August 23, 2006, 12:00 AM

Blockbuster anti-trust suit against rival Netflix can proceed, judge rules

A federal judge in San Francisco ruled Tuesday that Blockbuster can proceed with antitrust claims against online rival and DVD rental company Netflix, which is suing Blockbuster for alleged patent violations in the operation of Blockbuster Online.

A U.S. District Court judge in San Francisco ruled Tuesday that Blockbuster Inc. can proceed with antitrust claims against online rival Netflix Inc., which is suing Blockbuster for alleged patent violations in the operation of Blockbuster Online.

Netflix had asked the court to dismiss Blockbuster’s countersuit, to hear the two lawsuits separately, and to postpone discovery on the antitrust lawsuit until the patent suit was resolved.

Blockbuster filed the antitrust counterclaim in June in response to a suit Netflix filed in April alleging that Blockbuster’s online rental service violated two patents held by Netflix. Netflix is seeking to shut down Blockbuster Online.

In its counterclaim, Blockbuster argues that the Netflix suit is based on unenforceable patents Netflix obtained deceptively in an attempt to monopolize online rentals. Blockbuster is No. 70 in the Internet Retailer Top 500 Guide to Retail Web Sites; Netflix is No. 21.

A Blockbuster spokesperson says the company is “pleased with (Tuesday’s) ruling and we remain intent on aggressively pursuing our antitrust counterclaims.”

“There’s nothing really new here,” says a Netflix spokesman. “It was a procedural motion and it does not go to the merit of Blockbuster’s claim. Netflix will continue to defend our patented business methods.”

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