DALLAS, June 13 – LAWFUEL – Press Release Service – In antitrust counterclaims
filed today in federal court in San Francisco, Blockbuster Inc. (NYSE: BBI,
BBI.B) alleges that the lawsuit filed against its online service by
Netflix, Inc. is based on unenforceable patents that Netflix obtained
through deceptive practices in an attempt to monopolize the online rental
business.
“There is nothing original about renting movies or subscription rental
programs. Both were widely practiced long before any purported invention by
Netflix. For Netflix to claim exclusive rights over subscription movie
rentals is like a fast-food restaurant trying to patent selling hamburgers
through a drive-through window,” said Marshall B. Grossman, of Alschuler
Grossman, Stein & Kahan in Los Angeles, the firm representing Blockbuster
in the litigation. “As for Netflix’s so-called ‘dynamic’ queue, we are
convinced it is not legally patentable. We think it is obvious that if you
are going to provide subscription rentals over the Internet, you have to
let your customers list the items they want to receive and enable them to
periodically update their lists.”
The claims filed by Blockbuster against Netflix also allege that
Netflix failed to inform the Patent Office of previous patents and previous
business methods of other companies, despite the legal duty to make these
disclosures. Netflix has admitted that it was aware of the prior patents of
another company, which had already put Netflix on notice about possible
patent infringement. Netflix failed to disclose those prior patents to the Patent Office.
“The court has the final say on whether a patent is valid and whether a
company was honest in pursuing its patent. We state in our counterclaims
that Netflix’s conduct at the Patent Office was deliberately deceptive and
that Netflix’s goal all along has been to ultimately monopolize the online
rental business,” says Grossman. “A monopoly in this business, as in any
other consumer oriented area, could result in less choice and higher prices for the consumer.”
BLOCKBUSTER Online(R) was launched in August 2004 and grew its
subscriber base from zero to approximately 1.3 million customers by the end
of the first quarter of 2006. Netflix, which appears to have singled out
Blockbuster and no other online service for litigation, waited nearly three
years after receiving its first patent and 19 months since the launch of
BLOCKBUSTER Online before filing the action.
“We believe consumers are best served when companies compete in the
marketplace instead of in the courtroom,” said John Antioco, Blockbuster
chairman and CEO. “However, since Netflix has filed what we believe is a
needless lawsuit, we will agressively defend ourselves and vigorously
pursue our counterclaims.”
About Blockbuster
Blockbuster is a leading global provider of in-home movies and game
entertainment with almost 9,000 stores throughout the Americas, Europe,
Asia and Australia. The company may be accessed worldwide at
http://www.blockbuster.com.
This release includes forward-looking statements relating to our
pending litigation with Netflix. Although these forward-looking statements
are based on current expectations and beliefs, these statements are not
guarantees of future performance or events and they involve risks,
uncertainties and other contingencies inherent in the litigation process,
some of which are not within our control. Therefore, actual results may
vary materially from what is expressed in or indicated by the
forward-looking statements. This cautionary statement is provided pursuant to Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The forward-looking statements in this
release are made only as of the date hereof and we undertake no obligation
to update publicly any forward-looking statement for any reason, even if
new information becomes available or other events occur in the future.
