You will be redirected back to your article in seconds

Netflix imprimatur

Web DVD renter obtains patent on service

Netflix stock soared more than 6% Tuesday after the company said it has received a broadly worded patent for its online subscription film-rental service that apparently would cover systems in use by competitors such as Wal-Mart and Blockbuster.

The patent refers to the subscription rental of videogames and music as well as movies. It covers subscription plans based on allowing a maximum number of items to be out at any given time as well as those based on permitting a maximum number of exchanges during the rental period.

Although the patent primarily describes a system for Internet ordering and delivery through the mail, it claims to cover all methods for placing orders through a subscription program and all modes of delivery, including in-store subscription services.

Broad definition

“In the foregoing specification,” the patent states, “the invention has been described as applicable to an implementation anticipating Internet-based orders and mail or other long-distance delivery of the items. … However, the same invention may be applied in a more conventional video, games or music rental-store setting, where subscription customers may be allowed rentals of a specified number of movies, games or music selections at any time and/or in one subscription period, without rental return due dates, in exchange for a periodic rental subscription fee.”

The broad language of the patent would appear to apply to the online DVD rental service recently launched by Wal-Mart Stores, as well as the in-store game rental program launched by Blockbuster. The patent could be critical to Netflix’s efforts to fend off competition from its better-heeled rivals.

Earlier this month, Wal-Mart lowered the monthly fee for its service to be more competitive with Netflix.

Game for expanding

Also this month, Blockbuster announced the national rollout of its in-store game subscription service. It recently expanded its test of a DVD subscription program using a combination of online and in-store pickup and return options.

Wal-Mart officials were not available for comment.

A Blockbuster spokesman said the company had not seen the patent so could not comment on its specific claims. He added, however, “we can’t imagine there’s a patent out there that would prevent us from serving our customers in the best possible way.”

There was no immediate word on whether Netflix planned to pursue claims against Wal-Mart or Blockbuster. It could also choose to press claims against any of a handful of smaller companies offering online subscription rentals modeled on Netflix.

In a statement, Netflix general counsel David Hyman said, “Our team has focused their efforts on innovation to better serve our customers and on enhancing our intellectual property. We’re gratified that the Patent Office has recognized what a leap forward the Netflix subscription service is. However, we know that great companies are built by providing an outstanding consumer experience, and that is our primary focus.”

Netflix stock closed Tuesday up $1.35 at $22.85.

More Scene

  • Don Cheadle and Andrew Rannells Black

    Don Cheadle, Andrew Rannells Talk Snorting 'Coke' on 'Black Monday'

    “Black Monday” show creators David Caspe and Jordan Cahen divulged an intriguing detail to come later in the first season of the new Showtime comedy at its world premiere, held at the Theatre at Ace Hotel on Monday night in Los Angeles. “The fourth or fifth episode opens with a sexual harassment seminar, which very well [...]

  • Alfonso Cuaron attends the 44th Annual

    Alfonso Cuarón to LAFCA: 'Thanks to Your Help We Can Break Down Walls'

    Inclusion was the big winner at the L.A. Film Critics Association Awards, which was held Saturday night at the InterContinental in Century City. “This year’s winners are the most diverse in LAFCA’s 43-year history,” announced its president, Claudia Puig, adding that 14 out of their 18 awards were won by women and people of color. [...]

  • Mandatory Credit: Photo by Max Malandrino/REX/Shutterstock

    Hollywood Power Players Assemble to Save Iconic Deli Nate 'n Al

    A group of Hollywood executives and celebrities have banded together with the intent to save Beverly Hills deli and star haunt Nate ‘n Al, a stone’s throw from tourist destination Rodeo Drive. A consortium of investors including music kingpin Irving Azoff and wife Shelli, Universal Filmed Entertainment Group chairman Jeff Shell, and Rande Gerber and [...]

  • Charlie Collier, FOX Chief Executive Officer

    'The Passage' Team Talks Diversifying Races, Genders and Ages of Book Characters

    “The Passage” star Saniyya Sidney was unaware that the book version of her character was originally white until her father, a fan of Justin Cronin’s apocalyptic trilogy, informed her during the audition process. “I was like, ‘Oh, she is?'” Sidney told Variety at Thursday’s series premiere in Santa Monica, Calif. “And when I got it, [...]

  • KiKi Layne and Stephan James'If Beale

    Regina King Praised by 'If Beale Street Could Talk' Co-Stars for New 50/50 Initiative

    Two days had passed since Kiki Layne and Stephan James had attended their first Golden Globes and the “If Beale Street Could Talk” co-stars were still trying to wrap their heads around having been there. “It was such a special night — and pretty unreal,” says James, who was also nominated for his work opposite Julia Roberts [...]

  • Steven Van Zandt, Edie Falco, Tony

    'The Sopranos' 20th Anniversary Reunion: Cast, Producers Remember James Gandolfini

    Jan. 9’s 20th anniversary reunion of the cast and producers of HBO’s “The Sopranos” was a raucous family gathering from its first moments. “I saw a picture of myself in the newspaper,” series creator David Chase said at the start of the event. “And I thought, 20 years. Jesus Christ.” “People come up to me,” [...]

More From Our Brands

Access exclusive content