Blockbuster and Netflix have settled their patent disagreements, according to an SEC filing by Blockbuster today. The lawsuit battle, which originally began with Netflix's accusation that Blockbuster copied its methods for DVD rental over the Internet, is finally over after nearly a year of back-and-forth attacks from both companies. According to Blockbuster's filing, the terms of the settlement between the two are confidential, but "the parties have agreed to secure dismissal of all claims in the litigation."
It all started in August of 2003, when Netflix applied for a business patent to cover its online DVD rental model, a year and a half before Blockbuster launched its own online rental service. But the minute the patent was awarded to Netflix in April of 2006, the company was quick to sue Blockbuster for patent infringement. Netflix argued that Blockbuster was aware of the pending patent application when it "willfully and deliberately" launched its own copycat service.
Blockbuster wasn't quick to back down over the lawsuit, however. The company said that Netflix's claims were preposterous and that there was "nothing original about renting movies or subscription rental programs," comparing it to a fast-food restaurant trying to patent selling burgers through a drive-through. Blockbuster promptly filed a countersuit against Netflix, accusing the company of attempting to monopolize online rentals.
In Blockbuster's SEC filing, the company makes sure to note that the settlement "will have no material effect on Blockbuster’s future financial performance." This is a legitimate concern, as Blockbuster has been bleeding money lately. The settlement at least removes one level of uncertainty for the company, but whether or not it will be able to staunch the flow remains to be seen.
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