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Netflix Claims Its Business Model Is Patented, Sues Blockbuster
from the oh-come-on dept
All of the evidence so far has shown that Netflix has consistently beaten Blockbuster in the marketplace by offering a more compelling product to many people. Blockbuster keeps trying to get back into it, but hasn't been able to build up nearly the same user base -- despite its name recognition and ubiquitous stores. With that in mind, it's disappointing to see Netflix now resort to yanking out their business model patents and trying to force Blockbuster out of the online rental business. Here's a perfect example where that patent isn't at all needed to incent innovation. The market is doing a perfectly good job. The only thing this patent serves to do is reduce competition, thereby reducing continued innovation in that market. In the meantime, both companies will now waste money on fighting this out in court or coming to some sort of monetary settlement -- when both firms would be better served putting that money into improving what they offer customers.
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Reader Comments (rss)
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Re:
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Sue Happy America
If this court battle sticks then the person/company that had the first monetary transaction over the internet should in turn be able to sue any company who has, is or ever had an e-business for copying their idea. Damn the luck, it would probably be microsoft!
Aaaarrrrggghhhh, gotta love America!!
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You Have Got to be Kidding Me
Sounds like Netflix doesn't like the competition or a company that is providing a better product despite a smaller customer base.
Like the orginal post stated it would more beneficial for both companies to work on improving their offerings than battling in court.
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Patent Law
1. Inventor had sufficient incentive to invent the product/service without patent law.
2. Competition is restricted after product/service is invented due to patent law.
Don't take this as a defense of patent law; its economic justification is not entirely sound. I just mean to point out that the argument against it you presented is not complete.
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Re: Re:Backups are good
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Say what?
Wow.. your patent system is *messed* up.. I hope ours is better
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Re: You Have Got to be Kidding Me
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Why rent?
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Blah
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Voice of Experience
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Abuse of a bad patent system
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Maybe Gamfly Next
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Patent Infringement?
And FYI to the AC, not everyone with fast returns pirates movies
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Re: Patent Law
You don't think Netflix would have come along if they couldn't have received patent protection? I find that incredibly difficult to believe.
The point of patent law is to encourage creation of new productions by giving inventors exclusive rights to their inventions.
No, this is false. The point of patent law, as stated in the Constitution, is to promote the progress of useful arts and science.
It seems ridiculous that Netflix only chose this business model because it was patentable. What's much more likely is they saw an opportunity for a market and took it. The patent came after the fact, and was not needed in any way to incent the development of the model. Keeping the competition out again slows innovation in this market by giving Netflix a monopoly on it for the term of the patent.
The patent also does little public service in "revealing" its contents (the other side of the patent coin), since the business model is pretty clear for anyone who looks at their business.
So, yeah, I think it's pretty clear that this is a case of the patent system slowing innovation.
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Re: Re:
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Re: Re: Patent Law
Barring a minor typo due to rewriting the phrase (products instead of productions...) that is what I said. Patents are supposed to encourage progress. Distribution models can fall under the protection of patents under some valid (but not necessarily correct) interpretations.
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Netflix Vs. Blockbuster
I have used both services here recently and I think the difference is very simple....
Both of them cost the same, 17.99 a month for 3 DVD's at a time... but BlockBuster gives coupons for up to 4 free In-Store rentals a month. thus making blockbuster the better deal.
On the other hand though Netflix's system is far superior; Easier to search movies, better movie information, better movie suggestions, and much more. I also never had a problem with Netflix sending the wrong movie, where I did with Blockbuster. I also feel Netflix DVD's are in better condition, although I haven't had a problem with a DVD from either company.
So it comes down to.... Do you want quality (Netflix) or Quantity (Blockbuster). I prefer blockbuster as I like the better deal... and plus blockbuster is supposed to be redoing their interface... so maybe it will be comparable or better then Netflix's.
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Waste of the justice system's time
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couple thoughts
2. All the problems BB has with wrong movies and stuff makes me wonder if Netflix doesn't reimburse it's employees for BB and have them all swap DVD's and scratch them up.... wouldn't surprise me.
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NetFlix needs a second opinion
NetFlix is making the poor business descision to not get a second opinion. An unbiased second opinion, with no financial incentive (future billable hours for lawyers) would advise Netflix that they invented nothing. There is nothing to patent in the first place.
They did not invent the Distribution model(Post office + Pre-paid return envelopes), the product (DVD's), the business type (service, rental), or the location (Internet capable computer).
They were simply the first to:
1. realize that renting DVD's using the Internet and delivered through the mail is a good idea.
2. have enough $$ to hire enough people (software developers, advertising agencies, accountants, BAD LAWYERS)
3. have enough $$ to launch a big enough ad campaign
Could a pizza place patent the idea of ordering a pizza online? Would that preclude all other pizza places from using the Internet to get orders? What about delivering pizza's on mopeds? Would that prevent my pizza place from delivering pizza's on mopeds?
It's just my opinion, but it sounds like things are working the way they should.
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tough
It really sucks to take a risk and create a business and suddenly have other people do the exact same thing right away.
Although the idea of renting movies through the mail seems simple. Netflix did it first (i think) and they did it well. and if the USPTO granted a patent, then I think they should enforce it.
I would rather see a company enforce their patents early, rather than sit on a patent until someone else is successful and then sue.
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Re: NetFlix needs a second opinion
Now Pizza Hut or some other wingnut company is going to try to sue and probably win, and I won't be able to order online anymore.
Oh well, guess it is back to repeating my order twelve times and still getting the wrong order.
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Re: Patent Law
It is a given that after the product is invented, patent law restricts competition.
Then you say:
In order to actually form an argument against patent law in this case, you need to show two things:
1. Inventor had sufficient incentive to invent the product/service without patent law.
2. Competition is restricted after product/service is invented due to patent law.
If that's true, then condition 2 is always met, making the premise absurd.
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Paging Blockbuster
Hopefully this would avoid Netflix' stupid patents.
Also, allow Netflix customers to automatically transfer to Blockbuster by returning their Netflix DVDs to you. You handle the admin and pay each customer a "Welcome" bonus.
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Can you patent a business model?
I also have a problem with companies that sit on patents and wait for someone to infringe them.
Also... if Netflix has had this patent since 2003, why have they taken until now to enforce it?
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Re: Why rent?
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Re: Abuse of a bad patent system
I totally agree. I think they not only don't need to do this, but are also proving to be a disappointment by being part of the problem. I wrote an email today to Netflix. I also posted it to my weblog:
Unfortunate activity from Netflix
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ah, the real reason!
Netflix may actually accept that this is completely unworthy of being patented, but they simply made a calculated, cynical move to raise the stock price.
More support for all that Techdirt has been saying about misuse of patents. I salute Techdirt for cutting through all the daily BS that's out there!!!!
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Re: Can you patent a business model?
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netflix et al are for sheep.
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stupid lawsuit
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bb sucks
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