Blockbuster settles Netflix patent claim

Video rental chain Blockbuster has settled a patent dispute brought against it by online DVD rental company Netflix. Netflix had claimed that a Blockbuster queueing system violated a patent it held.

The terms of the settlement were not disclosed but a Blockbuster spokeswoman said that the dispute was now completely settled and that the company had no "ongoing obligations" to Netflix.

Online film rental firm Netflix has double the number of online subscribers as Blockbuster with 6.8 million customers. Blockbuster, which operates a diminishing network of rental shops, has had to chase the online business which has threatened the business of its local shops.

When Blockbuster launched its online rental system Netflix sued the firm, claiming that it violated a queueing system for film orders on which it held a patent and on its method of charging subscribers a monthly fee.

Blockbuster counter-sued, claiming that Netflix's case was designed to stifle competition, and that its claims were so broad as to be unenforceable.

It said that Netflix had used deceptive practices to obtain its patents and was attempting to monopolise the online rental business.

Blockbuster said that the settlement agreed this week would have no impact on the company's ongoing performance. "We can put this matter behind us and that's good news," Blockbuster spokeswoman Karen Raskopf told the Dow Jones news service.

The film rental industry in the US is worth $9 billion a year, and competition between Blockbuster and Netflix is fierce. Netflix this week matched a $1 price cut on one of its most popular services made by Blockbuster three weeks ago.

The move to online subscriptions for posted DVDs is damaging the traditional retail film rental business. Blockbuster this week announced that it would close 282 shops in the US this year. It closed 290 last year. It has 5,000 shops in the US and 3,000 elsewhere in the world.

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