Netflix Business Model Patented.

Discussion in 'DVD Video' started by Scot Gardner, Sep 21, 2003.

  1. Scot Gardner

    Scot Gardner Guest

    Netflix has just obtained U.S. Patent No. 6,584,450, and the "Method and
    Apparatus of Renting Items" business model is now owned by NetFlix.
    (On the surface, this seems about as useful as patenting the shoelace.)

    *** *** ***

    On Tuesday, Netflix was granted a patent that covered many of the basic
    features of the company's business model, a development that may well
    alter the nature of the competition between Netflix, a company based in
    Los Gatos, Calif., and the corporate giants, Wal-Mart and Blockbuster,
    that are entering the online DVD-rental market.

    Netflix's rental service has grown steadily since its introduction in
    1999. The company, which has 1.1 million subscribers, had first-quarter
    revenues of $56 million this year, an 82 percent climb from last year.

    The patent, which was filed in 2000, has 100 claims over all. The
    company has other applications pending with the United States Patent
    Office, including one on the intricately designed envelopes it uses to
    send the DVD's.

    "On the surface, the patent looks quite sweeping and quite meaningful,"
    said Arvind Bhatia, an analyst for Southwest Securities, a Dallas-based
    financial services firm. Depending on whether the patent or its
    enforcement is challenged in court, Netflix could use it to try to stop
    its competitors from setting up online rental services. Or it could
    charge royalties to other companies that license the patent, giving
    Netflix a financial advantage.

    The patent office grants protection for 20 years to inventions that are
    novel, useful, fully disclosed and not obvious. Some analysts question
    whether Netflix's innovation should have passed that last test.

    The patent "pretty much covers their entire process of having a
    subscription method for a product and how to manage the flow in and out
    of the company," said R. J. Jones, an analyst at Delafield Hambrecht.
    Because of that, Mr. Jones said, Blockbuster or Wal-Mart could challenge
    Netflix for patenting something obvious.

    But he added that he believed the patent would make Netflix a more
    attractive company for one of the big players to acquire.

    Complete story here:

    http://www.newamerica.net/index.cfm?pg=article&pubID=1270

    http://nf450.patentfetcher.com/
     
    Scot Gardner, Sep 21, 2003
    #1
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  2. Scot Gardner wrote:
    > Netflix has just obtained U.S. Patent No. 6,584,450, and the "Method and
    > Apparatus of Renting Items" business model is now owned by NetFlix.
    > (On the surface, this seems about as useful as patenting the shoelace.)
    >
    > *** *** ***
    >
    > On Tuesday, Netflix was granted a patent that covered many of the basic
    > features of the company's business model, a development that may well
    > alter the nature of the competition between Netflix, a company based in
    > Los Gatos, Calif., and the corporate giants, Wal-Mart and Blockbuster,
    > that are entering the online DVD-rental market.


    If they've also patented the idea of regional distribution centers, they
    don't have to worry--
    Their competitors haven't stolen it yet. :/

    Derek Janssen
     
    Derek Janssen, Sep 21, 2003
    #2
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  3. Scot Gardner

    Jeeters Guest

    The patent office needs burned to the ground and rebuilt. There's some
    ongoing lawsuit I read about recently where some little company that
    packages and sells peanut butter & jelly sandwiches for lunch carts, etc. is
    being sued by Smuckers. Apparently, Smuckers has come out with some line of
    pre-packaged P&J sandwhiches (i don't know if they're frozen or what) that
    they patented. So they're suing this other company. Yet this other company
    has been doing this for *years*.
    There's something wrong when the patent office starts handing out patents
    for P&J sandwiches.

    > The patent "pretty much covers their entire process of having a
    > subscription method for a product and how to manage the flow in and out
    > of the company," said R. J. Jones, an analyst at Delafield Hambrecht.
    > Because of that, Mr. Jones said, Blockbuster or Wal-Mart could challenge
    > Netflix for patenting something obvious.
     
    Jeeters, Sep 22, 2003
    #3
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