maryjanecapri (597594) on Wednesday April 05, 2006 @08:22AM (#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!
  • by Cheap Imitation (575717) on Wednesday April 05, 2006 @08:28AM (#15065253)
    How's that for ironic? A comment protesting the patent of common-sense business methods, and a request to read about it by giving us a referral link to Amazon, of all places... Now that's funny stuff!
  • by Mostly Monkey (454505) on Wednesday April 05, 2006 @08:36AM (#15065292)
    One problem is that often someone will patent an idea without further developing it. They will sit on it until another company does all the footwork to make the idea feasible and then sue them. Unless the other company takes the risk the patent won't benefit anyone.
  • common sense (Score:2, Insightful)

    by backwardMechanic (959818) on Wednesday April 05, 2006 @08:40AM (#15065315) Homepage
    Yes but common sense refers to the time the patent application is filed. I agree that lots of ideas are obvious after someone has had them. That is why you file the patent, and then tell the world about it. But if your idea was obvious before you suggested it, that's common sense and isn't (and shouldn't be) protected. If all obvious ideas could be patented, it becomes a race to file patents, and innovation naver gets a look in. Which appears to be how the US patent office functions.
  • Patents *are* bad (Score:2, Insightful)

    by chaves (824310) on Wednesday April 05, 2006 @08:43AM (#15065339)
    "If your competition can just steal your methods, then you would have no incentive to innovate"

    We don't need incentive to innovate, innovation is in the inner essence of the human race. Problems need to be solved, and someone will solve them first. There are many benefits of being an inventor or pioneer. And innovation is good for business as well, as it gives you a lead over the competition (no need to tie people down). There are ways you can prevent others from just stealing your work, such as copyrights, and trade secrets. That does not apply to business methods (you can still take credit for creating it, which can be good marketing). Here what matters is that you need to execute well and provide the better value for your customers.

  • by smelroy (40796) on Wednesday April 05, 2006 @08:44AM (#15065345) Homepage
    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 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?

    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. That allows me to go rent something on a whim. Those 2 free rentals in the store would cost me almost over half as much as the monthly subscription does already. Netflix can not compete on that level without partnering with some other competing retail rental chain. What Netflix does have going for it is they came up with this new idea for unlimited online rentals for a set monthly fee. Shouldn't they be able to protect that in some way?
  • Just add internet (Score:2, Insightful)

    by bhalter80 (916317) on Wednesday April 05, 2006 @08:53AM (#15065400)
    It seems that as soon as you add the words internet or software people just lose any sence they had. If you asked someone if you could patent having cash registers at the front of the store instead of having someone follow you around charging you as you take things off the shelf they would tell you there is no way you could patent that. But now if you have some software in a virtual store that computes your bill once you've finished selecting which items you want that's patentable. This country really needs to come to terms with the technology it has invented and realize how few differences there are between this new tech and the business methodology from the brick and mortar establishments it is based on.
  • by ewg (158266) on Wednesday April 05, 2006 @08:54AM (#15065406)
    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.
  • by rootrot (103518) on Wednesday April 05, 2006 @08:57AM (#15065427)
    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 should clearly have nailed down the whole "four wheeled, motorized vehicle" thing and avoided all these annoying "also rans."

    Personally, I think a company should live or die on thier ability to innovate and, more importantly, provide value and support to their client base...not their ability to litigate. YMMV.
  • by ami-in-hamburg (917802) on Wednesday April 05, 2006 @08:57AM (#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.
  • by Anonymous Coward on Wednesday April 05, 2006 @09:02AM (#15065460)
    Yeah, it's like the library system for books, except with DVDs and 'on computer' or 'on the internet'.

    Patents that just take a method that already exists, and tack on 'on the internet' are pointless.

    How long would it take anyone here to write a system that described what they did?
  • Re:Library patents (Score:5, Insightful)

    by Comboman (895500) on Wednesday April 05, 2006 @09:03AM (#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.

  • by Anonymous Coward on Wednesday April 05, 2006 @09:05AM (#15065479)
    How can Netflix compete with that without protecting their novel business model?

    I know I'm going to sound old fashioned, but how about providing superior customer service or lower costs?
  • by FrostyWheaton (263146) <mark,frost&gmail,com> on Wednesday April 05, 2006 @09:11AM (#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.

  • by lucifig (255388) on Wednesday April 05, 2006 @09:19AM (#15065578)
    "Blockbuster has been getting their asses kicked in regards to marketshare vs. netflix for about the last year or so"

    Of course you are going to get your ass kicked entering a market that a sole company dominated for 3-4 years. Just because your buddy can't see 5 years into the future doesn't mean the company execs cannot. I'm not saying that Blockbuster is going to run over Netflix in 5 years or ever...but they sure as heck can see the Amazon monster coming over the horizon into their market and have to dig their trenches now.

    As much as I disagree with method patents, Netflix has little choice but to try to defend this now while they have the market leverage/capital to do so.
  • by CharonIDRONES (656891) on Wednesday April 05, 2006 @09:26AM (#15065634)
    So what you're saying is ways to improve business, the assembly line pioneered by Henry Ford for automobiles should be patentable?

    While it was an amazing idea, and helped bring automobiles into the grasp of the average man, doesn't mean it should be exclusive to that company. A company discovers a new model that works, what should prohibit another company from taking up that model instead of going under? Bookstore than failing can't sell their books online because Amazon patented the 'innovation' of selling books online? Sorry, I thought capitalism was supposed to spur innovation not suffocate it.

    -Brandon
  • by LainTouko (926420) on Wednesday April 05, 2006 @09:35AM (#15065691)
    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?

    You do have the right to protect that investment in any case. Nobody is proposing prohibiting the protection of investments. What you're talking about is stripping other people of the right to use an idea.

    If your competition can just steal your methods,

    Eh? Is anyone proposing that stealing methods, which would necessarily entail forcibly erasing your knowledge of those methods from your mind, should be explicitly legal or something?

    Why do you patent authoritarians have such trouble describing things honestly? Is it because your arguments are so incredibly weak that they wouldn't survive if people understood what they really are?

    then you would have no incentive to innovate.

    Yeah, because no innovation ever happened at any point in history before patent systems were established.

    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.

    Your evidence of this? And remember, we are talking about removing people's freedom. You need really strong and convincing evidence of a huge, unambiguously beneficial end effect to propose such a thing. And certainly everything I've seen suggests precisely the opposite, it just ends up with a load of power being wielded by the already powerful few, and makes innovation far more difficult for the majority of less powerful people and companies, whilst creating artificial monopolies which remove much of the incentive to innovate from the monopoly-holder.

  • While patenting (Score:5, Insightful)

    by the_Bionic_lemming (446569) on Wednesday April 05, 2006 @09:42AM (#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.
  • Re:Worried! (Score:3, Insightful)

    by GuyverDH (232921) on Wednesday April 05, 2006 @09:44AM (#15065781)
    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 so.
    #3 - NetFlix - never used it, and now, never will.
  • by Anonymous Coward on Wednesday April 05, 2006 @09:46AM (#15065811)
    You know, it always seems obvious after the fact, doesn't it? But nobody, *nobody* was doing waht netflix was doing before netflix patented it. So all these examples of "I could just patent taking the bus" blah blah are silly because among other reasons, there's a ton of prior art.

    Netflix allows you to make a list of things, they send you a predetermined number of things from that list such that you have no more than x of them at a time, when you return one, you get the next thing on your list. Please show me someone who did this before Netflix.

    More particularly, show me anyone who was doing what is recited in the *claims* of the Netflix patents, and you have an argument. I'm sure blockbusters lawyers are scrambling now to do this. If they find prior art, good for them, and the patent is invalid. Otherwise, don't go around saying someone's idea is obvious if you never heard of or thought of it before.
  • by multiOSfreak (551711) <culturejam AT gmail DOT com> on Wednesday April 05, 2006 @09:49AM (#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."
  • by s!mon (15429) on Wednesday April 05, 2006 @10:02AM (#15065960)

    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.


    Its easy to suggest solutions to problems you don't understand. Patents are for the general public because they are vested to the public after a term of years. Otherwise, the idea might have never been released. This is the tradeoff, you disclose your novel idea to the public, and you get a limited monopoly on the idea. Its not unreasonable at all, especially if you spend hundreds of millions of dollars developing the idea.

    Just imagine how cheap Coca-Cola would be if they patented the formula in 1920.

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

    What about modify it? Improve it? Remove steps that are unimportant? Use it on a different subject matter? Apply it in different way?

    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.

    But society appreciates ingenuity and creativity. There is going to be a design-around for the patent, you just have to use your wits to figure it out. And when its figured out, how much competition will there be?

    This is typical slashdot flamebait. A lot of accusations and no intelligent discourse. I think business method patents are absurd too, but the whole anti-patent attitude lacks any true discussion on the merits of the patent system. Maybe from your software-developing perspective patents are absurd, but have you ever thought outside of the box and realized that its a good for other industries?
  • by graffix_jones (444726) on Wednesday April 05, 2006 @10:32AM (#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...
  • by sirrobert (937726) on Wednesday April 05, 2006 @10:59AM (#15066534)
    (Disclaimer: This may sound like a slur against lawyers, but it isn't. Look past the apparent cynicism (which isn't there) and see the interesting idea.)

    During a class in which we were discussing the Constitution, U.S. Law, and landmark Supreme Court cases, one student voiced some confusion about why the lawyers in some particular case -- one that was patently absurd to common sense and plain reading of the Constitution and laws in question -- would even take the case, since it didn't at all seem to pursue Justice.

    The professor, who was also a litigation attorney, interrupted the student before he finished speaking and said, "Don't think for a moment that it is about Justice. That's naive. Legislation may be about Justice, but litigation -- for the lawyer -- is an industry by which they earn their money to buy a house and car, and to buy things they like. Lawyers working for Justice work for non-profits."

    He went on to compare lawyers to cobblers -- they make shoes that sell, not that are perfect for the foot. The better the cobbler is, they more they will be able to achieve Just ends as an aside while they're performing their craft of forging a fine lawsuit for their customers -- if they care about that at all.

    There are very few people in any field who perform their functions primarily out of idealism. It is as likely that you'll find a lawyer who is seeking first and foremost to forward Justice as that you'll find an IT guy who is ideologically attached to his specific employer's technological well being. More likely, it's a way for him to earn money utilizing some (fairly) specialized skill to pursue his real interests (gaming, golf, whatever).

    As a final note, it does seem to me that there are certain fields that are more likely to generate idealogically motivated workers. Most of them become most apparent (as my professor said) in the pro bono arena (because it becomes obvious that the person isn't working for money). I should also point out that a fair number of lawyers may become lawyers for ideological reasons, but may also be willing to take cases that are lucrative even if not towards their certain ideological end.

  • by billcopc (196330) <vrillco@yahoo.com> on Wednesday April 05, 2006 @11:05AM (#15066589) Homepage
    It seems so obvious that patents like this only serve as legal ammunition to attack competitors. To most of us, the concept of patenting "Doing X over the internet" is ridiculous, but why is it so ? Does anyone have an example of a patent that has actually benefitted the world at large ?

    From what I've seen, patents serve to "protect" the intellectual property, but really how can you own an idea ? You can invent something and be the first to market, but to use the legal system to keep everyone else out of the game is just plain retarded. If someone's business model is so fragile that they must protect their ideas with patents, then in my book they deserve to suffer everything we throw at them. If they can't stand up to the competition on level ground then they should die and let the stronger entity take their place.
  • by tabdelgawad (590061) on Wednesday April 05, 2006 @11:48AM (#15067091) Homepage
    "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries" - Article I, Section 8, US Constitution.

    The reason for granting time-limited exclusivity (patents, copyrights) is not that innovators have a right to protect an investment, as the GP says. The reason is that without time-limited exclusivity, there would be a lot less incentive for innovators to innovate in the first place. This is especially true for innovations that require a substantial investment of time and money.

    To the extent that certain innovations do not require this investment, they are less deserving of exclusivity. Society as a whole gains when a drug company finds it worth its while to spend a billion dollars to develop a new drug that they can patent and sell above cost for a limited time (until generics enter). But society loses (from lack of competition as you point out) from patenting innovations of the "wouldn't it be cool if ..." variety, the type you can 'innovate' in a single evening while having a beer with your buddies.

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