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Netflix files to sue Blockbuster to shut down on-line service

msnbc.msn.com — Online DVD rental company Netflix Inc. on Tuesday sued rival Blockbuster Inc. for patent infringement, asking a federal judge in Northern California to shut down Blockbuster's 18-month-old online rental service and award Netflix damages, according to a copy of the filing.

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  • thenativeraver, on 10/12/2007, -14/+14Can't handle the heat then get out the kitchen.
    • drawkbox, on 10/12/2007, -4/+15I guess this means trouble in their model... Blockbuster must be gaining immensly for them to pull this. Would only be in my bag of "in case ***** happens" tricks if I was Netflix. Trouble ahead? I do not like this at all, how about take off a few dollars and advertise to win customers... This is bad, or the dumbest move Netflix could make.
    • OperatorNo9, on 10/12/2007, -4/+2drawkbox,

      In case you missed it, this was their strategy last year. Apparently, it wasn't enough to stop the rental giant.
    • osbjmg, on 10/12/2007, -4/+14Blockbuster's only chance is to continue online. If they are kicked out of the online rental arena, they will surely fold. Netflix obviously wants this to happen. I like netflix, but I don't like anti-competitive behavior :(
    • Doggpound, on 10/12/2007, -2/+34This just proves how stupid out patent system is when you can patent the idea of sending DVD's in the mail
    • abbtech, on 10/12/2007, -10/+9Exactly, competition is a good thing. I didn't think that Netflix would have been able to patent the whole movies by mail thing anyway. What is the unique concept? Quick... someone patent books by mail :)

      --------------------------------------
      http://hackedgadgets.com
    • scruffles, on 10/12/2007, -1/+5Blockbuster isn't going to fold if they loose their online business. It's competing against netflix that's dragging the company down (both their mail service and their 'no late fees' program). Rather than going broke trying to keep 10% of their customers that prefer online rentals, they should try to find more ways to dominate the 'in person' sale. Netflix shouldn't have bothered them nearly as much as McDonald's red box. This lawsuit might just save Blockbuster from its own bad management.
    • cius, on 10/12/2007, -2/+8I'm with doggpound on this one. It's ***** stupid that they can patent the idea of renting movies through the mail. This doesn't foster a competitive atmosphere, it destroys it. When an entire industry picks up on a "best practice" that's a good thing. It then means that the players in that indrustry will have to start innovating even further in order to differentiate themselves. If people really expect to make it big by a single invention, then they need to get real. People try to say that not protecting ideas would stifle innovation, as people would not invent if they knew that competitors could steal their ideas. Well, what do you think giving an inventor a permanent monopoly on a product is gonna do? If they get rich, good for them, by why invent when you've got a cash cow just sitting there reaping in the profits? Where does the innovation go then? Temporary monopolies, okay, you gotta redeem you R&D costs somehow, thats cool. But our copyright and patent systems are rapidly heading toward granting absolute monopolies and that worries me. If I were the judge on this, I'd spank NetFlix on the hand for wasting my time and tell them to suck it up and find a way to compete properly. Do some innovating.
    • outz, on 10/12/2007, -2/+3agreed. i absolutely hate blockbuster, but i hate anti-competitive behavior even more.
    • dpk87, on 10/12/2007, -0/+1@scruffles

      You sure about that? Blockbuster has been failing miserably and losing considerably large amounts of money. If they had to shutdown their online business, and on top of that pay damages... then I don't see how they could possibly recover.
    • valan, on 10/12/2007, -1/+2Blockbuster does suck, BUT you should NOT be able to patent the renting of dvds through the mail. What if you could "patent" a brick and mortar video rental place? You could just sue your rivals away, and there would be no competition. If netflix gets rid of competition they would be able to charge higher prices.
    • PhaseDMA, on 10/12/2007, -0/+2doggpound - The lawsuit has nothing to do with sending DVDs through the mail. It has to do how the queue is used, and renting the DVD for a unlimited amount of time.

      But you would know that if you read the article.
  • MediaShipper, on 10/12/2007, -6/+10Yeah why now? Why not a couple years ago?
    • SoccerBoy, on 10/12/2007, -0/+3RTFA:

      "A second patent issued Tuesday to Netflix apparently triggered the lawsuit. Netflix believes the additional patent covers an even wider range of automated interaction with its customers."
  • kevinrose, on 10/12/2007, -22/+50Oh yes, def going to talk about this on diggnation - this so rocks. I've lost hundreds to blockbuster in late fees.
    • rm999, on 10/12/2007, -3/+20I don't like how netflix thinks they own the concept of no late fees. I hate blockbuster as much as the next man (4 dollar rentals - go to hell!), but I think competition is a great thing.
    • mrASSMAN, on 10/12/2007, -9/+7didn't blockbuster get rid of late fees last year? it was a huge announcement..
    • JustinGN, on 10/12/2007, -2/+14@mrassman

      They got rid of late fees, but then replaced it with some system where if it wasn't returned within a certain period of time they automatically sold it to you. If it wasn't returned within 30 days after that, they charged your credit/debit card on file the full amount, less rental fee.
    • Seumas, on 10/12/2007, -4/+42I opened an account in about 1998. I used it to rent three movies and then never used it again. Years later (in 2003), BlockBuster started sending me notices about enormous fines I owed for past due movies to the tune of a couple thousand dollars.

      I called them up and took issue with it, saying that I had not stepped foot in their stores in almost five years. Further, it was my understanding that you had to PAY each year to remain a member of BlockBuster and I had done no such thing.

      After much debate, it turned out that another of my family members who has a first name starting with the same letter as mine (an 'S') rented movies frequently. The people working at BlockBuster were so careless that when they would just pick the first entry that showed up as "S. Lastname" rather than making sure it was the CORRECT person. And then when they returned the movies, they were not always returned under the same account they were checked out on.

      Sloppy. Very ***** sloppy. I wish I had never even rented those three movies to begin with, because even one dollar given to BlockBuster for anything is sickening. Plus, I like getting my movies unedited by a bunch of crazy family values censoring nuts.
    • Stillbored, on 10/12/2007, -4/+14Dude, Justingn, if you're not able to return a ***** video in 37 days (and that's not counting the time that you actually *pay* for), you deserve to pay for the damn thing.

      Trust me, it's better to pay $20 for a DVD after 37 days than to pay a whole crapload of late fees.
    • chriskzoo, on 10/12/2007, -2/+14So BlockBuster is at fault fo you being lazy?
    • perogi21, on 10/12/2007, -0/+5@stillbored
      I agree that paying 20$ for a late DVD is acceptable but what they really charge you for the movie is around 80+$ depending on the movie. My old roommate had that happen to him.
    • sagenumen, on 10/12/2007, -2/+5It's not a matter of them giving you 37 days to return a movie. The fact is that they tell you one thing and do another. With Netflix, there is truly no late fee. I've had movies arrive while I was out of the country and by the time I returned and actually watched the darn things, it was over a month. Late fee? Zero.

      I live in NJ and Blockbuster isn't allowed to advertise their "No late fees" because it's just not true. It is false advertising. Basically, they are just giving you extended late fees with even larger penalties for returning the movies late.
    • daRoach, on 10/12/2007, -4/+3Dumbass. Shouldn't keep movies out so long and you won't have hundreds of dollars of late fees.
    • elamr, on 10/12/2007, -0/+2Is this Netflix attempt at a "Mortal Kombat style" finishing move? Blockbuster is financially stunned so Netflix is going to attempt the legal equivalent to a spine dismemberment.
    • Lycanthor, on 10/12/2007, -0/+1To Seumas:

      -Quote-
      I opened an account in about 1998. I used it to rent three movies and then never used it again. Years later (in 2003), BlockBuster started sending me notices about enormous fines I owed for past due movies to the tune of a couple thousand dollars.

      I called them up and took issue with it, saying that I had not stepped foot in their stores in almost five years. Further, it was my understanding that you had to PAY each year to remain a member of BlockBuster and I had done no such thing.

      After much debate, it turned out that another of my family members who has a first name starting with the same letter as mine (an 'S') rented movies frequently. The people working at BlockBuster were so careless that when they would just pick the first entry that showed up as "S. Lastname" rather than making sure it was the CORRECT person. And then when they returned the movies, they were not always returned under the same account they were checked out on.

      Sloppy. Very ***** sloppy. I wish I had never even rented those three movies to begin with, because even one dollar given to BlockBuster for anything is sickening. Plus, I like getting my movies unedited by a bunch of crazy family values censoring nuts
      --End Quote-

      I'm not exactly sure that it's Blockbuster you're talking about. Perhaps you were in a different video store.

      #1 - Blockbuster's computer system requires a working address and telephone number for membership. This information is used to contact you before your video is 2 days late to remind you to bring the item back before a "late fee" is incurred. The calls are made by
      an automated system and are made without exception 365 days a year. After a week, postcards are mailed to you address to further remind you that you have items that need to be returned. In the terms and conditions of the membership you AGREED to, it stated that your telephone # and address must be valid. (So for you to say that you rented in 1998, but didn't get any notification that you had a balance or items that needed to be returned does sound like it was Blockbuster.)

      #2 - Blockbuster memberships are free. They don't cost anything. They don't need to be renewed every year. Once you get a Blockbuster membership card in North America, it is good at any Blockbuster in the US & Canada, anytime, for the rest of your life, or as long as you can actually keep the card.

      #3 - Blockbuster requires a membership card, or a valid state issued I.D. in order to use a membership account. Whoever rented items to your family members was not following company policy.

      #4 - (This is the part of your statement that is utterly flawed.) Blockbuster's computer system is incapable of returning an item under a different account than it was rented from. When you rent an item, the first thing that happens is that it gets tagged with your account number. Whether it gets correctly checked in by a CSR, or whether someone happens to manage to get your un-checked in item and bring it to the counter to rent, it WILL be check in on your account. When it gets missed by a CSR it's called "FOS," or "Found on Shelf." At Blockbuster they generate a report that indicated possible FOS movies every single day. Someone has to go on to the floor and look for items that are close to being late whether they've actually been returned or not, just to make SURE that it wasn't missed. If one is found, it is checked in, again, to the same account that rented it. There is no process for checking in a movie to a different account than the one that rented it.

      #5 - Blockbuster does not edit movies. In fact, the majority of their titles actually come in the UNRATED flavor.


    • Seumas, on 10/12/2007, -0/+1@lycanthor

      Nope, it was a Blockbuster. And yes, they're supposed to check your ID. But they don't. People can come in and give them their last name and first name and rent. At most, they'll ask for the last four digits of their phone number. Unfortunately, my phone number when I signed up was the same as the rest of my family. They seemed like a really sloppy operation.
  • carebearwarrior, on 10/12/2007, -1/+13It's funny because a few years ago, Blockbuster had the opportunity to purchase NetFlix. Oh how the mighty have fallen.
    • Seumas, on 10/12/2007, -6/+8You know, it wasn't that long ago when there were mom and pop movie rental shops all over the place. You could rent movies at Safeway and Albertsons. Hell, even the little korean convenience store next door with the out of date products that expired their sell-by date 15 years earlier rented movies.

      Now there's really just Hollywood, Blockbuster and Netflix.

      I found even Netflix to be a hassle. Always having to make sure you keep all the little sleeves and discs together and rotating them quickly so you don't waste your money because you were lazy for a couple days. Not to mention the whole "timeshifting" thing where they stagger your movies to keep you from getting newer movies as fast as you should be allowed to.

      But I tell you, as soon as someone figures out a way to give you all the movies you want per month via download or streaming, I am all over that. I won't pay per-movie, but I'd pay $20 or so to watch all the movies I could ever want per month. Especially if they were streamed in high enough quality that i could enjoy them on my 30" display.
    • OperatorNo9, on 10/12/2007, -1/+5I agree with you that a subscription streaming service is the best of all possible worlds for many customers--sort of like Yahoo! music but with HD movies. But this model has many pitfalls the least of which is DRM. The worst of which is profitability. Think about what it is you're asking. For your $20 per month, they would have to pay the MPAA, sorry, MAFIAA, licensing fees for each movie, upkeep on a farm of some unGodly servers, and a handful of pipes fat enough to download an elephant. In order for them to only charge you $20 per month, they would have to sign up an army of bleeding edge consumers the size of which in in questionable existence.

      I also think your playing up the "hassle" of using a service like NetFlix. Keep disc in sleeve until viewing. Replace after. Keep a spare NetFlix envelope somewhere. Lots of plans. Affordable. Most discs play well. Its a surprisingly good service...save the throttling issue.
    • noGoodNamesLeft, on 10/12/2007, -0/+1operator; Yeah, I have a "LoveFilm" rental in the UK (under the WH Smith name, but it's really LoveFilm); I was pleasantly surprised how rarely the issue of damaged DVDs was an issue. I've only had two discs out of God knows how many that were unwatchable, and most of the others only have very minor glitches if any.

      They seem to polish the discs; the older ones have a series of faint circular marks that look like they've put them in a polishing machine.

      One other point; more and more now, instead of mailing the discs in a protective plastic "clamshell" case inside the envelope, now Lovefilm simply put them in a paper sleeve (inside the envelope). Seems to make sense; scratching aside (not an issue if it's inside two layers of protection), it's quite hard to damage a DVD without putting serious force on it. The minor increase in damages in the post must be offset by the savings in postage to them; or maybe they're just experimenting.

      At any rate, the service is certainly convenient... I'd much rather have that than some DRM-hobbled downloading garbage.
    • diecastbeatdown, on 10/12/2007, -0/+3the way things are going it will take about 5-10 years before there is a reasonable streaming service online.

      ma and pa rental stores were great back 15-20 years ago, but there are just too many movies out now and an online service such as netflix with huge warehouses is able to supply all those movies and provide an easy to use interface for check-out. blockbuster, hollywood and any other rental store can't compare, again there are just too many movies out there for a single walk-in type shop to hold.

      blockbuster has the worst queue system and their online shop is almost unbearable to navigate. i had their service for about 2 months and the only way i can see someone preferring blockbuster online over netflix is that they just don't want to try new things and/or are loyal longtime blockbuster users.

      i've had netflix for 3 years now, love it. it continually gets better.
    • BigPapi, on 10/12/2007, -1/+2Guess they should've bought NetFlix when they had the chance! There's no way NetFlix can win this lawsuit. It's like McDonald's suing every fast food chain in the world over the "value meal" idea.

      Why do people complain about NetFlix or Blockbuster? I've been using Blockbuster Online for a year and it's been pretty damn good. For $15 a month they send me up to 18-20 movies/month and I get two free in-store rentals. What are you expecting? 50 movies a month? Who the hell has time to even watch 20?
  • JustinGN, on 10/12/2007, -1/+4Problem is, if Netflix wins this, then they could stretch the verdict to encompass other services like Gamefly and Red Octance, especially if NetFlix breaks into games as well. Don't get me wrong, I'd love to see Blockbuster (Now known as Walletbuster?) go the way of the dodo bird, but this suit /could/ be seen as a monopoly attempt or monopolistic competition by Netflix.

    I'm on the fence for this one.
  • robusteza, on 10/12/2007, -0/+2is there an online/mail order porn rental service yet? i always thought that would make someone an instant millionaire.
    • Quiescence, on 10/12/2007, -1/+15People wouldn't wait for porn for 2 days with lots of online porn sites available..
    • TheRepublic, on 10/12/2007, -0/+5Yes there is, It's called Wanted List and it was featured on Wired Magazine a couple of months ago, started by 2 young Asian entrepreneurs in California.
    • Ddevil, on 10/12/2007, -1/+3There are TONS of online porno rental services. A friend and I tried them out a couple of years ago. Their inventory and service sucks. Nothing is instock and you have to wait forever and a day for anything to arrive or process to return. Seems places like SugarDVD (sic) have the right idea to emulate the rental model, but just don't have the supply chain to implement the model correctly. On top of that, these companies cannot ship to many states (see: Teh South) due to strange and ancient blue laws that allow you to purchase porno mags, but not ship porn across state lines.
    • MasterDwarf, on 10/12/2007, -0/+3That's what the Interenet is for!!
    • wunch, on 10/12/2007, -0/+1http://video.google.com/videoplay?docid=5430343841227974645
    • robusteza, on 10/12/2007, -0/+1you'd be surprised how many people don't have access to a computer in a private enough place for that to work out.
  • monsieurgrand02, on 10/12/2007, -4/+3I was under the impression that Blockbuster Online and Netflix were sister companies of some sort. I could have sworn seeing advertisements that offered Blockbuster coupons when signing up for Netflix. I might just be wrong.

    Anyhow, it'll be thrown out. It's called competition. If you're losing customers to Blockbuster, offer better incentives. Blockbuster Online offers free in store rentals every month with your Online rentals. Great deal! What does Netflix have? And how does Netflix own a patent to an "online wish list that prioritizes DVD desires??" I know plenty of companies that offer wish list features.. Why should they get special treatment for a feature that tons of companies use?

    Netflix will likely lose a lot of business with this bad publicity. Should have just left it alone.
    • ultimate_ed, on 10/12/2007, -0/+2For me, that's what makes Blockbuster the better deal. I started with Netflix, but switched to Blockbuster when they started up becuase they were cheaper and I got two in store rentals a month on top of the three out at a time. That flexibility is something Netflix just can't offer.

      I've never had any trouble with Blockbuster, either online or in the stores. I would have to say that, if Netflix does have a patent, it ought to be thrown out as they've taken too long to try and make a claim against Blockbuster. Patents have to be defended to be enforcable. If Netflix really thought they had a claim, they should have filed from the moment Blockbuster went online. I certainly don't remember them suing Wal-Mart when they tried their online rental business.
    • Dgen_X, on 10/12/2007, -0/+1that's the reason I went with blockbuster...but now I'm beginning not to like it

      they sent me an email saying I had to pay more to get 2 movies at a time instead of 3...so now I'm at the $10 plan with 1 disc at a time and 2 free rentals (usually used for games...which would cost $8!)

      but now I'm having trouble getting them to send the top choices in my queue...the number 1 and 2 "available" titles won't get sent, and they just send me the third...
    • brhad56, on 10/12/2007, -2/+1I just quit Netflix after being a customer with them for 3 years after reading that they're sueing blockbuster. Hopefully enough customers will quit and show them that it's not cool to play those games. I'll probably join blockbuster just to spite them.
  • stonedgeek, on 10/12/2007, -2/+7I hate Blockbuster and I would usually side with the smaller company in these kind of legal fights, but I have no respect for netflix in this case. Patent laws suck.
  • Stevor1984, on 10/12/2007, -3/+3Maybe this will get these two tied up in court and allow a third company to spring up who actually care about their customers.
    • JustinGN, on 10/12/2007, -2/+2Perhaps. I'd like to see a merger between a DVD rental and Game rental company, or at least give me overnight shipping on my games like Netflix does. I'm paying more per month for one game, and yes, games are more expensive, but I still think I should be getting the same shipping (overnight, one business day) as Netflix customers.
    • monsieurgrand02, on 10/12/2007, -2/+1I have to agree. I hate the fact that renting movies and renting games have seperate monthly fees and are dealt with seperately. I'd like to see Blockbuster merge the two and just have one fee. Or at least gives us the option of making one payment for both. (and at a not-so-expensive cost as well)
  • johndi, on 10/12/2007, -2/+3Netflix also believes its patents cover perhaps its most popular feature — the option of renting a DVD for an unlimited time without incurring late fees. Wonder when they are going to patent breathing.

    Seriously does anyone know how to read at the patent office?
    • monsieurgrand02, on 10/12/2007, -2/+2There was an article on digg a while back about how various patents have become rediculous and Netflix has it's fair share of rediculous patents, it seems.

      Might as well patent something like breathing already...
  • yensed, on 10/12/2007, -1/+3Netflix knows the future isnt snail mail renting..
  • renwoshin, on 10/12/2007, -3/+1netflix probably purposely waited this long just to get as much money from blockbuster as possible, and once they started turning mildly profitable, sue them. it's not like they just said, "oh, we actually have patents that can take out blockbuster, let's go right now".
    • manfrin, on 10/12/2007, -2/+2Mmm... no.

      Netflix lost money because of blockbuster online, they weren't sitting on their hands thinking "Oh man, lets let Blockbuster take our marketshare so we can sue for royalties!", they were thinking "lets gather all the evidence and make a really strong case ebfore we file, so they'll be pretty much helpless".
  • veloscaper, on 10/12/2007, -1/+3The reason why this showed up today and is happening now is Netflix just got issued a new patent (issued April 4th) and the claims pretty much cover the idea of someone using a computer to select movies to rent that are then sent to them. Additional claims cover the movie queue and the ability for a customer to move titles up and down the queue.

    The unlimited time with late fees might have been in some other claims but I just did a quick read of it.
    • streetstealth, on 10/12/2007, -0/+1So if the new patent was just issued a few days ago...

      Hello, does anyone at the patent office or on NF's legal team know the term PRIOR ART?
  • manfrin, on 10/12/2007, -2/+1Blockbuster is so far down the rabbit hole that if they do indeed lose this, I can see them filing for bankruptcy.

    They're literally hemorrhaging money.
  • aurifex, on 10/12/2007, -3/+2Patents are bad, mmmmmk?

    Well, they started out well, now all that's left is the insanity of what patents are being awarded.
  • buzzardrock, on 10/12/2007, -2/+3This is a ridiculous junk lawsuit that crys out the need for patent reform in this country.. This is about as retarded as amazon one click shopping button patent. I love netflix.. I use the service.. but I'm sorry.. claiming a nice little envelope with a dvd in it.. ,not having late fees, and a movie queue list is patent enfringement is the dumbest thing I ever heard. What blockbuster did is what companies do in markets..... this move on netflixes part is anticompetitive.. It doesn't take someone with a law degree to state how obviously retarded this is. This makes me want to cancel my netflix account and sign up for blockbuster in protest..
  • inspiredbylife, on 10/12/2007, -2/+0Ah, how about similar services in other countries?

    Will netflix sue these guys [ http://www.seventymm.com ] too?
    • bloobloo, on 10/12/2007, -1/+1They could try. However unless India allows software patents it wouldn't be heard.
  • AdamCo, on 10/12/2007, -1/+3I've had no problems with my Blockbuster online account. I get my movies quick. They have gotten better about having new movies in stock too. If I have a movie on my list that isn't out yet, they have been sending it to me the day before it comes out and it will be at my house the day the movie comes out, I like that. I hear people complaining about netflix when it comes to getting new releases. I haven't tried netflix, but I don't plan on switching from blockbuster. Especially since I get a couple free movie or game rental coupons a month for in store. Plus, I have got a couple free previously viewed DVDs from blockbuster with free coupons they sent me for using blockbuster online. I am happy with them.
  • INHUMANITY, on 10/12/2007, -0/+3Well this story reminded me to sign up for another 30 free day trial. This is my fourth membership and I haven't paid a penny for just over four months.

    Unethical? Absolutely! Do I feel guilty? Absolutely not!

    Thank you Blockbuster! :)
  • RKON, on 10/12/2007, -5/+4No Digg. Competition is a good thing.

    I have had Netflix for years and I got throttled. I quit and join BB and I have to say it was pretty decent. Not to mention the Free coupons every month. I can see why Netflix is suing.
    • undauntedspirit, on 10/12/2007, -1/+2Why no digg? If anything you should be digging it if you don't agree with it!! If fact the headline shows no bias either way! You should help spread the news if anything right??

    • diggdat, on 10/12/2007, -2/+1I agree with undaunted... You digg or not digg a story based on if you think it is newsworthy/interesting or not.

      For that matter when you post a story you may very well not agree with it, you may post it because of what information it brings or what the story may indicate about the author of the story.
    • RKON, on 10/12/2007, -0/+1Yeah, I guess you guys are right. I'll digg it. It is interesting in regards to the patent and the effect it may have on the future.
  • Cbeck527, on 10/12/2007, -5/+3netflix pwns blockbuster
  • noamsml, on 10/12/2007, -1/+3Suing competition out of buisness is one of the core definitions of evil.
  • buckykatt, on 10/12/2007, -0/+2I wonder if Netflix is suing now because of talk that Amazon might join the game. A precedent against Blockbuster might help them limit what Amazon can do.
  • pauliewoll, on 10/12/2007, -1/+1I thought the US was founded on the rule of law, not the rule of lawyers?
  • swaxhog, on 10/12/2007, -0/+2I stopped using a mail in rental service, Zip.ca in my case, and went back to brick and mortar. The big thing around here is these new 24 hour fully automated rental outlets. Very cool set up. Movies are $1.29 to rent compared to $5 at the monopoly stores. Browse online, reserve, and go pick up. No waiting or guessing what movie might show up or waiting weeks for a new release.

  • astrotrain, on 10/12/2007, -6/+2Seems like Netflix is insecure with itself. Next they will go after anyone who uses the same type of envelopes they use because they fell that will be infringing on its way it sends and receives mail.

    I used Netflix, and was kind of happy with it .. if you want the latest movie, you may end up in a queue to
    get it, so there "lot-o-copies" does not stand true for most new releases. And the way they flux the price
    of their monthly service (yup, you don't rent a movie you still pay them that service fee), has gone from
    $11.99 up to $19.99 and then I think it has drop a bit.

    Online movie rentals are only worth it if you plan on renting a number of movies per month (at least 6 plus),
    otherwise it is just cheaper to head down to the local movie store rent a movie. Yeah the late rentals you
    have to assure you return your movie on time.

    Oh and the Blockbuster 'No Latefees', that's a sheep in wools clothing. If you do not return it within x-amount
    of weeks, then you automatically buy it. And you can only return it to Blockbuster for a store credit.

    So if you have that copy of Leonard:Part 6 and its been over at least a week... then looks like your a proud
    owner of the movie now...

    • hypercube33, on 10/12/2007, -0/+3"a sheep in wools clothing." Thats all I'll say...
    • sleepwalkers, on 10/12/2007, -0/+0No, it isn't a "sheep in wools clothing", whatever the hell that's supposed to mean.
      If you can't get off of your lazy ass and return a movie in 37 days, then you deserve to pay for the movie.
      I think you'd be hard pressed to find anyone who thinks "Return a movie in 37 days, and we'll only charge you $1.25 extra" is unreasonable.
  • chriskzoo, on 10/12/2007, -2/+2If this goes through, this is the sort of rediculousness you will see:
    -McDonald's suing Burger King for infringement on the "Combo Meal"
    -Ford suing every other auto manufacturer for using the assembly line

    Seriously, how would those be any different than what Netflix is doing? Basically they patented what amounts to a Christmas list, but instead of everyone mailing them a hard copy, they just keep it electronically - Santa should sue!
    • swaxhog, on 10/12/2007, -0/+1It's different but it's using computers. Once computers, or Internet are added to any mundane, 500 year old business practice, it's now patentable.
  • filovirus, on 10/12/2007, -0/+5Netflix only lowered their prices to compete. They did not do it out of a sense of love and charity. Thank Blockbuster.

    When I return movies to Netflix they are always checked in the next day. I get new releases every Tuesday or Wednesday. My service with Netflix is great. Now, if they would only buy out Gamefly so my games don't have to go all the way to California to be checked in. Gamefly, are you reading? You are too slow to be worth the price.
  • chriskzoo, on 10/12/2007, -0/+3People complaining about Blockbuster late fees need to check themselves.
    a) Blockbuster does not have a recurring monthly fee at the store level (it's free to join)
    b) You have 2 weeks to return it scott-free
    c) If you don't return it, they charge you the price of the movie, but you can still return it within 30 days from the rental and only pay like a $2 fee

    So you're telling me that you can't return a movie within 30 day - further proof of Generation E(ntitlement)
    • noGoodNamesLeft, on 10/12/2007, -0/+2That's funny, I kept reading that people were complaining about Blockbuster because *their advertising was misleading*.

      If someone advertises something without making the snags clear, and people take them up on it, they have the right to bitch. Nothing to do with "entitlement".
  • masonreloaded, on 10/12/2007, -0/+2The issue isn't that people generally want to keep movies for longer than 30 days, it's the fact that Blockbuster say "NO LATE FEES" - which is just false. You say it yourself: there is a $2 fee if you dont return the movie within 2 weeks (actually 9 days for new releases, at least at my store) - what do you call that if it isn't a "late fee"?

    If their advertising slogan was "KEEP IT LONGER" or something then fine, but they are comitting one of the worst cases of false advertising ever...
    • viciousnet, on 10/12/2007, -0/+0they dont consider it a late fee.. its a "restocking fee" its on the receipt i think on the back. It does make sense since there is no monthly subscription fee.
    • BigPapi, on 10/12/2007, -0/+1You're right, there is no "Late Fee" but you have to freakin return the movie. They're not just handing them out like candy at the doctor's office. Their business is in "movie rentals". Which means that eventually, they'll want the movies back. Every idiot knows that.
    • Lycanthor, on 10/12/2007, -0/+0Let me clear up this whole restocking fee thing. When you rent something, Blockbuster gives you a rental period and a due date. This is either 2 days, or 8 days. They would like for you to return the item by the due date in order for there to be more movies/games available to rent for other customers. HOWEVER, they give you an entire week to let the item sit on your coffee table, under your car seat, in your dog's doghouse all chewed up, or whatever. After that week grace period, on the 10th day late, the computer automatically sells the item, charging either the new price if it's a new movie, or the previously viewed price if it's something they have started to sell used, minus your rental cost. From the day it auto sells to you, you have ANOTHER 30 days to get up off your butt and return the item. If you can do this, Blockbuster will BUY IT BACK from you minus a $1.25 (+tax) restocking fee.

      Keep in mind that this piddly little $1.25 that everyone is so upset about is actually, if I'm not mistaken, a tax that has to be paid for YOU selling the item back to Blockbuster. Even so, the $1.25 is nothing compared to the $4 hit you'd take every rental period with "late fees."

      Let me break this down 1 more time:

      You pay around $4.49 for a 2 day rental new release.

      They want you to bring it back in 2 days so it would be available for someone else to rent.

      4 Days after you rented it, you get an automated call reminding you to return it, or you'll be charged the selling price.

      You remember since they don't have late fees, you can wait 5 days to watch it, since you want to watch it on the weekend.

      You disregard the call, there are no "LATE FEES" after all.

      You finally watch the movie, which you remove from your DVD player and lay face down on the table, which gets buried under magazines, and scratched to hell.

      You receive a postcard from Blockbuster telling you about the movie which is about to auto-sell to you. You throw this away, with all the junk mail.

      Almost a week goes by, and your original movie is now well over 10 days late, Blockbuster charges ~ $18 to your account.

      28 days later you find the movie, pop it back in the case, and bring it back to the store.

      They take the item back, no problem, you get hit for a $1.25 restocking fee.

      Soooooooo... you pay $4.49 + $1.25 to keep the item for 38 days. That makes it around $0.16 a day for the item that Blockbuster received from you. If you had never rented this item, Blockbuster could have rented it out at least 19 times to people who return their item within 2 perfectly reasonable days to watch a 2 hour movie.

      You: 1 rental at $4.49 + $1.25 restocking fee = $ 5.74
      19 other customers, every 2 days: 19 x $4.49 = $85.31

      So, for you to keep the item and bitch and complain about $1.25, Blockbuster lost $79.57. Other customers had less movies available to be able to rent, making their experience less enjoyable. Not to mention the fact that Blockbuster takes the hit on the brand new movie that is now scratched beyond repair, which of course, you neglected to mention when you were complaining to the CSR about how you have to pay $1.25 to keep the movie for over a month.

  • tragik, on 10/12/2007, -1/+1This is very interesting.
    The key word here is 'patent' though. If Netflix does in fact have valid patents for this type of business, then they should be the only one doing it until the patent runs out, and I'm sure the court will agree with that. Of course it depends on what does patents are exactly and how they are interpreted by the judge.

    Either way, when you create a pattent, you do so in order to keep other people from stealing your ideas. And if that's what ***** has been doing, then i hope they get ***** over for good.
    • Hubris, on 10/12/2007, -0/+1Agreed - however there should be restrictions on what patents can be given. Patents should have to be about something truly innovative - not a sales strategy.

      Hmm.....maybe I should file for a patent on the concept of buying product from a wholesaler and selling it to consumers....I'll call it a patent to 'retail' product. I'll be able to sue every business in existance!
  • chriskzoo, on 10/12/2007, -0/+3How about this - BlockBuster should sue Netflix for infringing on their business model of "taking money from people for renting movies."
  • aggieandrew, on 10/12/2007, -1/+5How do companies get pantents for this stuff. It's just so stupid. Can you imagine if this was done in other industries?

    "Method of selecting, customizing, and purchasing a computer on a website."

    Heck, I should even patent some of my teaching practices:

    "Preparing printed notes for students that follow-along with instructor notes on an over-head projector, and giving a short assessment over the covered material the next day."

    I just think we need major reform in our pantent system. Something like what Netflix does should not be pantentable. It means they can shut-down ANY COMPETITION.
    • mechengr, on 10/12/2007, -0/+2You have to look at the patent claims not the abstract. The only way to violate a patent is if your product/process can be viewed the same as one of the claims. In order to get around it, you just have to come up with something just a little bit different that changes what the claim says.
  • mechengr, on 10/12/2007, -2/+1It doesn't look like they are trying to shutdown BB online, they want royalties for the patents BB is using or to have them stop using said features.

    Patents protect companies best interests and create competitiveness. If there were no patents everything would be the same, everyone would have to charge the same and there would be no competition. Product differentiation is what makes competition.

    Personally, I hope Netflix sues the pants off of BB. I havent been in one of their stores for years. Prior to Netflix I went to Famliy Video and got new releases for 2 bucks. But, I'm lazy and got tired of late fees. Yay for Netflix!!
  • enzyte, on 10/12/2007, -0/+0How can there be a patent for this?
    Rental by mail is not so popular unless you live in the same city as a distribution center. Delivery is just not prompt enough. And I think Blockbuster's online rental program with giving a free in-store rental every week puts them a notch above Netflix for outlying areas that still have Blockbuster stores.
  • Flashman, on 10/12/2007, -0/+3HOW DO YOU PATENT A BUSINESS PRACTICE?!!

    "Excuse me, I'm suing you because I hold a patent on the use of spreadsheets to organise a corporation's finances."
    • cmderinchief, on 10/12/2007, -0/+0Agreed. Why don't they go after Gamefly and other places that offer online game rental? Same idea, different media.
  • Schmitty, on 10/12/2007, -0/+1Since the patent infringement case against RIM, it seems like it's the IN thing to sue other companies for similar tactics. I mean, is it hurting their sales that much?
  • thedazman, on 10/12/2007, -0/+2This is ridiculous. The basic idea of the lawsuit doesn't even make sense. If it we're true, McDonald's could patent selling food to cars that drive up next to the restaurant, Coca Cola could patent selling soda in vending machines, and Apple could patent selling songs on line. That's just crap.
  • dengar69, on 10/12/2007, -0/+1So I guess Walmart is next?
  • dime, on 10/12/2007, -0/+1Netflix is screwed... and they know it.


    Blockbuster has the superiority because of their B&M infrastructure. The free in-store rentals BB provides gives it the edge needed when the services are otherwise identical.

    Although, it would be very bad if Netflix went under. Nothin' stifles service more than monopoly.


    But hey - when in doubt, SUE!

  • MasterDwarf, on 10/12/2007, -0/+1This is rediculous. I dont like Blockbuster and I dont subscribe to Netflix, but really, come awn. This is like suing a super market because you were the first one to sell food in an enclosed building structure using terminals to accept credit cards, and nobody else is allowed to use the same business model/methods.

    I am sure Netflix is would be the one to complain when the try to run competitors out of the market then they're looked at as a monopoly.
  • Ehrgeiz, on 10/12/2007, -0/+0If netflix didn't cost more then blockbuster I would have never switched but they don't and they don't offer their customers anything. Last ditch effort to save themselves because they wont drop the price on a subscription.
  • naisanza, on 10/12/2007, -0/+1plus if you watch too many hot films they will put you at the very end of the list. which is their way of refusing you the right to watch "anything, whenever."

    netflix is bs. i'd go for blockbuster.
  • pastabagel, on 10/12/2007, -0/+0Competiton? Do you even know what a patent is? It's a government sanctioned monopoly. That's the point of it.

    And please don't overgeneralize. They didn't patent sending DVD's in the mail. Amazon does that and nobody with a brain cell thinks Amazon and Netflix compete (at least they don't yet).

    Netflix patented something very specific - user makes a list of DVDs, netflix sends out a predetermined number of them (greater than one), when the user returns one, they get the next on their list.

    Please identify someone who was doing this before Netflix did it.

    Inventions are always obvious after someone invents them first.

    And in case Netflix is reading, they should probably sue Gamefly for infringement too.
    • chriskzoo, on 10/12/2007, -0/+2That's the point - that is not an "invention." It is simply maintaining a list, nothing more, nothing less. Maybe anyone who has put out an instruction booklet should do the same thing - afterall, once you complete step one, you get to move onto step two and so on and so forth. It's like a kid giving a parent a Christmas list. They may want toy #1 so the parent gets it. Then the parent moves down the list and sees that toy #2 is sold out (similar to Netflix not having a movie in stock) so they move onto toy #3.

      It's as rediculous as companies getting patents on proteins they discover (and I work in the pharmaceutical industry). The protein should not be patentable, only drugs you invent that affect that protein. Netflix has invented NOTHING.
    • diggdat, on 10/12/2007, -0/+1I think they they did more than that. They also pioneered the price structure that would allow for the ability to keep movies (for 2 years if you want) as a long as you maintain the monthly fee. I may be wrong but my guess is that they had to have a whole different level lot of licensing agreements with the Movie industry to create that financial environment. Once created, it is easy for a competitor to come along and and say "me to please..." having not had to create the environment in the first place (or the market awareness for matter).

      The ability to rent three movies on different days from your queue, keep one and send back two or whatever you want is a big part of the benefit for this service. People with children may well choose to sacrifice one choice of their three to keep a Disney film their kids watch over and over without having to re-rent it etc.

      Some of this though, is just the price paid for being first. In the end, it will come down to patent law and the issue may well be if the concept was justified in being patented or not. If it was patented, they are just pursuing their legal right. Frankly, Blockbuster and Netflix's rivalry did not start here...
  • SoccerBoy, on 10/12/2007, -0/+2I hate Blockbuster. I returned a movie several years ago to one of their stores. About 6 months late I received a thing in the mail informing me that I must return the movie (that I already returned), or they would sue me.

    I called up the store and the manager said it was too late and it was out of their hands. I asked if they could check and see if the movie I returned was their or not. The person on the phone said that I needed to deal with the Blockbusters head office and whatnot.

    So I traveled three hours (I had moved away) to go back to the store I dropped the movie off at. I walked in went to find my movie (Bockbuster was kind enough to include their serial number for me), found my movie. I then went to the front count asked for the manager and showed him the movie that Blockbuster wanted to sue me over. He then accused me of bringing the movie into the store.

    Just then a kid I went to high school with walks out of the back room. He was a manager in training. He started to help and discovered that the movie had been rented out to other customers, while the movie was "missing".

    The manager then jumps back in and decides he needs to kick me out of the store.

    So, the head office offered me free rentals for a year for all me problems. I declined, and haven't been in a store since, nor will I ever.
    • chriskzoo, on 10/12/2007, -0/+1Happenned to me, but I simply called "corporate" and they were like "no problem, we'll remove it from your account." Problem solved.
    • SoccerBoy, on 10/12/2007, -0/+1I has 19, just started university and wasn't all that smart then. Looking back, I could have made it easier on myself. Hey, you learn from your mistakes, right?
  • dime, on 10/12/2007, -0/+0"hate Blockbuster. I returned a movie several years ago to one of their stores. About 6 months late I received a thing in the mail informing me that I must return the movie (that I already returned), or they would sue me."

    This story sounds a little wild imo.

    Years ago, I didn't return a video. They sent notices, and eventually submitted it to a collection agency. Instead of getting a black eye on my credit report, I paid it.

    And that makes sense - I can't see Blockbuster (or any major company, really), suing anyone over $80. Hell, the video is only worth about 10 minutes worth of lawyer fees.

    • SoccerBoy, on 10/12/2007, -0/+1I think it was more of a threat then something they would follow through with.
  • Chompy, on 10/12/2007, -0/+2Yeesh, how many Congressmen do we have to buy to get some patent reform going?
  • CaughtThinking, on 10/12/2007, -0/+1Welp, there goes my desire to get a Netflix account.
  • chriskzoo, on 10/12/2007, -0/+1I kind of find this whole set of patent fiascos funny by the way people take sides. It seems like people that are generally of the Anti-Microsoft crowd (you know who you are) side with Netflix because Blockbuster is the "big evil." Seriously, Blockbuster has a way better setup allowing customers to also walk into the store and Netflix knows it. Plus, once downloadable movies becomes mainstream, both of these companies are out of business.
  • mikebritton, on 10/12/2007, -0/+0I just like the idea of Blockbuster having a chunk taken out of them, and hope Netflix slams them into the dirt. It would be a pleasure to watch their stores being dismantled board by ***** board. They cheated me for years with their late fees and I want to ***** on the razed rectangle in the parking lot where their store used to be as I speculate on my next Netflix purchase.
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