Netflix Sues Blockbuster
A few months ago Netflix decided to file a lawsuit against Blockbuster claiming, amoung other things, patent infringement. Personally, I believe that this lawsuit illustrates exactly what is wrong with the American patent system.
Basically, the lawsuit attacks Blockbuster's new online ordering system. Specifically, Netflix asserts that it owns the IP rights in it's online 'wishlist' system, as well as the concept of renting movies for an unlimited time without penalty.
These allegations are clearly rediculous. First, the 'wishlist' system - a concept that allows the customer to make a list movies that they would like to rent for future rentals - should never be patentable. What exactly is Netflix claiming to be original? The concept of making a wishlist is shared amoung billions of children around the holiday season. Clearly, they did not invent this concept. What they did invent is the adaptation of a common concept in the realm of movie rentals. However, Netflix didn't even invent the whole idea of making a queue when ordering items online; anyone who has ever shopped online has seen such an idea in practice by way of the 'shopping cart' method. The only difference between the traditional shopping cart method and Netflix's method is the fact that Netflix does not deliver the items right away. Is this an invention? Is this patentable?
The more outlandish claim that Netflix makes is that Blockbuster infringes their IP rights when they decide not to charge a late fee. Here, Netflix asserts that waiving a late fee is a 'business method', and that such a method is patentable. A late fee is essentially a payment of liquidated damages on a rental contract. In order to patent a business method - and I am a strong believer that business methods should not be patentable although some courts seem to disagree with me - the method must be truely original, not just a common business method used in a different industry. How could Netflix possibly argue that they were the first company to ever decline to pursue damages on a rental contract? Also, how could they argue that they are the first company to ever charge a flat rental rate on an item, and allow the customer to continue using the item for as long he/she would like?
The bottom line is that Netflix is far from original in this concept. For example, take a ride down to your local beer and beverage store and inquire about buying a keg. I guarantee you that the clerk will charge you a 'rental fee' for the keg and tap. However, the store will let you keep the keg and tap for as long as you want, returning most of your rental fee (i.e. the deposit) to you when you return the items.
Basically, the lawsuit attacks Blockbuster's new online ordering system. Specifically, Netflix asserts that it owns the IP rights in it's online 'wishlist' system, as well as the concept of renting movies for an unlimited time without penalty.
These allegations are clearly rediculous. First, the 'wishlist' system - a concept that allows the customer to make a list movies that they would like to rent for future rentals - should never be patentable. What exactly is Netflix claiming to be original? The concept of making a wishlist is shared amoung billions of children around the holiday season. Clearly, they did not invent this concept. What they did invent is the adaptation of a common concept in the realm of movie rentals. However, Netflix didn't even invent the whole idea of making a queue when ordering items online; anyone who has ever shopped online has seen such an idea in practice by way of the 'shopping cart' method. The only difference between the traditional shopping cart method and Netflix's method is the fact that Netflix does not deliver the items right away. Is this an invention? Is this patentable?
The more outlandish claim that Netflix makes is that Blockbuster infringes their IP rights when they decide not to charge a late fee. Here, Netflix asserts that waiving a late fee is a 'business method', and that such a method is patentable. A late fee is essentially a payment of liquidated damages on a rental contract. In order to patent a business method - and I am a strong believer that business methods should not be patentable although some courts seem to disagree with me - the method must be truely original, not just a common business method used in a different industry. How could Netflix possibly argue that they were the first company to ever decline to pursue damages on a rental contract? Also, how could they argue that they are the first company to ever charge a flat rental rate on an item, and allow the customer to continue using the item for as long he/she would like?
The bottom line is that Netflix is far from original in this concept. For example, take a ride down to your local beer and beverage store and inquire about buying a keg. I guarantee you that the clerk will charge you a 'rental fee' for the keg and tap. However, the store will let you keep the keg and tap for as long as you want, returning most of your rental fee (i.e. the deposit) to you when you return the items.
posted by Dan Levy | 4:34 PM
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