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Netflix Sues Blockbuster For Infringement

The long-smoldering controversy over business methods patents may flare up again, now that Netflix Inc., is making headlines by suing its movie rental competitor Blockbuster Inc.

Netflix, the king of online movie rentals, claims that copied Netflix's methods, including the online queue that subscribers use to prioritize films they want to rent, a no-late-fees policy and the practice of allowing customers to get a new DVD as soon as they return one.

Netflix filed the case in federal court in San Francisco on April 4, the same day the PTO granted Netflix a business method patent covering the processes and policies it sued Blockbuster for stealing.

The PTO had initially denied Netflix's application based on the so-called "technological arts rejection," which drastically limited patents of business methods that lacked a technological aspect. But last fall, the Board of Patent Appeals and Interferences ruled that such rejections violated federal law, removing a hurdle to many business methods applications.

While it is not known whether Netflix patent was approved as a direct result of that decision, "it certainly didn't hurt," says Richard Himelhock, shareholder in the Chicago IP firm Wallenstein, Wagner & Rockey, who has experienced the difficulty of getting business process patents approved in recent years.

"The decision definitely will increase the number of business process patents," Himelhock says. "In my own practice I've seen at least one application that had the technological arts objection removed right after the case came down."

Senior Editor

Mary Swanton

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