Netflix Sues Blockbuster Over Online Srvc

Online DVD rental company Netflix has filed suit against rival video rental firm Blockbuster claiming Blockbuster’s online rental business infringes upon Netflix’s patented business methodologies.

If you’re wondering why Netflix waited until 18 months after Blockbuster started up its own online DVD rental business to file suit, it’s because Netflix was only just awarded a key patent for its business model. Netflix’s claims are based on Blockbuster infringing on Netflix’s patent; it’s asking a California federal judge to shutter Blockbuster’s online rental service and award Netflix damages for infringement.

In 2003, Netflix was awarded a patent on the method by which Netflix customers select and receive a a particular number of rental titles, and return them for different selections.

Since launching its online rental service in August 2004, Blockbuster has shoveled more than $300 million into developing its business, with a almost maniacal determination to do in upstart Netflix. But far from going under, Netflix has thrived under the heavyweight’s competition (growing its subscriber base to 4.2 million, compared to the 1 million users Blockbuster has managed to sign up) and Blockbuster has been forced to roll back its marketing due to significant company debts of more than $1 billion.