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Netflix Sues Blockbuster to Shut Online Service

Categories: CasesNew Business ModelsPatents

- Text of Netflix’s Complaint (including patents)
- Netflix’s New Patent 7,024,381 (’381′) (April 4, 2006)
- Netflix’s Patent 6,584,450 (’450′) (June 24, 2003)
On the heals of being granted its new “Approach for Renting Items to Customers” business model patent ’381, Netflix has sued rival Blockbuster for patent infringement, seeking to shut down Blockbuster’s 18-month-old online rental service and award Netflix damages. The complaint, filed in U.S. District Court in San Francisco, alleges that Blockbuster infringed Netflix’s ’381 patent by “copying Netflix’s patented business method, including but not limited to copying Netflix’s dynamic queue; copying Netflix’s method of sending DVDs to subscribers based on ranked order of titles in their queue; and copying Netflix’s method of allowing subscribers to update and reorder their queue”. Netflix alleges that Blockbuster knew of the pending patent application, but “willfully and deliberately” launched an infringing service anyway.

The ’381 patent is a continuation of, and claims benefits of, the Netflix’s earlier patent ’450. The abstracts for each of the (i) new ‘Approach for Renting Items to Customers” patent ’381′ and (ii) ‘Method and Apparatus for Renting Items’ patent ’450, granted earlier on June 24, 2003; are the same, and both read as follows:

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.

And, FYI, here is the abstract of Netflix’s earlier “Mailing and Response Envelope” patent no. 6,966,484 granted on November 22, 2005:

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.

Sources: CNet | ars technica | MSNBC | Reuters | CNN | Red Herring | Hollywood Reporter | CNN Money | Chron | USA Today | San Jose Mercury News | SF Engadget | SF Examiner | SF Gate | Business Week | Blockbuster Press Release

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