April 5, 2006, 12:00 AM

Netflix files patent infringement suit against Blockbuster

Online DVD rental company Netflix Inc. has filed a patent infringement suit against rival Blockbuster Inc. and is asking a federal court to shut down Blockbuster’s online rental service. The lawsuit also seeks unspecified damages.

Paul Demery

Managing Editor, B2B E-commerce

Online DVD rental company Netflix Inc. has filed a patent infringement suit against rival Blockbuster Inc. and is asking a federal court to shut down Blockbuster’s 18-month-old online rental service. The lawsuit also seeks unspecified damages.

In the suit, filed Tuesday in U.S. District Court in the Northern District of California, Netflix alleged that Blockbuster Online violated two patents held by Netflix. The first patent, granted in 2003, covers the Netflix business method of allowing consumers paying a monthly fee to select and rent DVDs from the company’s web site and maintain a list of titles telling Netflix in which order to ship the DVDs.

The second patent covers the Netflix policy allowing subscribers to keep the DVDs for as long as they want without incurring late fees. That policy also allows subscribers to obtain new DVDs without incurring additional charges and to set or re-set the order in which they receive the DVDs.

A Blockbuster spokesman declines comment on the charges, saying the company has not received a copy of the lawsuit.

Netflix has more than 4 million subscribers while Blockbuster Online has 1.2 million subscribers.

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