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| UPDATED: 2006-06-14 |
 Blockbuster Escalates Rivalry With Netflix 
By: Doug Caverly 2006-06-14 Another punch was thrown on Tuesday in the fight between Blockbuster and Netflix as the former made new accusations against the latter. Blockbuster alleged that Netflix has manipulated the U.S. patent system in order to monopolize the online DVD rental market. Better known for its brick-and-mortar stores, Blockbuster was sued by Netflix two months ago for patent infringement claims. “We believe Blockbuster infringed on our patented business model and we are going to vigorously defend our patent,” said Netflix spokesman Steve Swasey. Marshall Grossman, a Los Angeles attorney representing Blockbuster, had made a statement earlier. “Netflix is trying to monopolize this space on the Internet and restrain competition to the detriment of Blockbuster and the public,” he said. The two companies have been locked in battle for some time now over the online market. There are about 6.2 million people who use one service or the other, but Netflix is the dominant source, with 4.9 million subscribers. Netflix has been in business since 1999, though, while Blockbuster only began offering online rentals in 2004. Its entry into the market (apparently) made an impact, as Netflix then cut the price of its most popular service by $4 per month. The legal problems have their origins in Netflix’s 2003 patent on its service. It wasn’t until the company was granted a wider patent in April that it sought to enforce those claims, however. Blockbuster filed a countersuit in U.S. District Court in San Francisco, labeling Netflix’s patent claims a “sham.” Even Netflix CEO Reed Hastings called the company’s first patent a joke when he met with Blockbuster’s chief lawyer, according to the suit. It goes on to allege that Blockbuster withheld certain information from the government about earlier innovations. Supposedly, these facts might have kept the corporation from being granted the patents in the first place. It’s too bad these two are locked in such a fierce court battle; a pricing war would be much more useful for consumers. Add to | DiggThis | Yahoo! My Web Technorati: Blockbuster, Netflix View All Articles by Doug Caverly About the Author: Doug is a staff writer for InternetFinancialNews, SearchNewz, WebProNews, and SecurityProNews. |
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