A Forrester report points out challenges faced by some business-to-business firms working online.
Blockbuster Inc. today filed a counterclaim against Netflix Inc., alleging that Netflix’s patent infringement suit against Blockbuster is based on unenforceable patents that Netflix obtained through deceptive practices.
Blockbuster Inc. today filed a counterclaim against online DVD rental company Netflix Inc., alleging that Netflix’s patent infringement suit against Blockbuster is based on unenforceable patents that Netflix obtained through deceptive practices. The counterclaim also charges that the suit is an attempt to monopolize the online rental business.
Netflix could not be reached for comment.
In its suit, filed in April in U.S. District Court in the Northern District of California, Netflix alleged that Blockbuster’s 20-month-old online rental service violated two patents held by Netflix. The first patent covers the Netflix business method of allowing consumers to pay 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 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.
“There is nothing original about renting movies or subscription rental programs,” said Marshall B. Grossman, Blockbuster’s attorney. “Both were widely practiced long before any purported invention by Netflix. For Netflix to claim exclusive rights over subscription movie rentals is like a fast-food restaurant trying to patent selling hamburgers through a drive-through window.”
Blockbuster also believes that Netflix’s so-called dynamic queue technology is not legally patentable, Grossman said. “It is obvious that if you are going to provide subscription rentals over the Internet, you have to let your customers list the items they want to receive and enable them to periodically update their lists,” he said.
Blockbuster’s claim also alleges that Netflix failed to inform the U.S. Patent Office of similar patents and business methods previously held by other companies as required by law. Blockbuster charged that Netflix admitted it was aware of the prior patents of another company, which already had put Netflix on notice about possible patent infringement, but did not disclose them to the patent office.
Netflix’s conduct at the patent company was deliberatively deceptive, with the goal of monopolizing the online rental business, Grossman said.