Indy woman sues Netflix, Wal-Mart, alleging DVD monopoly

[mb*]

An Indianapolis woman has sued Wal-Mart Storeshttp://images.intellitxt.com/ast/adTypes/mag-glass_10x10.gif (http://www.indystar.com/article/20090211/BUSINESS/902110328#) and Netflix Inc., joining dozens of others who allege the retailers have tried to monopolize the online DVD rental market.

The lawsuit was filed Monday on behalf of Martha Karatz by Cohen & Malad, an Indianapolis firm known for handling class-action consumer complaints. It accuses Wal-Mart and Netflix of conspiring to divvy up the rental and sales markets for DVD movies.

About 40 similar lawsuits have been filed in the past three weeks.

Filed in U.S. District Court in Indianapolis, Karatz's lawsuit asks the court to declare it a class action, open to anyone who paid to rent DVDs from Netflix since May 19, 2005. Damages aren't specified.

The lawsuit says the conspiracy began when the chief executives of Netflix and Walmart.com met for dinner in January 2005. The following May, the companies agreed that Wal-Mart would stop competing with Netflix for online rentals, and Netflix would promote sales of new DVDs by Wal-Mart and not sell new DVDs in competition with them, the lawsuit says.

It charges four violations of the federal Sherman Antitrust Act. Prices are "higher than they otherwise would have been" because of the deal, the lawsuit says.

Wal-Mart denied it acted improperly. "We made our own independent decision to exit the DVD rental business (http://www.indystar.com/article/20090211/BUSINESS/902110328#) and our subsequent agreement with Netflix is entirely proper," spokeswoman Michelle Bradford said.

Netflix did not respond to a request for comment.

http://www.indystar.com/article/20090211/BUSINESS/902110328

[sws4420]

I don't have the time for the research, but I'm almost certain that Netflix had a good case against Blockbuster at one time because it was claiming that Blockbuster copied its idea. I'll look into it more when I get home.

[LLL]

I know a lot of you guys use Netflix, but they totally piss me off with their friggin popups. They come up more than any other popup at sites I go to and their graphics seem to totally overrun anything else I am trying to look at until I can get the damn thing killed. Let's just say I have a bad taste in my mouth for those guys. :swear1:

[mb*]

i love my netflix. may put it on hold for a while tho. i'm not really using it right now.

my friend jeremy uses blockbuster online, says it's way better cuz you can take it to the store if you want. i tried it, i wasn't a fan.

[sws4420]

I love Netflix.
I know a lot of you guys use Netflix, but they totally piss me off with their friggin popups. They come up more than any other popup at sites I go to and their graphics seem to totally overrun anything else I am trying to look at until I can get the damn thing killed. Let's just say I have a bad taste in my mouth for those guys. :swear1:Actually, blame the sites you go on for the ads. Netflix can't just put their ads wherever they want, the sites you're getting the popup ads from ask for these ads to be called. Netflix is just the customer paying for the ad. Sort of like how every page on here has at least one ad, but that's only because I coded them to show up that way to help pay for the site. :eg0prof:

Here's the story about their lawsuit:
SAN FRANCISCO - Online DVD rental service Netflix Inc. on Tuesday accused Blockbuster Inc. of illegally copying its ideas in a patent infringement lawsuit challenging the video store chain’s recent Internet expansion.

The complaint, filed in U.S. District Court in San Francisco, focuses largely on the online wish lists that prioritize the DVD desires of about 5.4 million people who subscribe to either Netflix or Blockbuster’s Internet service.

Netflix also believes its patents cover perhaps its most popular feature — the option of renting a DVD for an unlimited time without incurring late fees.

That change, introduced by Netflix seven years ago, became so popular that Blockbuster last year stopped charging late fees for tardy rental returns to its video stores. Dallas-based Blockbuster once pocketed hundreds of millions of dollars annually from those late fees.

Both Netflix and Blockbuster’s online service charge $17.99 per month to rent up to three DVDs at a time. When subscribers return a DVD in a postage-paid envelope, the rental services automatically send the next available movie on their wish lists.

Blockbuster initially denigrated the flat-fee concept, but then reversed course and launched its Internet service in 2004 after scores of customers defected to Netflix, based in Los Gatos, Calif.

“Blockbuster has been willfully and deliberately copying Netflix’s business methods,” Netflix spokesman Steve Swasey said.

Blockbuster spokesman Randy Hargrove declined to comment Tuesday because the company hadn’t yet seen the suit.

Netflix contends it first patented the process for managing DVD wish lists — known as queues — in June 2003.

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.

Netflix hopes to obtain a court order that would force Blockbuster to change the way its online rental service operates or require the company to pay patent royalties — a potentially huge bill, based on other recent patent disputes.

For instance, the maker of the popular Blackberry e-mail device last month agreed to pay $612.5 million to settle a long-running patent infringement case.

Because patent cases often delve into highly technical issues, they can take several years to wind through the legal system.

If Netflix prevails, it could thwart its biggest competitor in the steadily growing field of online DVD rentals.

Netflix began the year with about 4.2 million subscribers. Blockbuster has signed up about 1.2 million online customers so far. Netflix’s success already has hurt Blockbuster, which lost $588 million last year and expects to continue to close stores as more DVD renters turn to the Internet.

In contrast, Netflix earned $42 million last year. But its service has been recently fending off a backlash triggered by a class-action lawsuit that focused attention on a scoring system that penalizes its most frequent renters. Netflix is awaiting court approval of a proposed settlement that would give free DVDs for a month to millions of former and current subscribers.


http://www.msnbc.msn.com/id/12156759/

Also, I'd like to add that this lady's story makes little sense on another level. Just because they're the only ones doing it doesn't mean that have a monopoly. A monopoly is when one company corners the market on a certain service. If she wanted to, she could start up her own company to compete with Netflix. The only hurdle I can see her having is designing a slightly different business model as to avoid the patent infringement that Blockbuster was accused of.